On Monday's I'm going to start looking at the previous week's major economic releases, analyzing the numbers along the same lines as used in the Fed's Beige Book. The reason is simple: this will help us all digest the news in a way that helps us understand the macro-level direction of the economy. Unlike NDD's higher frequency analysis, this will focus on the largely coincidental economic numbers that are released monthly and in some cases quarterly.
Consumer spending: Real personal consumption expenditures dropped .1%. The primary reason for the decrease is a drop in both non-durable and durable goods expenditures, which was caused by a drop in auto purchases. Real PCEs have now dropped the last two months, after a strong rise starting in early 2009. Consumer sentiment is still weak, as evidenced by both a drop in the Conference Board's number and the University of Michigan consumer sentiment number.
Manufacturing: The ISM number surprised on the upside, but the new orders number was weak, as was the overall production number. In addition, the Chicago PMI also surprised on the upside. However, as I'll show later today, emerging economies are raising short-term interest rates, thereby slowing their respective economies. We've also seen signs of a slowdown at the global level in manufacturing, leading me to conclude this months numbers were abberations in an otherwise slowing manufacturing environment.
Real Estate: The good news here is the Case Shiller number increased, indicating the housing market may be bottoming. As I noted last week (see also here and here) -- and as NDD has also pointed out (see this post as well)-- it appears the housing market is closer to a bottom than conventional wisdom implies.
While the good news last week was Greece avoiding a default, the overall tenor of most reports was negative. Consumer sentiment is slipping, causing a drop in spending. Since this is 70% of US GDP, this is hardly a good development. Globally, manufacturing is in a slowdown, largely caused by emerging economies raising interest rates to control inflation.