- by New Deal democrat
The big news this week was first quarter GDP limping in at 1.8%. It is interesting that this GDP advance was almost exactly that of second quarter 2010 when gas prices were similar. With gas prices even higher in the last month, second quarter GDP is not likely to be pretty either. Durable goods orders, however, rose strongly, up 2.5%. While the regional manufacturing surveys have weakened month over month, they are basically going from white hot to red hot.
That manufacturing continues to look excellent is a great positive, because the high-frequency weekly indicators are almost all in retreat:
Oil was trading at $113.76 a barrel by Friday, the fifth full week it has been above $100. It remains at a level above 4% of GDP. Gas at the pump increased $.04 more to $3.88 a gallon - with the exception of 11 weeks in 2008, an all time high. Gas prices have gone up over $1 a gallon just in the last 5 months. Gasoline usage at 9148 M gallons was 1.5% lower than last year's 9290. This YoY comparison has been negative for the last seven weeks in a row, averaging -1.5% for the last five weeks. If this level of decline continues for another month, that will be equivalent to the decline near the end of 2007.
The BLS reported that Initial jobless claims last week were 429,000. The four week average has gone back over 400,000, This series has not made a new low in eight weeks, has been back over 400,000 for three weeks, and recorded the highest number in over 3 months. Not good at all.
Railfax was up only 1.4% YoY. Baseline traffic is below last year's levels. Cyclical traffic is at a low ebb for YoY advance. Waste materials sank even lower below last year's levels and shipments of motor vehicles fell. Only intermodal traffic is holding up reasonably well. Also not good.
The American Staffing Association Index remained at 92 for the fourth week in a row, after stalling at he 90-91 level for 7 weeks. If this series does not pick up significantly in the next four weeks, it will mirror its flatness in 2008. Also not good.
As expected, the Mortgage Bankers' Association reported a decrease of 13.6% in seasonally adjusted mortgage applications last week, reversing the prior week's increase of 10.0%, due to new higher FHA premiums. Refinancing decreased 0.6%, and remains near its June-July 2010 lows. The purchase series has been generally flat for close to one full year - compared with its previous relentless decline, a good thing.
The ICSC reported that same store sales for the week of April 23 rose 3.2% YoY, and increased 0.4% week over week. Shoppertrak reported a 16.1% YoY increase for the week ending April 23. It also reported a WoW increase of 12.2%. This was the week before Easter, so calendar affects continued to strongly affect these results.
Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that for the first 19 days in April 2011, $129.4 B was collected vs. $123.4 B a year ago, for an increase of $6.0 B YoY. For the last 20 days, $135.3 B was collected vs. $125.1 B a year ago, for an increase of $10.2 B, or 8.3%. Use this series with extra caution because the adjustment for the withholding tax compromise is only a best guess, and may be significantly incorrect.
Weekly BAA commercial bond rates decreased .09% to 5.98%. This compares with a .10% decrease in the yields of 10 year treasuries to 3.41%. There remains no sign of corporate distress here, and no sign yet of a deflationary bust.
M1 was up 0.2% w/w, up 0.5% M/M, and up 11.3% YoY, so Real M1 is up 8.6%. M2 was up 0.1% w/w, up 0.6% M/M and up 3.9% YoY, so Real M2 is up 1.2%. Although Real M1 is still strongly in the "green zone" where it has been since before the end of the "great recession," Real M2 has faded even more below its 2.5% "green zone." (In all recessions since the Great Depression, real M1 has been negative and real M2 has been below +2.5%). Not so good.
The weekly indicators are lining up on the side of a stalling economy.
My condolences to all to who sustained loss due to this week's massive outbreak of tornadoes. Have a good weekend.