Weekly indicators: consumer spending breaks on through to the other side edition

 - by New Deal democrat

This may have been the slowest week for monthly data ever. The only item of note was the ISM services report, which improved to 56.0.

So let's get right to this week's look at the high frequency weekly indicators. This is probably a good week to remind readers that the purpose of looking at these numbers is that they are as close to an up-to-the minute look at the economy as we can get. They can be noisy, but if there is an important turn in the economy, it will show up here before it shows up in the monthly numbers. For example, two years ago the Gallup Daily Consumer Spending report showed that consumers were continuing to spend during the debt ceiling debacle, despite the monthly numbers hitting an air pocket. The conclusion and the title are the last things I write, after I've recorded the numbers. And the post is designed so that the conclusion is after the numbers, so you can form your own opinion freely.

Anyway, let's start this week with conusmer spending, because Gallup consumer spending turns out to be the star of the show again.

Consumer spending

• ICSC +0.3% w/w +2.5% YoY


• Johnson Redbook +3.7% YoY


• Gallup daily consumer spending 14 day average at $102 up $19 YoY

Gallup's 14 day average of consumer spending went over $100 this week for the first time since the financial crisis of September 2008, almost 5 years ago. At least as consumers are reporting it, back to school shopping is on a tear. The ICSC varied between +1.5% and +4.5% YoY in 2012, while Johnson Redbook was generally below +3%. The ICSC had a good week this week as well, and Johnson Redbook remains close to the high end of its range.

Oil prices and usage

• Oil down -$0.97 to $105.97 w/w


• Gas $3.63 down -0.01 w/w


• Usage 4 week average YoY up +3.2%

The price of Oil remained near its 52 week high. The 4 week average for gas usage was, for the fifth week in a row after a long streak to the contrary, up YoY.

Interest rates and credit spreads

•  5.32% BAA corporate bonds up +0.07%


• 2.64% 10 year treasury bonds also up +0.07%


• 2.68% credit spread between corporates and treasuries unchanged

Interest rates for corporate bonds had been falling since being just above 6% in January 2011, hitting a low of 4.46% in November 2012. Treasuries previously were at a 2.4% high in late 2011, falling to a low of 1.47% in July 2012, but remain back above that high. Spreads remained at their new 52 week low this week. Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

• +1% w/w purchase applications


• +8% YoY purchase applications


• unchanged% w/w refinance applications

Refinancing applications have decreased sharply in the last 11 weeks due to higher interest rates to a two year low. Purchase applications have also declined from their multiyear highs in April. Both purchases and refinance applications stabilized this week.

Housing prices

• YoY this week +8.8%

Housing prices bottomed at the end of November 2011 on Housing Tracker, and averaged an increase of +2.0% to +2.5% YoY during 2012. This weeks's YoY increase is still close to a 7 year record.

Real estate loans, from the FRB H8 report:

• unchanged w/w


• +0.3% YoY


• +1.9% from its bottom

Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  Over the last few months, the comparisons have completely stalled.

Money supply

M1

• +0.1% w/w


• +1.9% m/m


• +8.1% YoY Real M1

M2

• +0.4% w/w


• +1.2% m/m


• +5.2% YoY Real M2

Real M1 made a YoY high of about 20% in January 2012 and eased off thereafter. Earlier this year it increased again but has backed off its highs significantly.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. It increased slightly in the first few months of this year and has generally stabilized since, although it has declined slightly in the past few weeks.

Employment metrics

The American Staffing Association Index rose 1 to 96. It is up +3.2% YoY

Initial jobless claims

•   333,000 up 7,000


•   4 week average 335,500 down -5750

Tax Withholding

• $50.5 B for the first 6 days of August vs. $50.0 B last year, up +0.5 B or +1.0%


• $146.1 B for the last 20 reporting days vs. $133.4 B last year, up +12.7 B or +9.5%

Daily tax withholding has improved to the middle part of its YoY range compared with its YoY average comparison in the last 7 months. Initial claims remain within their recent range of between 325,000 to 375,000, and have flattened out just as they have in the last 3 springs and summers. The 4 week moving average, however, made a new post-recession low this week.

Transport

Railroad transport from the AAR

• -1200 carloads down -0.4% YoY


• +4600 carloads or +2.8% ex-coal


• +11,700 or +4.8% intermodal units


• +11,300 or +2.0% YoY total loads

Shipping transport

• Harpex up 2 to 403


• Baltic Dry Index down -64 to 1061

Rail transport has been both positive and negative YoY in the last several months. This week it was positive once again. The Harpex index had been improving slowly from its January 1 low of 352, but has flattened out in the last 8 weeks. The Baltic Dry Index has retreated from its recent 52 week high. In the larger picture, both the Baltic Dry Index and the Harpex declined sharply since the onset of the recession, and have been in a range near their bottom for about 2 years, but have stopped falling.

Bank lending rates

• 0.22 TED spread down -0.02% w/w


• 0.185 LIBOR down -0.001% w/w

The TED spread is still near the low end of its 3 year range, and has fallen back from its slight rise in the last month.  LIBOR established yeat another new 3 year low.

JoC ECRI Commodity prices

• down -0.03 to 123.76 w/w


• +3.91 YoY

The one and only negative this week was the increase in interest rates. For the week, mortgage applications and gas prices joined shipping rates as neutral.

Everything else was positive. Rail had a positive week, oil and gas prices were slightly lower, gas usage was higher, interest rate spreads remained at a 1 year plus low, house prices were very positive, bank rates were very positive, money supply remained positive, the 4 week average of initial jobless claims made a new post-recession low, temporary jobs have turned positive again, and most of all, consumer spending was strong, especially as measured by Gallup.

The American consumer is truly a wonder to behold. Have a nice weekend.