Sometimes you eat the bear. Sometimes the bear eats you. When it comes to struggling average Americans, this week the data showed the bear having a feast. The Conference Board's consumer confidence measure slipped a full 10 points, a very dramatic move, although at week's end that was not confirmed by a generally sideways move in the University of Michigan's consumer sentiment report. The reason may have to do with politics, specifically the Democratic party's collective pearl-clutching fainting spell after they were reduced to a 59-seat "minority" in the Senate:
"Consumers have been getting more impatient with the slow progress of the stimulus program, and confidence in the Obama administration's economic policies has begun to wane," Richard Curtin, director of the [Michigan] surveys, said in a statement.New and existing home sales both tanked, with new home sales setting a record low. Existing sales were essentially exactly where they were when they bottomed a year ago. Unlike "cash for clunkers", it appears that the $8000 home buyer credit did only pull demand forward. If so, however, we should expect a rebound in a few months as that plays out.
If that wasn't bad enough, initial jobless claims rose to 496,000, the highest weekly number in 3 months. The 4-week moving average also increased to 472,750, and that number cannot be explained by snowstorms several weeks ago. My best guess is that we are seeing municipal and state government layoffs, but we'll find out more about that in a week.
When you get away from American consumers and start talking about manufacturing, it's like you are in a different country. The Chicago PMI "posted a surprise increase from 61.5 in January to 62.6 in February." This reading is among the highest in the last 20 years, and confirms all of the other manufacturing reports out in the last several months. Strip away those pesky people, and industries are having a terrific recovery.
For another example, here is a graph of the American Trucking Association's index for January, which was reported this week:
The graph shows that trucking loads have increased 2/3's of the way from their recession bottom to their pre-recession top, and are now virtually equal to where they were in January 2007, the last January before the recession began. The American Trucking Association noted that this "gain boosted the SA index ... to ... its highest level since September 2008."
One leading Doomer at Daily Kos was sure that the GDP report for 4Q 2009 would be revised, and he was right - just not in the direction he thought: it was revised upward 0.2% to 5.9% annualized. If this revision holds up, we only need Q1 2010 GDP to be +0.5% for YoY GDP to be 2.0%, and if Q1 2010 GDP is +2.5%, the YoY GDP will also be +2.5%, which strongly supports at least some job growth.
Turning to the high-frequency weekly numbers, the ICSC same store retail sales for the week ending February 20 increased 4 0% YoY and 2.3% WoW. Similarly, ShopperTrak "reported that year-over-year GAFO retail sales increased 6.2 percent for the week ending Feb. 20 while sales rose 4.4 percent versus the previous week ending Feb. 13," saying:
Sales reached a seasonal peak as Valentine’s and President’s Day spending spurred shopping early in the week providing both a year-over-year and week-over-week boost. Additionally, ShopperTrak reported GAFO sales levels increased last week as the Eastern markets recovered from blizzard like conditions and consumers dug out to visit various retail locations and spend.This week, at least, points to a better real retail sales report for February, but we will see in a few weeks.
If truck traffic was increasing briskly, rail traffic was more mixed, as cyclical, intermodal, and total traffic remained up year over year, but cyclical traffic declined compared with last week. Baseline traffic is again below where it was a year ago, a real conundrum.
Gasoline demand last week was up from a year ago, the first YoY increase this year. Prices at the pump increased to $2.66/gallon. Oil on Friday was just below $80/barrel.
The Daily Treasury Statement for February 24, 2010 showed $129.7B in withholding taxes paid this month vs. $126.0 for the same date last year. February 2009 ended with $142.9B paid. We have two more days of reporting this year (vs. three last year), so the jury is out as to whether this month will show an actual YoY increase for the first time since a year into the Recession.
Finally, following my blog Tuesday, Tim Iacono of The Mess that Greenspan Made updated his CS-CPI graph, and here it is:
Will consumers drag down the economy, or will the economy pull up consumers? My bet is on the second: as several bloggers noted this week, developing economies, in particular in Asia, are leading the recovery. The average American consumer is no longer the locomotive, but the caboose.
P.S.: This week, this blog posted its 4,000th entry. Thanks to all who read and comment!