Saturday, December 31, 2011

Weekly Indicators: 2011 ends with a bang edition

- by New Deal democrat

Monthly data ended 2011 on a mixed note. The Case Shiller home index for October showed further declines in home sale prices, while consumer confidence has now regained virtually all the ground it lost during the debt ceiling debacle in July. Meanwhile, some of the high frequency weekly indicators continue to be affected by seasonality, but almost all ended 2011 with good showings.

Turning first to jobs, all three weekly indicators were good:

The BLS reported that Initial jobless claims rose by 17,000 to 381,000. The four week average declined by 5250 to 375,000, the lowest level in 3 1/2 years. Seasonality is still significant, so extra caution is warranted, but even if the numbers are slightly overcompensating for seasonal factors, the trend remains very good.

The American Staffing Association Index rose by one to 93 last week. This series will plummet in the next couple of weeks due entirely to seasonality. It is now equal to last year's levels, after stagnating earlier this year.

Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that withholding for the first 19 days of December stood at $144.2 B vs. $143.7B a year ago for a gain of $0.5 B. For the last 20 reporting days, $151.8 B was collected vs. $147.0 B a year ago, a gain of $4.8 B or +3.3%.

Housing continued to show promise:

For the fifth week in a row, YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker were positive, up +1.7% YoY. For the first time, an absolute majority of metro areas -- 29 -- had YoY price increases. Chicago remained the only area with a 10% YoY price decrease.

The Mortgage Bankers' Association did not report this week. Reports will resume next week.

Retail same store sales continued their year-long strength, and also reflected seasonal swings. The ICSC reported that same store sales for the week ending December 24 increased 4.5% YoY, and were also up 0.9% week over week. Shoppertrak reported that YoY sales increased 14.8% YoY and were also up 37.8% week over week (no, those are not misprints).

The biggest bang of all was rail traffic. The American Association of Railroads reported that total carloads increased 16.4% YoY, up about 71,200 carloads YoY to 505,100. Intermodal traffic (a proxy for imports and exports) was up 40,700 carloads, or 22.9% YoY. The remaining baseline plus cyclical traffic increased 30,500 carloads or 11.9% YoY. Total rail traffic has staged an impressive rebound in the last 3 months.

Several sectors gave mixed readings:

Money supply has been flat or down since its Euro crisis induced tsunami of several months ago. M1 was flat last week, and declined -0.1% month over month. It is now up 17.5% YoY, so Real M1 remains up 14.1%. This is about 7% under its peak YoY gain several months ago. M2 fell -0.1% w/w but was up +0.4% month over month. It remains up 9.7% YoY, so Real M2 was up 6.3%. This is also significantly less than its YoY reading at the crest of the tsunami.

Oil closed at $99.11 a barrel on Friday. This slightly above the recession-trigger level calculated by analyst Steve Kopits. Gas at the pump rose $.03 a gallon to $3.26. Measured this way, we are just about at the 2008 recession trigger level. Gasoline usage, at 8923 M gallons vs. 9399 M a year ago, was off -5.1%. The 4 week moving average is off -5.6%. Since March the YoY comparisons have been almost uniformly negative, and substantially so since July.

Only credit spreads showed continued weakness. Weekly BAA commercial bond rates increased .04% to 5.24%. Yields on 10 year treasury bonds increased rose .01% 1.95%. Spreads continue to widen, representing increasing weakness.

In 2011, the weekly mark-to-reality approach of the high frequency indicators continued to reap benefits. Initial signs of a growth slowdown started to appear in February, and continued throughout the spring and summer, reaching a climax with actual contraction in many parts of the economy in August and September. Since that time, there has been a sustained and gathering re-acceleration of growth. Throughout the year, consumers dipped into the savings they had accumulated during the recession and so sales remained uniformly positive. Meanwhile, they appeared to embrace a sustained approach to conserving energy, as gasoline usage showed a significant and continuing decline from prior years' levels.

Have a happy and safe new year!