Saturday, December 24, 2011

Weekly Indicators: turbocharging Santa's sleigh edition

- by New Deal democrat

The only poor news reported this week was in the rear-view mirror, where the final revision showed 3Q GDP to be even weaker than previously thought at +1.8%. Monthly data was strong, as housing permits and starts were the strongest in 3 years leaving aside the month when the $8000 housing credit expired. Consumer sentiment rebounded further and has now made up nearly all of its debt debacle induced slide. Durable goods also came in stronger than expected. Existing home sales improved from the month before. New home sales improved as per expectations. Personal income and saving were up slightly. The LEI were reported up +.5.

This week, the high frequency weekly indicators lit an afterburner for a closing kick to the year, as they were all either strongly positive or at least neutral. They are at the point where holiday seasonality strongly affects their week over week performance. I again remind new readers that my "Weekly Indicators" column is not designed to be a big picture forecast of the future, but rather by use of high frequency data to capture an up-to-the-minute snapshot of the economy as it is right now.

Perhaps the strongest kick came from rail traffic, which has been on the rebound for months. This week it delivered the best comparison in years. The American Association of Railroads reported that total carloads increased 9.2% YoY, up about 45,300 carloads YoY to 538,000. Intermodal traffic (a proxy for imports and exports) was up 13,200 carloads, or 6.0% YoY. The remaining baseline plus cyclical traffic increased 31,800 carloads or 11.7% YoY.

Turning to jobs, adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that withholding for the first 15 days of December stood at $114.4 B vs. $109.9 B a year ago for a gain of 4.5 B. For the last 20 reporting days, $148.1 B was collected vs. $139.1 B a year ago, a gain of $9.0 B or +6.5%. This is a marked and welcome contrast with last week's YoY -1.1% loss.

The BLS reported that Initial jobless claims declined by 2,000 to 364,000. This is the lowest figure in over 3 1/2 years. The four week average declined by 7500 to 380,250. Take both of these with grains of salt since this is the third week where year-end seasonality is significant. Even if the numbers are slightly overcompensating for seasonal factors,however, the trend is excellent.

The American Staffing Association Index remained at 92 last week. This series will plummet in the next couple of weeks due entirely to seasonality. It is still slightly below last year's levels, after stagnating earlier this year.

Turning next to housing, for the fourth week in a row, YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker were positive, up +1.3% YoY. The areas with YoY% increases in price remained at 25, just two short of 1/2 of all areas. The number of areas with greater than 10% YoY declines increased by 1 to 2 due to an apparent glitch in the December 2010 data for New Orleans.

The Mortgage Bankers' Association reported that seasonally adjusted purchase mortgage applications decreased -6.9% last week, continuing its decline from one week before. On a YoY basis, purchase applications were down -4.9%. The actual reading remains firmly within the range that purchase mortgage applications have been in since May 2010. Refinancing fell -6.9% w/w.

Retail same store sales were tepid to good. The ICSC reported that same store sales for the week ending December 17 increased a strong 4.6% YoY, and were also up 3.4% week over week. Shoppertrak reported that YoY sales increased 1.3% YoY and reversed last week's big decline, with a 21.7% gain. Johnson and Redbook reported a 3.4% YoY gain.

Weekly BAA commercial bond rates decreased .10% to 5.20%. Yields on 10 year treasury bonds also fell .10% 1.94%. For the last month before this week, spreads widened again, representing increasing weakness.

Money supply has been generally flat since its Euro crisis induced tsunami of several months ago. M1 decreased -0.1% last week, and was unchanged month over month. It is now up 17.7% YoY, so Real M1 remains up 14.3%. This is about 7% under its peak YoY gain several months ago. M2 was up +0.3% w/w but also unchanged 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 $99.24 a barrel on Thursday. This slightly above the recession-trigger level calculated by analyst Steve Kopits. Gas at the pump fell $.06 a gallon to $3.23. Measured this way, we are just about at the 2008 recession trigger level. Gasoline usage, at 8879 M gallons vs. 9213 M a year ago, was off -3.6%. The 4 week moving average is off -4.7%. Since March the YoY comparisons have been almost uniformly negative, and substantially so since July.

This week's data put a turbocharger on Santa's sleigh, with several reports giving the best reading in over 3 years, and others at least moving forward slowly but smoothly. Even Oil, while always a concern, left a little extra change in consumers' pockets compared with the last 11 months.

Have a Merry Christmas or at least a nice long weekend!