Friday, August 2, 2013

... And in other economic news

- by New Deal democrat

While the July jobs report was the big news this morning, in the last couple of days we've had some other significant economic releases that are worth noting.

A number of short leading indicators have been quite positive. First of all, the ISM manufacturing index came in a 55.4. The new orders component of that index was even higher at 58.3. There has never been an economic contraction at these readings. Ever.

First time jobless claims came in close to their post-recession unadjusted lows. Similarly, there has never been a recession within 2 1/2 months of such a reading.

July auto sales declined slightly from 15.9 million annualized to 15.7 million annualized. This is still the second highest reading since 2008. Auto sales typically turn negative about half a year before any economic contraction, and are typically down at least 10% from their peak at that time. This suggests that the remainder of 2013 will continue to show expansion.

Finally, personal income increased 0.3%, probably 0.1% in real terms. Spending increased 0.5%. Not surprisingly, the savings rate declined 0.2% to 4.2%. June's income and spending were both revised down -0.1%. The savings rate has risen from its post-recession low in January of 3.3%. The consumer is still powering the economic expansion, but an increasing trend in the savings rate, while necessary, acts as a brake on that expansion.

Depending on what happens in the ongoing fiscal showdowns in Washington, the rest of 2013 looks clear. The jury is out on 2014.