tag:blogger.com,1999:blog-23014297864274996872024-03-18T11:28:17.462-05:00The Bonddad BlogStill nerdy after all these yearsAnonymoushttp://www.blogger.com/profile/07993720456025396144noreply@blogger.comBlogger11617125tag:blogger.com,1999:blog-2301429786427499687.post-20573386764674909432024-03-18T11:27:00.002-05:002024-03-18T11:27:34.474-05:00Manufacturing and construction vs. the still-inverted yield curve<p> </p><p> <i>- by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Prof. Menzie Chinn at Econbrowser makes the point that the yield curve is still inverted, and has not yet eclipsed the longest previous time between onset of such an inversion and a recession. So he believes the threat of recession is still on the table.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">And he’s correct about the yield curve, although it is getting very long in the tooth. In the past half century, the shortest time between a 10 minus 2 year inversion (blue in the graph below) to recession has been 10 months (1980) and the longest 22 months (2007). For the 10 year minus 3 month inversion (red), the shortest time has been 8 months (1980 and 2001) and the longest has been 17 months (2007):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhl_rbxLim6hiPz_CIgr8PDcXEBJAOkc9yi8ZHFKT_KJiDIQB-Hdm6swcNlaIHYC3IaVqrWbQo_1gVRwkKoogABpUYgwGHeTuNbknIzcKu6gvHVAnJ47wFGDC0v7A4R-onRNalLjPSBKf76U1g_Qj1XtK6D1vne0g1O-ryA2a_moNtfm59barH37cL9nSNj/s1916/0F399A1C-7368-4A9E-A342-9E1C3082D625.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="815" data-original-width="1916" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhl_rbxLim6hiPz_CIgr8PDcXEBJAOkc9yi8ZHFKT_KJiDIQB-Hdm6swcNlaIHYC3IaVqrWbQo_1gVRwkKoogABpUYgwGHeTuNbknIzcKu6gvHVAnJ47wFGDC0v7A4R-onRNalLjPSBKf76U1g_Qj1XtK6D1vne0g1O-ryA2a_moNtfm59barH37cL9nSNj/w400-h170/0F399A1C-7368-4A9E-A342-9E1C3082D625.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">At present the former yield curve has been inverted for 20.5 months, and the latter for 16.5 months. So if there is no recession by May 1, we’re in uncharted territory as far as the yield curve indicator is concerned.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">My view for the past half year or so has been much more cautious. While there has been nearly unprecedented Fed tightening (only the 1980-81 tightening was more severe), on the other hand there was massive pandemic stimulus, and what I described on some occasions as a “hurricane force tailwind” of supply chain unkinking. If the two positive forces have abated, does the negative force of the Fed tightening, which is still in place, now take precedence? Or because interest rates have plateaued in the past year, is it too something of a spent force? Since I confess not to know, because the situation is unprecedented in the modern era for which most data is available, I have highlighted turning to the short leading metrics. Do they remain steady or improve? Or do they deteriorate as they have before prior recessions?</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">First of all, let me show the NY Fed’s Global Supply Chain Index, which attempts to disaggregate supply sided information from demand side information. A positive value shows relative tightening, a negative loosening:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4KTH278mxCr_yywp0O13QeXE5JKr3Luxt0MIyICbLBw5-A1yTa4wsy0aK2lNu5G3NWL6RXEh4HgmGD5u4piMizIX0Mnab-OSkbWXUWRBKnqskLKs_UC_A4hshTiNPjrsy38HEQwraTtspV6VjgJVXchNVkhjRZYM7CD2IdbJcycrngybkqYDiOEQ8eiAI/s1944/DADD2FAB-396E-438F-97EA-595B35FF612B.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="772" data-original-width="1944" height="159" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4KTH278mxCr_yywp0O13QeXE5JKr3Luxt0MIyICbLBw5-A1yTa4wsy0aK2lNu5G3NWL6RXEh4HgmGD5u4piMizIX0Mnab-OSkbWXUWRBKnqskLKs_UC_A4hshTiNPjrsy38HEQwraTtspV6VjgJVXchNVkhjRZYM7CD2IdbJcycrngybkqYDiOEQ8eiAI/w400-h159/DADD2FAB-396E-438F-97EA-595B35FF612B.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">You can see the huge pandemic tightening in 2020 into 2022, followed by a similarly large loosening through 2023. For the past few months, the Index has been close to neutral, or shown very slight tightness.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Typically in the past Fed tightenings have operated through two main channels: housing and manufacturing, especially durable goods manufacturing.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Let’s take the two in reverse order.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Manufacturing has at very least stalled, and by some measures turned down to recessionary levels. Last week I discussed industrial production (not shown), which peaked in late 2022 and has continued to trend sideways to slightly negative right through February.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">A very good harbinger with a record going back 75 years has been the ISM manufacturing index. Here’s its historical record through about 10 years ago (when FRED discontinued publishing it):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivU74SrGtze5bNFQvsXlN4SIv3TJETWPsgBL_Z-65XOSwEZR0GjPDlvLHd2QcnXReuzD59e4hi3lU28zhUG_3KjszHvIjlklNjRJGYt9zEFnSCA63An_oYj35mY4ffGxSihKt3Pv9tdbvHYCgEjgj2GSuvnGfE4XUUwDLjdBlexv_lTHs7rOCbsgqt0GC9/s630/8B27CA13-FD10-47AB-91B2-2B4C10A59864.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="378" data-original-width="630" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivU74SrGtze5bNFQvsXlN4SIv3TJETWPsgBL_Z-65XOSwEZR0GjPDlvLHd2QcnXReuzD59e4hi3lU28zhUG_3KjszHvIjlklNjRJGYt9zEFnSCA63An_oYj35mY4ffGxSihKt3Pv9tdbvHYCgEjgj2GSuvnGfE4XUUwDLjdBlexv_lTHs7rOCbsgqt0GC9/w400-h240/8B27CA13-FD10-47AB-91B2-2B4C10A59864.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">And here is its record for the past several years:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYHfLSIvYSTnQL662r6yl5Ix1Ta1kvI0_9Xe1vgo3e8RyjBRQhjM0A6HPN-zWylbrSv7evvzKYUatfB2yA9JxlQ_b2iuUhyphenhyphene6NQe3mkySvJyTGDCNBryAikw7vfwB1d0tGN6k7f_cWbiI5Vupa9N4uyiJiSw9zXJZeboDyuj_sBTLKgZnpmD0e3ynVEyiT/s782/73B93064-0522-4D7A-8CE5-167CD2767A13.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="474" data-original-width="782" height="243" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjYHfLSIvYSTnQL662r6yl5Ix1Ta1kvI0_9Xe1vgo3e8RyjBRQhjM0A6HPN-zWylbrSv7evvzKYUatfB2yA9JxlQ_b2iuUhyphenhyphene6NQe3mkySvJyTGDCNBryAikw7vfwB1d0tGN6k7f_cWbiI5Vupa9N4uyiJiSw9zXJZeboDyuj_sBTLKgZnpmD0e3ynVEyiT/w400-h243/73B93064-0522-4D7A-8CE5-167CD2767A13.gif" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">This index was frankly recessionary for almost all of last year. It is still negative, although not so much as before.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Two other metrics with lengthy records are the average hourly workweek in manufacturing (blue, right scale), which is one of the 10 “official” leading indicators, as well as real spending on durable goods (red, measured YoY for ease of comparison, left scale):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRVOjl4KhfDK9mjJG4JHacsotDrJmdpICfEzUce3NLMCYfzBesaTeW5IpKARiQc1eWKm3456zwazEx0JAVp417gfuemzP4a_qhw-Rmws92fVkxthSD1pnK6MSTzeGsYmiZ9Mc3ZAgWpRxN-TW2X3onJKGBkiOLDQEHD0-ZBvIcEfpRkpXNH18bKGd6Zwb3/s1907/C8B365C8-B130-4FD4-B4D3-091AB519E2DE.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="825" data-original-width="1907" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRVOjl4KhfDK9mjJG4JHacsotDrJmdpICfEzUce3NLMCYfzBesaTeW5IpKARiQc1eWKm3456zwazEx0JAVp417gfuemzP4a_qhw-Rmws92fVkxthSD1pnK6MSTzeGsYmiZ9Mc3ZAgWpRxN-TW2X3onJKGBkiOLDQEHD0-ZBvIcEfpRkpXNH18bKGd6Zwb3/w400-h173/C8B365C8-B130-4FD4-B4D3-091AB519E2DE.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">As a general rule, if real spending on durable goods turns negative YoY for more than an isolated month, a recession has started (with the peak in absolute terms coming before). Also, since employers generally cut hours before cutting jobs, a decline of about 0.8% of an hour in the average manufacturing workweek has typically preceded a recession - with the caveat in modern times that it must fall to at least roughly 40.5 hours:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEge3kWkbBqYs8lXvhN5RB5sn_iaeMMcpRFLB0J0OPRvHFxRlEsYT0UwXUl8JYibq594ZkkIJZ271QGqbSB08Hgky2RlWtG3VqjGqy1zJ-QxFTUHXthVp1d7h8Tr4bNUGnGfHDJOIWwrv-Er_oI1EgM0KJvrkuDQjOmcBu7UgYlpmGXWXuACNw50NL5fzm_4/s1907/5420A0EE-5DA9-44DF-9D92-C2271F4C7BF4.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="1907" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEge3kWkbBqYs8lXvhN5RB5sn_iaeMMcpRFLB0J0OPRvHFxRlEsYT0UwXUl8JYibq594ZkkIJZ271QGqbSB08Hgky2RlWtG3VqjGqy1zJ-QxFTUHXthVp1d7h8Tr4bNUGnGfHDJOIWwrv-Er_oI1EgM0KJvrkuDQjOmcBu7UgYlpmGXWXuACNw50NL5fzm_4/w400-h171/5420A0EE-5DA9-44DF-9D92-C2271F4C7BF4.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The average manufacturing workweek has met the former criteria for the last 9 months, and the latter since November. By contrast, real spending on durable goods was up 0.7% YoY as of the last report for January, and in December had made an all-time record high.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">But if some of the manufacturing data has met the historical criteria for a recession warning, it is important to note that manufacturing is less of US GDP than before the year 2000, and had been down more in 2015-16 without a recession occurring.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Further, housing construction has not meaningfully constricted at all. The below graph shows the leading metric of housing permits (another “official” component of the LEI, right scale), together with housing units under construction (gold, *1.2 for scale, right scale), and also real GDP q/q (red, left scale):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFeRUBU-AXa9EF1XiVgSSOM1VyqqngmdtfVAeE6ZYJhrQKg0-qgI1cwmACvnP85aGegVfiKi8_snpq5jR6iYBvnwR-cUXVYJzdQ2VIV3195KuRN4ikPC9-RVEJT8H_lFxLsqGqRF8Xh8kAnI-0MJn1XJvmNe3NSjct3AD-gGdlY66d9sNQJY13IJanE8Ma/s1908/CC8D167A-55DB-4A5F-9E48-38996B174BB5.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="822" data-original-width="1908" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFeRUBU-AXa9EF1XiVgSSOM1VyqqngmdtfVAeE6ZYJhrQKg0-qgI1cwmACvnP85aGegVfiKi8_snpq5jR6iYBvnwR-cUXVYJzdQ2VIV3195KuRN4ikPC9-RVEJT8H_lFxLsqGqRF8Xh8kAnI-0MJn1XJvmNe3NSjct3AD-gGdlY66d9sNQJY13IJanE8Ma/w400-h173/CC8D167A-55DB-4A5F-9E48-38996B174BB5.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Housing permits declined -30% after the Fed began tightening, which has normally been enough to trigger a recession. *BUT* the actual measure of economic activity, housing units under construction, has barely turned down at all. In comparison to past downturns, where typically it had fallen at least 10%, and more often 20%, before a recession had begun, as of last month it was only 2% off peak!</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The only other two occasions where housing permits declined comparably with no recession ensuing - 1966 and 1986 - real gross domestic product increased robustly. This was similarly the case in 2023.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">An important reason is the other historical reason proppin up expansions: stimulative government spending. Here’s the historical record comparing fiscal surpluses vs. deficits:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgK56LYE2XF2-bewPRrHpaZbnASbRbo-8Lay6MdYzFUaOljmxL4vRRBXvcqkVg6xfzGspkiI6-nY2lVLXstb14XyZfeI2y0euVEggdO87Xmm-FgtBTPnj6GIarb1z5dDIeDf6f_Q7QQVI2H-DrtR-eE_EBJDS6n38dQRsX2ZY6iLb8OOcUBxy-wSpJ9fbO7/s1919/80E24CC6-A12F-452C-BE04-5B1F0918F7F5.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="821" data-original-width="1919" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgK56LYE2XF2-bewPRrHpaZbnASbRbo-8Lay6MdYzFUaOljmxL4vRRBXvcqkVg6xfzGspkiI6-nY2lVLXstb14XyZfeI2y0euVEggdO87Xmm-FgtBTPnj6GIarb1z5dDIeDf6f_Q7QQVI2H-DrtR-eE_EBJDS6n38dQRsX2ZY6iLb8OOcUBxy-wSpJ9fbO7/w400-h171/80E24CC6-A12F-452C-BE04-5B1F0918F7F5.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Note the abrupt end of stimulative spending in 1937, normally thought to have been the prime driver of the steep 1938 recession. Note also the big “Great Society” stimulative spending in 1966-68, when a downturn was averted (indeed, although not shown in the first graph above, there was an inverted yield curve then as well). Needless to say, there as been a great deal of stimulative fiscal spending since 2020 as well.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Fed tightening typically works by constricting demand. Both government stimulus and the unkinking of supply chains work to stimulate supply. </div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">All of which leads to the conclusion that, while manufacturing has reacted to the tightening, the *real* measure of construction activity has not, or not sufficiently to be recessionary.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Tomorrow housing permits, starts, and units under construction will all be updated. Unless there is a sharp decline in units under construction, there is no short term recession signal at all.</div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-69560608408082331122024-03-16T07:43:00.003-05:002024-03-16T07:43:37.779-05:00Weekly Indicators for March 11 - 15 at Seeking Alpha<p> </p><p> -<i> by New Deal democrat</i></p><p><br /></p><p>My “Weekly Indicators” post is <a href="https://seekingalpha.com/article/4678617-weekly-indicators-treading-water" target="_blank">up at Seeking Alpha</a>.</p><p>Not a lot of movement in any indicator this week. The long leading background, even after all this time, still tilts negative even though “less bad.” And the shorter term data continues mixed, as some sectors are very positive, and a few are very negative.</p><p>As usual, clicking over and reading will bring you up to the virtual moment on the economy, and bring me a little lunch money for my efforts.</p>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-54769767172292298732024-03-15T11:03:00.002-05:002024-03-15T11:41:21.114-05:00Industrial and manufacturing production improve for the month, but 16+ month fading trend continues<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;">Industrial production is an indicator that has faded somewhat in importance in the modern era since China’s accession to normal trading status in 2000. Before that, a downturn in production was an excellent coincident indicator for a general downturn in the economy. Since then there have been several downturns, most importantly during 2015-16, when the broader economy, most notably housing and the consumer, did not follow. That was again the case of the downturn in 2023 - which has not resolved yet.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;">This morning’s report was another case of good news and bad news. The good news is that industrial production rose 0.1% for the month, and manufacturing production rose 0.8% from downwardly revised January numbers:</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7j3ZZFf7U3ZQocO-AwgaVWzOK6X2bIwfIympH7amUO8UIeQagUWVjWu15X7boRfqx6QprQzxgLvRojg2r78b9eoNt28A1fLuzs5OiT7FFxnxrU1iN8QpAgpWjzM1R_GnpLgjW068was_Ulb1H0GTGMs1ibOw7nFOrwHDrWFUeV_t0pOQvDg0XXByZdPYn/s1907/D1148BA3-2DA7-4B98-813A-9CCCA5A343B4.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="822" data-original-width="1907" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7j3ZZFf7U3ZQocO-AwgaVWzOK6X2bIwfIympH7amUO8UIeQagUWVjWu15X7boRfqx6QprQzxgLvRojg2r78b9eoNt28A1fLuzs5OiT7FFxnxrU1iN8QpAgpWjzM1R_GnpLgjW068was_Ulb1H0GTGMs1ibOw7nFOrwHDrWFUeV_t0pOQvDg0XXByZdPYn/w400-h173/D1148BA3-2DA7-4B98-813A-9CCCA5A343B4.jpeg" width="400" /></a></div><br /><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;">The bad news is that both remain down YoY, by -0.3% and -0.2% respectively (which, note, is not as bad a YoY comparison as either 2015-16 or 6 to 12 months ago), and both remain down from their respective peaks of September and October 2022. Here’s the YoY view:</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJBLTHnJINlhoSmItyYG2Ks5_fGDpJd0yx9_40k7i_6toeCEAVCFR8pys303bpIjpTd2ZfwZhLG7RcPu9ofeFNsD9NmIV3JeBTtm8sxgcgtrIUDnJlht1aAfCDfV3vY6lcDPJL-7cR9g0m6Is4LzbR31S-LV6OPXV1VefmUqWhNa3sA0jRr-gZdVVnKyyr/s1903/7F76703C-1662-43F5-A7AC-51DC8A923317.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="819" data-original-width="1903" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJBLTHnJINlhoSmItyYG2Ks5_fGDpJd0yx9_40k7i_6toeCEAVCFR8pys303bpIjpTd2ZfwZhLG7RcPu9ofeFNsD9NmIV3JeBTtm8sxgcgtrIUDnJlht1aAfCDfV3vY6lcDPJL-7cR9g0m6Is4LzbR31S-LV6OPXV1VefmUqWhNa3sA0jRr-gZdVVnKyyr/w400-h173/7F76703C-1662-43F5-A7AC-51DC8A923317.jpeg" width="400" /></a></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;">In fact, the general trend over the past half year appears to be a further slight fade from a secondary peak in the summer of 2023.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;">This is, needless to say, particularly unwelcome in view of yesterday’s poor real retail sales report. If both manufacturing and the consumer are stallling out, that is not good. It will heighten the importance of this month’s report on personal spending, to see how well the broader measure of real spending on goods in particular is holding up.</div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-82096433189361164082024-03-14T08:52:00.006-05:002024-03-14T08:53:50.971-05:00Good news and bad news Thursday: the bad news is real retail sales<p> </p><p> <i>- by New Deal democrat</i></p><p><br /></p><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The bad economic news this morning was that after taking into account inflation, retail sales, which rose 0.6% nominally, were only up 0.2%, and last month’s number, which I described as making a “face-plant,” was revised down a further -0.3% to -1.1%.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">In other words, the net result was that real retails sales were -0.1% worse than last month’s poor result as initially reported.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Which is bad enough. But it means that the last two months are the worst post-pandemic numbers in almost three years. Below I show them in comparison with real personal consumption on goods, the similar metric from the personal income and spending report, normed to 100 as of just before the pandemic:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1vJokQhW-vxd_fgOh_59BXQy4-JnxzneeDRRuGFevquDik50lE930YQsvnNv0dewUlcaT8MF_RFoc3MpCq1pZN-pKTydmTpMdxJxLRaaSsxU59Yj_uNa_oJhdHN1UVOb1HhY9xL67kwDTLsAwhNbWsjhslXodMMIrKtWlXZUzTcAOqRWd28hyphenhyphenkjzhcgm1/s1907/84DD43EA-BDFE-4705-A727-7D9CA4BDC97E.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="835" data-original-width="1907" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1vJokQhW-vxd_fgOh_59BXQy4-JnxzneeDRRuGFevquDik50lE930YQsvnNv0dewUlcaT8MF_RFoc3MpCq1pZN-pKTydmTpMdxJxLRaaSsxU59Yj_uNa_oJhdHN1UVOb1HhY9xL67kwDTLsAwhNbWsjhslXodMMIrKtWlXZUzTcAOqRWd28hyphenhyphenkjzhcgm1/w400-h175/84DD43EA-BDFE-4705-A727-7D9CA4BDC97E.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">I included the second number above because real retail sales and real personal spending on goods tend to track one another fairly closely over time, and both (/2) tend to forecast the trend in nonfarm payrolls. What has been compellling over the past half year is the marked divergence between the two spending measures, as retail sales have declined, while real personal spending has continued to increase.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"> Here’s the record of both compared with jobs going back 15 years measured YoY:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcYBY30-AiK8mvqpPaaaVl5TacMaO17kSCx9tY62B930-iHtT4EziFxslJKPlL1C-4fjOMfUNfLBmVWJyHBXPvGLZqxDCY2nlKijuOILMcrrkVHBW9uhnIucP2x3nxBtP8kQmd4ocCgpu3mOzKo5hhkl0VaJiCMRIFHIauFqVgAk4iSOcH55DCxs5lWvhE/s1900/AA52F337-248F-461A-AF9D-F97FE971BC79.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="833" data-original-width="1900" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgcYBY30-AiK8mvqpPaaaVl5TacMaO17kSCx9tY62B930-iHtT4EziFxslJKPlL1C-4fjOMfUNfLBmVWJyHBXPvGLZqxDCY2nlKijuOILMcrrkVHBW9uhnIucP2x3nxBtP8kQmd4ocCgpu3mOzKo5hhkl0VaJiCMRIFHIauFqVgAk4iSOcH55DCxs5lWvhE/w400-h175/AA52F337-248F-461A-AF9D-F97FE971BC79.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;">On that same YoY basis now, real retail sales (blue) are down -1.6%, after a revised -2.0% in January, meaning a (noisy!) trend forecast of a YoY decline in jobs of over -0.5%, vs. the real personal spending forecast of roughly a 1% gain: </span></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto; background-color: white;"><br /></span></span></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="color: #333333;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6J_DOqpqd1FTRrOWvBuSqhv5tn4eByODowV8ZSipZRn4DYigGcc2wZGFqRIPHaoMq_7WgNXucv7HSPZEbsLxoYHCyHbS43dzfr-d6-CFnQDYOQN_i95pJ5QGsHWg50waiFU-08i1fiPXcPR_VGS3Apy9suv_Jcb0wTjgt-EpjMy27AeD5t4KpPx75gvDw/s1911/9DB5A643-CFBC-4222-B01C-1C063A7D479C.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="837" data-original-width="1911" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg6J_DOqpqd1FTRrOWvBuSqhv5tn4eByODowV8ZSipZRn4DYigGcc2wZGFqRIPHaoMq_7WgNXucv7HSPZEbsLxoYHCyHbS43dzfr-d6-CFnQDYOQN_i95pJ5QGsHWg50waiFU-08i1fiPXcPR_VGS3Apy9suv_Jcb0wTjgt-EpjMy27AeD5t4KpPx75gvDw/w400-h175/9DB5A643-CFBC-4222-B01C-1C063A7D479C.jpeg" width="400" /></a></div><br /></span><div><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto; background-color: white;"><br /></span></span></div><div><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;">Usually in the past (as, going back almost 75 years) such a decline in real retail sales has meant recession - but not in the last 18 months. I continue to expect the unusual large divergence between the two spending measures to resolve, hopefully in the direction of real personal</span><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;"> spending.</span></div><div><div dir="ltr" id="AppleMailSignature"><br /></div></div></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-37895149467753437722024-03-14T08:27:00.003-05:002024-03-14T08:29:58.510-05:00Good news and bad news Thursday: the good news is jobless claims . . .<p> </p><p> -<i> by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">This morning brought us both good and bad economic news.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The good news was that initial jobless claims continue very low, at 209,000, down -1,000 from last week, while the four week average declined -500 to 208,000. Even better, after major downward revisions, continuing claims rose 17,000 to 1.811 million:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgK34y8VhJt9JCyH7m9FHhCGhalkoRW-K_NNghR05963NSP8jiwCREcQNXbQpusjlqbUokLrOkVBc0HCms584ir5_MXZ2VwpFElAoxb40zV2liuwVnjrQlT-PbzElhAJvkvigMDv7pgxqVBaNdrrbPYKidqHgj_gXWOHdu14PfrRaYWOUTiDidy5gk42ZtZ/s1908/7CDFA6BD-3A68-455B-A677-6111EE26E035.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="833" data-original-width="1908" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgK34y8VhJt9JCyH7m9FHhCGhalkoRW-K_NNghR05963NSP8jiwCREcQNXbQpusjlqbUokLrOkVBc0HCms584ir5_MXZ2VwpFElAoxb40zV2liuwVnjrQlT-PbzElhAJvkvigMDv7pgxqVBaNdrrbPYKidqHgj_gXWOHdu14PfrRaYWOUTiDidy5gk42ZtZ/w400-h175/7CDFA6BD-3A68-455B-A677-6111EE26E035.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Recall that continuing claims had been reported over 1.900 million, so as I said above, this was major!</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">On the more important YoY basis for forecasting, initial claims are down -14.3%, the four week average down -7.2%, and continuing claims, which before revisions had been running at about 10% higher YoY, are now only up 2.2%:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6eik0zDV0CsM68hOmQgtRlnTW6umTd6Jkood2pqY6qT7eZeM2RK8pJ7kMXFtOB711_b5-eH0y-QlFE6r2xJPEL4ERhyphenhyphenkbquxPQMEJj-hq2rOQxNODxWerWSu0cZf4vz9ofMjilgxW-GRSd1aMTQx5HzPVwV9NlMM4N2UIr8j4OQawOf941I-QyfKMNOD4/s1902/EDEA2B6C-21B1-4FD9-B214-3E02A6A2A001.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="826" data-original-width="1902" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6eik0zDV0CsM68hOmQgtRlnTW6umTd6Jkood2pqY6qT7eZeM2RK8pJ7kMXFtOB711_b5-eH0y-QlFE6r2xJPEL4ERhyphenhyphenkbquxPQMEJj-hq2rOQxNODxWerWSu0cZf4vz9ofMjilgxW-GRSd1aMTQx5HzPVwV9NlMM4N2UIr8j4OQawOf941I-QyfKMNOD4/w400-h174/EDEA2B6C-21B1-4FD9-B214-3E02A6A2A001.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">This is all very positive for continued good employment numbers in the months ahead (but see my next post today!).</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Last week the unemployment number very much did NOT do what I expected, which was to remain steady or decline. Instead it rose to a new 2+ year high of 3.9%. I wondered whether, because unemployment includes both new and existing job losses, it followed continuing claims more than initial claims (although initial claims lead both).</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Here’s the long term pre-pandemic trend (divided into two parts for easier viewing)(continuing claims /8 for scale):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOLv114-B9fOwyEcFQHL2SidHyxFxyfUMmweujZ-c-G_5wQDrRwkPWzlui7aALHQJghU0CYYwBXHXrSrV5lmjUdDLYzYqDO9XLzCw_CfLdRp9-qbPUqDAcCxJqdD0IxpuKw59J-pm_-P2GEeFZfSTPxCfRzFgQfreJLNSU5Z4krKkib21Ysm16xHG782ge/s1913/A56B1EF8-FB08-4B49-AF39-1DC085F5D6B8.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="825" data-original-width="1913" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOLv114-B9fOwyEcFQHL2SidHyxFxyfUMmweujZ-c-G_5wQDrRwkPWzlui7aALHQJghU0CYYwBXHXrSrV5lmjUdDLYzYqDO9XLzCw_CfLdRp9-qbPUqDAcCxJqdD0IxpuKw59J-pm_-P2GEeFZfSTPxCfRzFgQfreJLNSU5Z4krKkib21Ysm16xHG782ge/w400-h173/A56B1EF8-FB08-4B49-AF39-1DC085F5D6B8.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4SoewvdVRpuE8SADMCq8zeBFVyw89UIjzVJRFwZLxIqHSQbLyXh7mSEbzxGr6xVsMpHZJJ-yScb4IWg-ov2wtHpMswx6MDj6HWK-AJLVPyveIfoGzj5As4TIJOMaAhgwJgnJRe1r7n68EQhMrOLMq94f5B4HHKfBFZ9NqyonYmuwgpf2PUHby8M75yJAd/s1904/525A3F3B-206E-4436-9591-E52722F8BF1F.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="815" data-original-width="1904" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4SoewvdVRpuE8SADMCq8zeBFVyw89UIjzVJRFwZLxIqHSQbLyXh7mSEbzxGr6xVsMpHZJJ-yScb4IWg-ov2wtHpMswx6MDj6HWK-AJLVPyveIfoGzj5As4TIJOMaAhgwJgnJRe1r7n68EQhMrOLMq94f5B4HHKfBFZ9NqyonYmuwgpf2PUHby8M75yJAd/w400-h171/525A3F3B-206E-4436-9591-E52722F8BF1F.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Historically, as I’ve always pointed out, initial claims lead both continuing claims and the unemployment rate. The above graph shows that continuing claims also lead the unemployment rate, although with much less of a lead time.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">So here is the post-pandemic record:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2JJc10f1WQMVHZzfVF1DvS7PZ1cIoeKa57EAoYAt_QHzvqOsMmymUnLsaDV4oUjn1gzYKuQOLgnMYdxxLnpyRGuMUHupnzq6J7YGYRzfPxw1VM0FfiqKAB1bmVecUPedr0KS8yhC34NSZktxya6P7Dhyphenhyphen3YusJwHiiF6Fi7x5Lk-5FgHgL7kKX5Stnvnj0/s1907/724D74A0-8622-45ED-BC00-64A00D372B44.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="833" data-original-width="1907" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2JJc10f1WQMVHZzfVF1DvS7PZ1cIoeKa57EAoYAt_QHzvqOsMmymUnLsaDV4oUjn1gzYKuQOLgnMYdxxLnpyRGuMUHupnzq6J7YGYRzfPxw1VM0FfiqKAB1bmVecUPedr0KS8yhC34NSZktxya6P7Dhyphenhyphen3YusJwHiiF6Fi7x5Lk-5FgHgL7kKX5Stnvnj0/w400-h175/724D74A0-8622-45ED-BC00-64A00D372B44.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The divergence between initial and continuing claims beginning this past autumn looks like it indeed has passed through into the unemployment rate. Since the historical record remains that initial claims lead continuing claims, and in the past three weeks (post revisions!) continuing claims have declined sharply, we’ll see how this shakes out after the full month of March.<br /><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-15822715518920109472024-03-13T08:57:00.003-05:002024-03-13T08:57:13.469-05:00The most potent labor market indicator of all is still strongly positive<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">On Monday I examined some series from last Friday’s Household survey in the jobs report, highlighting that they more frequently than not indicated a recession was near or underway. But I concluded by noting that this survey has historically been noisy, and I thought it would be resolved away this time. Specifically, there was strong contrary data from the Establishment survey, backed up by yesterday’s inflation report, to the contrary. Today I’ll examine that, looking at two other series.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Historically, as economic expansions progress and the unemployment rate goes down, average hourly wages for nonsupervisory workers improve at an increasing rate (blue in the graph below). But eventually, inflation (red) picks up and overtakes that wage growth, and a recession occurs shortly thereafter. Not always, as we’ll see in the graph below, but usually:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLa8uE5tbhDlhxQ0apkf-IPpg58U1eYH1S9vboSmFbprq07ThIxPbTeAoe29_hbUgsW3UQi15nmSLQMdlkyKpyp2yRUOYRu87mx9g7azUb7Yy_5YSYc1quA7k-ekitfeGnnYzskUjGvyscOkduGyqL15QR91UcenOZOYYcosGxZUx64juhyL-JlaG2rLob/s1908/C85883DF-FC48-4836-9336-FF03CA986B2F.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="825" data-original-width="1908" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLa8uE5tbhDlhxQ0apkf-IPpg58U1eYH1S9vboSmFbprq07ThIxPbTeAoe29_hbUgsW3UQi15nmSLQMdlkyKpyp2yRUOYRu87mx9g7azUb7Yy_5YSYc1quA7k-ekitfeGnnYzskUjGvyscOkduGyqL15QR91UcenOZOYYcosGxZUx64juhyL-JlaG2rLob/w400-h173/C85883DF-FC48-4836-9336-FF03CA986B2F.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><div><br /></div><div>As you can see, there have been a number of exceptions to the rule, chiefly where inflation outstripped wage growth, but no recession happened anyway. Typically this has occurred because of the entry of so many more people (like women in the 1980s and early 1990s) into the labor force.</div><div><br /></div><div>And we certainly see that inflation outstripped wages in 2022, not coincidentally when there were several negative quarters of real GDP. But with the decline in gas prices, in 2023 inflation subsided much more sharply than wage growth, and the economy improved more substantially. That has remained the case in the first two months of 2024.</div><div><br /></div><div>But an even more potent indicator is one I have come to rely on even more: real aggregate payrolls for nonsupervisory workers. Here’s its historical record up until the pandemic:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRerjvz-K5Em7PpZXIPL1YkyPaERnX0kN3t2ZaMYbkh1qgneUpSDwjf9FQAd9bJrb_ZxSXDaU0iSbp88mEa3BxQDZ06_wVaj0l5WjJKmLCrRO2kIB6DoX51Y2BfCTJ3Wn-buedDDXXu8wyKMxUb_Yu4zhfgmJAa_LQijiIof5afubnhyphenhyphenz553F8_ftGPgvf/s1914/6AC184A7-AE28-4BCE-A243-6387D848E0A0.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="814" data-original-width="1914" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhRerjvz-K5Em7PpZXIPL1YkyPaERnX0kN3t2ZaMYbkh1qgneUpSDwjf9FQAd9bJrb_ZxSXDaU0iSbp88mEa3BxQDZ06_wVaj0l5WjJKmLCrRO2kIB6DoX51Y2BfCTJ3Wn-buedDDXXu8wyKMxUb_Yu4zhfgmJAa_LQijiIof5afubnhyphenhyphenz553F8_ftGPgvf/w400-h170/6AC184A7-AE28-4BCE-A243-6387D848E0A0.jpeg" width="400" /></a></div><br /><div><br /></div><div>There’s not a single false positive, nor a single false negative. If YoY aggregate payroll growth is stronger than YoY inflation, you’re in an expansion. If it’s weaker, you’re in a recession. Period.</div><div><br /></div><div>And here is its record since the pandemic:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4JklaQFgCy3CSxfLxqjleSgXDezA0qLSzEI84VzT8XZRJ9f6OLU5q3jLzyAp46cBJF-tD-jUcr7WYLa2Pzfgf6XH2BXXdHGDpISbXspdi-HCSL36KvIBoERiNAdWPmOb68Y27apWQ5QSwjDpF2eAfU6MUI00iPRG3sPNNsOGy9tDYTJwclYjfrjt0DUwR/s1919/270636E8-D132-491D-A1E0-3038A27CE00F.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="828" data-original-width="1919" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh4JklaQFgCy3CSxfLxqjleSgXDezA0qLSzEI84VzT8XZRJ9f6OLU5q3jLzyAp46cBJF-tD-jUcr7WYLa2Pzfgf6XH2BXXdHGDpISbXspdi-HCSL36KvIBoERiNAdWPmOb68Y27apWQ5QSwjDpF2eAfU6MUI00iPRG3sPNNsOGy9tDYTJwclYjfrjt0DUwR/w400-h173/270636E8-D132-491D-A1E0-3038A27CE00F.jpeg" width="400" /></a></div><br /><div><br /></div><div>Real aggregate nonsurpervisory payrolls are positive, and they got more positive in 2023 compared with 2022. Currently they are 2.6% higher YoY than inflation.</div><div><br /></div><div>In addition to the YoY comparison, real aggregate nonsupervisory payrolls have always declined, at least slightly, from their expansion peaks before every single recession in the past 50 years except for when the pandemic suddenly shut down the economy:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmYrDCMVYMVBa9AB0CSMZbw_Tz6-j7uOOcp1hiOEPzwSb5BthYv5VAuEc4Nu5ytWJuXNe-28kPR-PaAqm-t-X9nawtHSy51RNjeEsBbGc8qU4we8xFcImwnVqwCb06c5DqF0VT0SAlVoSFy7-JwZc5lkz0B0TIkxO48XxavSDXpXwPavfmIK5Idv9RKlT3/s1915/CBFECE7E-0E66-49A0-9008-1E062D467F9D.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="826" data-original-width="1915" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmYrDCMVYMVBa9AB0CSMZbw_Tz6-j7uOOcp1hiOEPzwSb5BthYv5VAuEc4Nu5ytWJuXNe-28kPR-PaAqm-t-X9nawtHSy51RNjeEsBbGc8qU4we8xFcImwnVqwCb06c5DqF0VT0SAlVoSFy7-JwZc5lkz0B0TIkxO48XxavSDXpXwPavfmIK5Idv9RKlT3/w400-h173/CBFECE7E-0E66-49A0-9008-1E062D467F9D.jpeg" width="400" /></a></div><br /><div><br /></div><div>Not every slight decline means a recession is coming. But if real aggregate payrolls are at a new high, you’re not in a recession, and one isn’t likely to occur in the next 6 months, either.</div><div><br /></div><div>And in case it isn’t clear from that long term graph, here’s the short term graph of the same thing:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNZaWXiMhiKHOMmqeIjZ-VWRxSf_6cgKDVXtKe7TdlseOxHbZesOxK2QUT-jzqfdVO860j6lWNhEtY0tTVZz4u1jjQru782EaGwKAmJmzGLm4VNBRMRn8bbYyCTNxKiM9RlVjPGblQTcHn-ry5C15S9g-hjdbyN7-KdvE2xwtbE3zV-g8VnA5JF5USjUbs/s1906/0ADED54C-AE75-40D7-B227-58963D424A72.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="811" data-original-width="1906" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNZaWXiMhiKHOMmqeIjZ-VWRxSf_6cgKDVXtKe7TdlseOxHbZesOxK2QUT-jzqfdVO860j6lWNhEtY0tTVZz4u1jjQru782EaGwKAmJmzGLm4VNBRMRn8bbYyCTNxKiM9RlVjPGblQTcHn-ry5C15S9g-hjdbyN7-KdvE2xwtbE3zV-g8VnA5JF5USjUbs/w400-h170/0ADED54C-AE75-40D7-B227-58963D424A72.jpeg" width="400" /></a></div><br /><div><br /></div><div>Real aggregate nonsupervisory payrolls made a new all-time high in February. Despite the negative metrics in the Household survey, this is *very* potent evidence that not only are we not in a recession, but one isn’t likely in the immediate future either.</div><div><br /></div><div><br /></div></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-18391857590224034862024-03-12T08:57:00.002-05:002024-03-12T09:03:02.949-05:00February consumer inflation: the tug of war between gasoline and shelter continues<p> </p><p> <i>- by New Deal democrat</i></p><p><br /></p><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Last month I described the trend in consumer inflation as an ongoing “tug of war” between energy and housing. Energy (mainly gasoline) peaked in June 2022 and made its low in June 2023, while housing, which peaked in early 2023, has been gradually disinflating since.</span></p><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">That tug of war continued in February. Energy prices firmed, up 2.3% for the month, while shelter, which still increased 0.4% for the month, had its lowest YoY reading since June of 2022. As you may already know, both headline and core inflation rose 0.4% in February. The YoY increases were 3.2% and 3.8% respectively. The former YoY reading is in the range that it has been for the past 6 months, while the latter is also the lowest since April 2021. Here are the monthly changes in each for the past two years:</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7z3K_qndwK9aye0XWlnNYpE7cHwUAmXdYGcDgTjXfBQNraO7mm7cluyWW2UvmcOukVOzCVKymWjvx7pgrzeGCEe8GUS6_r4V7xBkpwHmC5ccFfuQibdapuuOva6hNu0nZcJkaEodJRyeV7_QrgP2-yhiL-bu1dVedJRvrC1ghUrFdoqaKklTuRxy_c83e/s1909/CFA113EB-8F72-4F6C-B2B6-1590EBDF290D.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="829" data-original-width="1909" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7z3K_qndwK9aye0XWlnNYpE7cHwUAmXdYGcDgTjXfBQNraO7mm7cluyWW2UvmcOukVOzCVKymWjvx7pgrzeGCEe8GUS6_r4V7xBkpwHmC5ccFfuQibdapuuOva6hNu0nZcJkaEodJRyeV7_QrgP2-yhiL-bu1dVedJRvrC1ghUrFdoqaKklTuRxy_c83e/w400-h174/CFA113EB-8F72-4F6C-B2B6-1590EBDF290D.jpeg" width="400" /></a></div><br /><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="background-color: white;">In lieu of a bunch of graphs, here is the Census Bureau’s spreadsheet. The column at the far right shows the YoY increases, where it is easy to see where the remaining problem areas are:</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgezL_kEMDWTQ-xD6Vu2Jxc6Tga1yhXlSCfzJhZgi0dOTkC0-cMoGko5qIJeatJtwco1zu01ib28W1rNaQgExuvGRquB8g9K9hmw1W3jfS8FpMsW2Zsv_uupgiyvAfZ4-707kS6eVQy-ttwF3hTd_Cs_H3pUfkgjWyMMOBna8KXb8CcM9HaqIAIqnMTu1NA/s2160/780FFFEB-782E-4608-8C3E-A9F6C17707C7.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1552" data-original-width="2160" height="288" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgezL_kEMDWTQ-xD6Vu2Jxc6Tga1yhXlSCfzJhZgi0dOTkC0-cMoGko5qIJeatJtwco1zu01ib28W1rNaQgExuvGRquB8g9K9hmw1W3jfS8FpMsW2Zsv_uupgiyvAfZ4-707kS6eVQy-ttwF3hTd_Cs_H3pUfkgjWyMMOBna8KXb8CcM9HaqIAIqnMTu1NA/w400-h288/780FFFEB-782E-4608-8C3E-A9F6C17707C7.jpeg" width="400" /></a></div><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="background-color: white;">The only sectors still up over 4% YoY are food away from home, transport services (mainly repairs and insurance), and - still - housing. Here’s what the first two look like, plus a breakout of the motor vehicle repair and maintenance component of transport services:</span></p><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="background-color: white;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW10SUfZ56rMkq5YujcI0P86hytpyMtdK_GTccArA-UA1TcVoYAyiWkz1V0PdlhQvRmAmMMXH6tLXbCz-gQZhyphenhyphenqLBsIxIJ9T7f8UN7PaaA_TVdsg9owqnYiUCCJFskKdhcqWsFwCUvx3dEt3vM0UC3MrPHIc3vzz6Y3dK6U0NOX7tJzy5WM-OgLju-J9VH/s1913/F57596C3-7B26-455B-A311-EC0D98FBB90F.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="830" data-original-width="1913" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiW10SUfZ56rMkq5YujcI0P86hytpyMtdK_GTccArA-UA1TcVoYAyiWkz1V0PdlhQvRmAmMMXH6tLXbCz-gQZhyphenhyphenqLBsIxIJ9T7f8UN7PaaA_TVdsg9owqnYiUCCJFskKdhcqWsFwCUvx3dEt3vM0UC3MrPHIc3vzz6Y3dK6U0NOX7tJzy5WM-OgLju-J9VH/w400-h174/F57596C3-7B26-455B-A311-EC0D98FBB90F.jpeg" width="400" /></a></div><br /><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><div>Inflation in food away from home is still gradually disinflating, and is now at its lowest YoY rate of increase since June 2021. although it is still running about 1.5% above its YoY rate before the pandemic. If its present trend continues, it will be increasing at its pre-pandemic level in about 6 months. </div><div><br /></div><div>Transportation services, however, have stopped decelerating for the last 8 months. As shown above, however, it isn’t due to repairs, which while still up 6.7% YoY, have shown sharp deceleration. Rather, it is almost all due to motor vehicle insurance (which unfortunately is not broken out separately on FRED), which was up another 0.9% in February alone, and is up a whopping 20.6 YoY!</div><div><br /></div><div>Aside from motor vehicle insurance, as I’ve been saying for months, the only *real* remaining inflation problem boils down to shelter. To show this, below are the YoY% increases in headline inflation (which has been bouncing around between 3.1% and 3.7% for over half a year, core inflation, which has been very gradually trending downward, energy (now down -1.7% YoY, /3 for scale), and CPI ex-shelter, which is up only 1.8% YoY:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgJ4k5V7RBttSP2AfzPQkh1UtrPV6jV2hPLX8UD4AZWyX7oAXE9LYOZabC73BJhSY28qeBRQz51dMQqLLDl6wWsKYrnUVTVot_Fe2_uDy_k66YUSvnfUMhsnFPEE5NPzn4JQYLdeKLrJVvTZzVwez5mSeRMY2NdkGBW9z9S3xehIdWF76BsfRGJKucfl1wU/s1912/7D33A1B5-FFDE-4B8C-B110-CBA5BB66162A.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="828" data-original-width="1912" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgJ4k5V7RBttSP2AfzPQkh1UtrPV6jV2hPLX8UD4AZWyX7oAXE9LYOZabC73BJhSY28qeBRQz51dMQqLLDl6wWsKYrnUVTVot_Fe2_uDy_k66YUSvnfUMhsnFPEE5NPzn4JQYLdeKLrJVvTZzVwez5mSeRMY2NdkGBW9z9S3xehIdWF76BsfRGJKucfl1wU/w400-h174/7D33A1B5-FFDE-4B8C-B110-CBA5BB66162A.jpeg" width="400" /></a></div><br /><div><br /></div><div>An issue has been made by a few people about whether series like the Apartment List National Rent Index, which have shown slight YoY *declines* in rents for several months, have been giving a true leading reading. While rent of primary residence has continued to increase, up 0.5% in February, the YoY comparisons continue to show deceleration, H<span style="background-color: white;">ere are the monthly% (blue, right scale) and YoY% (red, left scale) changes in the CPI for rent of primary residence:</span></div><div><span style="background-color: white;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUSNJ6GLXSVopZfZfgM1h5hlMnHg7Z-jneBWqEuXmStmpS6C7Ms6vO3DvMTCCmN6v6rHLGQ1qrAlERQg_d7E9RrLvhgxHMfmpdW_S_WswoQUiHxyxLUnk9goE4UxTZpn1xVHCB3ixoSE_Uk2oOE00Ozhlb5bNpNtQKP1TdBgMPdTD5tZmjO_rVB5bpSxSV/s1900/98AB18AA-8490-4646-B264-F74D114D8BD3.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="829" data-original-width="1900" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUSNJ6GLXSVopZfZfgM1h5hlMnHg7Z-jneBWqEuXmStmpS6C7Ms6vO3DvMTCCmN6v6rHLGQ1qrAlERQg_d7E9RrLvhgxHMfmpdW_S_WswoQUiHxyxLUnk9goE4UxTZpn1xVHCB3ixoSE_Uk2oOE00Ozhlb5bNpNtQKP1TdBgMPdTD5tZmjO_rVB5bpSxSV/w400-h175/98AB18AA-8490-4646-B264-F74D114D8BD3.jpeg" width="400" /></a></div><br /><div><br /></div><div><div>YoY comparisons will get much more challenging beginning next month, as the final 0.7% monthly reading from last February drops out of the picture. But the last 3 months have only increased a total of 1.1%, and are the lowest 3 month average since autumn 2021. I suspect that the slowly decelerating trend will continue. If it continues over the next 6 to 9 months, YoY rent in the CPI will be about 3.4% - right in the middle of its pre-pandemic range.</div><div><br /></div><div>Finally, here is this month’s update of the graph comparing house prices as measured by the FHFA Index (/2.5 for scale) with CPI measure of owners equivalent rent:</div></div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJ-mV3sRLVuz_BLqxei7wivzJDiFfLLdCYzYeoGcqBMVBVLLMBSK9N8ZNOyA2GqVRjPFfReb-pPWhIogSW1tG6785FoCHl9eJmCEm8n29IJ84zVzO53ZKNWNl_nDjbjScHJVC5Kqz5K6_3guCLOvVRt5nU7aQmzfHMK3HrZpDSJZhDM3bTQ0dPcH9mQIf4/s1912/D0A3F402-3F7B-47F0-BDBE-15EBEB2DE0E5.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="817" data-original-width="1912" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJ-mV3sRLVuz_BLqxei7wivzJDiFfLLdCYzYeoGcqBMVBVLLMBSK9N8ZNOyA2GqVRjPFfReb-pPWhIogSW1tG6785FoCHl9eJmCEm8n29IJ84zVzO53ZKNWNl_nDjbjScHJVC5Kqz5K6_3guCLOvVRt5nU7aQmzfHMK3HrZpDSJZhDM3bTQ0dPcH9mQIf4/w400-h171/D0A3F402-3F7B-47F0-BDBE-15EBEB2DE0E5.jpeg" width="400" /></a></div><br /><div><br /></div><div><span style="background-color: white;">Like rent of primary residence, owners equivalent rent, up 6.0% YoY, is increasing at the lowest pace since July 2022. </span>Although house prices have resumed increasing in the past half year, the pace of those increases is in line with their pre-pandemic trend. Thus I expect the deceleration the CPI shelter index to continue, although it may do so at a slower pace.</div><div><div><br /></div><div>To sum up, my conclusion this month is the same as it was last month, to wit: if there are no unpleasant surprises awaiting in the months ahead as to gas prices, we can expect headline inflation to continue to be fairly stable, and shelter to continue to show disinflation, leading to gradually lower core inflation readings as well.</div></div></div><p><br /></p>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-9441067201409087762024-03-11T08:37:00.001-05:002024-03-11T08:37:27.917-05:00Scenes from the February jobs report: yes, the Household Survey really was recessionary<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Later this week we get a lot of interesting reports, including CPI tomorrow, retail sales on Thursday, and industrial production on Friday. In the meantime, let’s take a further look at some of the more noteworthy data from Friday’s employment report. In particular, as I wrote then, the Household Survey portion of that report was downright recessionary. Let me show you why.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Let’s start with YoY civilian employment. This is only up 0.4%. (Note: in this graph, as in all of the below graphs except for the last one, I subtract the current value so that it shows exactly at the zero line for easy comparison with previous occasions where the YoY value has been the same):</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCt4j4z_tpCZlLCNTVlnSd9Q9Gxxv0rv_EHJBTm8tjRe_zHTfgt5uwhp8D9XdeI3ysCmMZ95jAJCHVRM-DirCzP4maJrGKb6X6A75nLo0H19QHiN7gLJvLOCAkeTfI1QhZqQyQWp4cC02ILkZm09oe2PKoCYXBJZeOog9U9lVbN7LWeSEabIXKCA6SyCMI/s1904/3195BCCD-865E-47AE-B996-D626437B35FF.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="826" data-original-width="1904" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCt4j4z_tpCZlLCNTVlnSd9Q9Gxxv0rv_EHJBTm8tjRe_zHTfgt5uwhp8D9XdeI3ysCmMZ95jAJCHVRM-DirCzP4maJrGKb6X6A75nLo0H19QHiN7gLJvLOCAkeTfI1QhZqQyQWp4cC02ILkZm09oe2PKoCYXBJZeOog9U9lVbN7LWeSEabIXKCA6SyCMI/w400-h174/3195BCCD-865E-47AE-B996-D626437B35FF.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">In the past 75 years, that has only occurred 5 times not associated with recessions: 1952, 1995, 2003, 2011, and 2013: </div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiliLVXkM-ciMRkhtOQFQVavm8ke0u4Uk6j5K_DTGcuT7eXk1cNrMR2TusStHCgrIwhcrF-PBZsC1Eb1qB4AXS5ZXFUnMw9JkKTv6_a-Q6FX1SA5bLJ5T3YVeCLYlg9XJ-tmFP0mlq3LMWlf-DSVbaWcsvY63d7K2ZS7y7ZANI7VZ4LGfhkoLPZ7fCECVbq/s1916/B0BF6233-1FBD-4A19-A230-20C5E3362C3B.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="821" data-original-width="1916" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiliLVXkM-ciMRkhtOQFQVavm8ke0u4Uk6j5K_DTGcuT7eXk1cNrMR2TusStHCgrIwhcrF-PBZsC1Eb1qB4AXS5ZXFUnMw9JkKTv6_a-Q6FX1SA5bLJ5T3YVeCLYlg9XJ-tmFP0mlq3LMWlf-DSVbaWcsvY63d7K2ZS7y7ZANI7VZ4LGfhkoLPZ7fCECVbq/w400-h171/B0BF6233-1FBD-4A19-A230-20C5E3362C3B.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">U6 underemployment is up 0.5% YoY:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnY7EJPIt9Ucl9kvYIQRbtm_SgThguX6xSnjOsKGbenwp9JGo07QmERwKl2-rrGQWMY_XF1Nn7i5eMy-DgiXj9w42PC9d7ubLY-5snTn2pqA1rz6vlziGuIQbsUFjX7VjhdLpNickOuaY2nxb-2do0jeOLiFh4KiCZ6Gt5d5ppC1woafapRulk8oZmMzrZ/s1905/BE48DA8B-8F6D-4D06-8FD4-A56F51585562.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="1905" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnY7EJPIt9Ucl9kvYIQRbtm_SgThguX6xSnjOsKGbenwp9JGo07QmERwKl2-rrGQWMY_XF1Nn7i5eMy-DgiXj9w42PC9d7ubLY-5snTn2pqA1rz6vlziGuIQbsUFjX7VjhdLpNickOuaY2nxb-2do0jeOLiFh4KiCZ6Gt5d5ppC1woafapRulk8oZmMzrZ/w400-h171/BE48DA8B-8F6D-4D06-8FD4-A56F51585562.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">In that series 30 years of existence, that has only happened once outside of a recession, in 2003:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheaCm0IIcuAJStDjfsZB-0zIEudd44ntuU_e7OiVdZ5KSZl73WTnItGJFLbyfy9_fSX6mVKvWJGt_XA-1wa1E2NWHlsEECeSzccLgqlJtw7AStNVJunFD4VVZFKc4Z1Y15Yez_TEVhrDnMNwkEk1fVxQOuf1OQTwuTnajLYTx1YMvP6yxelmbWM_hW19H9/s1913/A66B4F1F-D953-4787-93FA-A0F30BEA98C8.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="818" data-original-width="1913" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheaCm0IIcuAJStDjfsZB-0zIEudd44ntuU_e7OiVdZ5KSZl73WTnItGJFLbyfy9_fSX6mVKvWJGt_XA-1wa1E2NWHlsEECeSzccLgqlJtw7AStNVJunFD4VVZFKc4Z1Y15Yez_TEVhrDnMNwkEk1fVxQOuf1OQTwuTnajLYTx1YMvP6yxelmbWM_hW19H9/w400-h171/A66B4F1F-D953-4787-93FA-A0F30BEA98C8.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">U3 unemployment is up 0.3% YoY:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEid71C2RlVJKgFjPXmGJVdiXQsCWowq9PE1fjwyisKIYJxAVJwdknM7uwTQ0YYv-RN6lnYgB9yrzMBl_9-LFhEdXtqbwdiX4-PuFpc3nH442IaQjyaQQjrkUg_AC3_GArm6JrSxC3R6zZl3zFlhx6cHy20aQ2jxyUj_bBGUlTDAbiTFFK1yxGI3h5Wp7k5w/s1904/B03E8BC6-98C9-4DA6-AB33-D79EE3D2CADF.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="823" data-original-width="1904" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEid71C2RlVJKgFjPXmGJVdiXQsCWowq9PE1fjwyisKIYJxAVJwdknM7uwTQ0YYv-RN6lnYgB9yrzMBl_9-LFhEdXtqbwdiX4-PuFpc3nH442IaQjyaQQjrkUg_AC3_GArm6JrSxC3R6zZl3zFlhx6cHy20aQ2jxyUj_bBGUlTDAbiTFFK1yxGI3h5Wp7k5w/w400-h173/B03E8BC6-98C9-4DA6-AB33-D79EE3D2CADF.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">That has occurred outside of recessions 5 times in the past 75 years: in 1952, 1956, 1963, 1967, and 2003</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPgMZGwGKqt44DQc7DPmc3RchRNmPpld2VWdE-hBbcGlSLdWYmfMHZlvgY178Jt-r6yPC1imvQGSdx1AMb8DlJ7zdv5g7FXF92OeFu5kA3ZymkHbfFr4zsTZpFJL_izcKC1rw4zfhzQ65MZWPiTQNOR3U5L_72_GYJ2KWBVcQs5YTZpqzRuYtyRFCB0YCN/s1914/4FB9D2CB-510B-4E53-81F7-9E576AF45D8C.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="807" data-original-width="1914" height="169" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPgMZGwGKqt44DQc7DPmc3RchRNmPpld2VWdE-hBbcGlSLdWYmfMHZlvgY178Jt-r6yPC1imvQGSdx1AMb8DlJ7zdv5g7FXF92OeFu5kA3ZymkHbfFr4zsTZpFJL_izcKC1rw4zfhzQ65MZWPiTQNOR3U5L_72_GYJ2KWBVcQs5YTZpqzRuYtyRFCB0YCN/w400-h169/4FB9D2CB-510B-4E53-81F7-9E576AF45D8C.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Finally, while the Sahm rule, which requires the 3 month average of the unemployment rate to be higher by 0.5% from its low in the previous 12 months, has not been triggered, that metric is up .27%:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQwppdrHjKfFDDu37aSz4WF9qPLvjpYergJppBRHxeRe3b8n__31dHXjjQQwp7pNUcsUEfxdnd7P2Qw6JiV_U73UcTLHPIRyCskC1XkhY_ADOxYo3TGIjieRG1M1KPejvuZKH1DrexQJCnvicN5HRilny0ISM2_xTiF1UwQYEYrE-qwIyF5fq8b1qNhNjq/s1922/BC87B4BD-875F-4C41-BAD5-0181A091067C.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="825" data-original-width="1922" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgQwppdrHjKfFDDu37aSz4WF9qPLvjpYergJppBRHxeRe3b8n__31dHXjjQQwp7pNUcsUEfxdnd7P2Qw6JiV_U73UcTLHPIRyCskC1XkhY_ADOxYo3TGIjieRG1M1KPejvuZKH1DrexQJCnvicN5HRilny0ISM2_xTiF1UwQYEYrE-qwIyF5fq8b1qNhNjq/w400-h171/BC87B4BD-875F-4C41-BAD5-0181A091067C.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">That has occurred outside of a recession occurring only 5 times as well: 1962-63, 1967, 1977, 1986, and 2003:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjHb-izvdEE-zNl0QzfQuMZglUH8TDnafdub5Yh7EqnJjo-4HwFzoYTQ-lVngeqlHoDd163ce9e4_iZEqJf4h3fxE3wYp-3AG3RInzXrl2QtqnOFgojDCG5Bh5fRWh6wrZOSGOkmAII-UnNSj6lm7KEt-SsEsXKfiQPHK5nddQWZo3IKKcv4b1dxOZ_Cns/s1910/9F690087-0ABE-45E4-B858-4336987AB73F.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="1910" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjHb-izvdEE-zNl0QzfQuMZglUH8TDnafdub5Yh7EqnJjo-4HwFzoYTQ-lVngeqlHoDd163ce9e4_iZEqJf4h3fxE3wYp-3AG3RInzXrl2QtqnOFgojDCG5Bh5fRWh6wrZOSGOkmAII-UnNSj6lm7KEt-SsEsXKfiQPHK5nddQWZo3IKKcv4b1dxOZ_Cns/w400-h171/9F690087-0ABE-45E4-B858-4336987AB73F.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">In other words, more often than not when any of these Household Survey metrics have been at these levels in the past, it has been shortly before or early in a recession.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><div><br /></div><div>The current divergence between YoY job growth as measured by the Establishment and Household Surveys is 1.36% (By the Establsihment Survey, jobs have increased 1.6% YoY vs. the 0.2% in the Household Survey). Since the Korean War, that big a divergence has occurred 17 times in over 800 months, usually only lasting one month:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9kGO9MNyA0mN-byAiMs_5Nz93DLuwMcL-8cMxBEmj2l51sf8Og1uZcV_hCmGEaaQ0c3D3dR89wT__BwlTi0Rjo4ob3V2ieRA72wBld_Iydmj5lnTwUJ6Gc14E71wV_79Chl5S2_akwsfKm0gned12WYRE2PBBTAAE9TxD_5wG6mu1NplcSJHA45CC7UcE/s1913/EDBA60F2-9489-4C34-A28E-764E01F21322.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="830" data-original-width="1913" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9kGO9MNyA0mN-byAiMs_5Nz93DLuwMcL-8cMxBEmj2l51sf8Og1uZcV_hCmGEaaQ0c3D3dR89wT__BwlTi0Rjo4ob3V2ieRA72wBld_Iydmj5lnTwUJ6Gc14E71wV_79Chl5S2_akwsfKm0gned12WYRE2PBBTAAE9TxD_5wG6mu1NplcSJHA45CC7UcE/w400-h174/EDBA60F2-9489-4C34-A28E-764E01F21322.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div>Based on past experience, I expect the two surveys to track more closely in the months ahead. The question is, which one will resolve towards the other? At any given time, there is always some metric that is going to be recessionary, and another which supports expansion. In this case, I suspect the Household Survey’s weakness will be the metric that proves transitory, but for now that weakness is very much real.</div><div><div dir="ltr" id="AppleMailSignature"><br /></div></div></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-25164379265315820962024-03-09T13:06:00.003-06:002024-03-09T13:06:47.413-06:00Weekly Indicators for March 4 - 8 at Seeking Alpha<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p>My “Weekly Indicators” post is <a href="https://seekingalpha.com/article/4677104-weekly-indicators-sharp-bifurcation-in-short-leading-and-coincident-timeframes" target="_blank">up at Seeking Alpha.</a></p><p>Generally speaking, there is a demarcation between consumer-oriented data, which is in the main positive, and manufacturing-oriented data, which is mainly weak or negative.</p><p>As usual, clicking over and reading will bring you up to the virtual moment on the economy, and reward me with a little lunch money.</p>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-58861419247788171132024-03-08T08:34:00.000-06:002024-03-08T08:34:05.041-06:00February jobs report: the Household Survey is downright recessionary, while the Establishment Survey is decidedly mixed<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="background-color: white; font-family: UICTFontTextStyleTallBody; font-size: 17px;">In the past few months, my focus has been</span><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"> on whether jobs gains are most consistent with a “soft landing,” i.e., no further deterioration, or whether deceleration is ongoing; and more specifically: </span></p><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><ul style="line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: white;"><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto;">Whether there is further deceleration in jobs gains compared with the last 6 month average, or weather gains have held steady. In February, they held steady.</span></span></span></li></ul><ul style="line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: white;"><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto;">Whether the unemployment rate is neutral or decreasing; or whether there is further weakness. The recent excellent reports in initial claims suggested this rate would decline. To the contrary, it increased to a new 2 year high; and</span></span></span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: white;"><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto;">Based on the leading relationship of the quits rate to average hourly earnings, whether YoY wage growth would continue to decline slightly. It did decline, and is tied for a 2.5 year low.</span></span></span></li></ul><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><p><span style="background-color: rgba(255, 255, 255, 0);"><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto;">Here’s my in depth synopsis.</span></span></span></p><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div dir="ltr"><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><b style="background-color: rgba(255, 255, 255, 0);"><br /></b></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><span style="background-color: rgba(255, 255, 255, 0);"><b>HEADLINES</b>:</span></div><ul style="line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="-webkit-text-size-adjust: auto; border: none; caret-color: rgb(51, 51, 51); color: #333333; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">275,000 jobs added. Private sector jobs increased 223,000. Government jobs increased by 52,000. </span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);"><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto;">Both December and January were revised downward, by -43,000 and -124,000 respectively, for a total of -167,000. After a break last month, this resumes the pattern from nearly every month last year, when there were a steady drumbeat of downward revisions.</span></span></span></li><li style="-webkit-text-size-adjust: auto; border: none; caret-color: rgb(51, 51, 51); color: #333333; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">The alternate, and more volatile measure in the household report, declined by -184,000. On a YoY basis, in this series only 667,000 jobs, or 0.4%, have been gained. This is the lowest since the pandemic lockdowns.</span></li><li style="-webkit-text-size-adjust: auto; border: none; caret-color: rgb(51, 51, 51); color: #333333; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">The U3 unemployment rate rose 0.2% to 3.9%. As indicated above, this is a 2 year high.</span></li><li style="-webkit-text-size-adjust: auto; border: none; caret-color: rgb(51, 51, 51); color: #333333; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">The U6 underemployment rate increased +0.1% to 7.3%, 0.8% above its low of December 2022.</span></li><li style="-webkit-text-size-adjust: auto; border: none; caret-color: rgb(51, 51, 51); color: #333333; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Further out on the spectrum, those who are not in the labor force but want a job now declined -121,000 to 5.672 million, down from its highest level since September 2022, vs. its post-pandemic low of 4.925 million set last March</span></li></ul><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><b style="background-color: rgba(255, 255, 255, 0);">Leading employment indicators of a slowdown or recession</b><div><b style="background-color: rgba(255, 255, 255, 0);"><br /></b></div><span style="background-color: rgba(255, 255, 255, 0);">These are leading sectors for the economy overall, and help us gauge how much the post-pandemic employment boom is shading towards a downturn. With two exceptions, these were negative, generally reversing last month’s gains:</span><div><ul style="line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">the average manufacturing workweek, one of the 10 components of the Index of Leading Indicators, reversed last month’s decline, and was up sharply, by 0.3 hours to 40.5, but is still down -1.0 hour from its February 2022 peak of 41.5 hours.</span></li></ul><ul style="line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Manufacturing jobs declined -4,000.</span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Within that sector, motor vehicle manufacturing jobs declined -400. </span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Construction jobs increased by 23,000.</span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Residential construction jobs, which are even more leading, declined by -200 from last month’s post-pandemic high.</span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Goods jobs as a whole rose 19,000 to another new expansion high. These should decline before any recession occurs. After revisions, these are up 1.1% YoY, the lowest growth since early in the pandemic, but which is nevertheless average compared with most of the last 40 years.</span></li></ul><ul style="line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Temporary jobs, which have generally been declining late 2022, fell by another 15,400, and are down about -250,000 since their peak in March 2022.</span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">the number of people unemployed for 5 weeks or fewer rose 186,000 to 2,326,000.</span></li></ul></div><span style="background-color: rgba(255, 255, 255, 0);"><br /></span></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><b style="background-color: rgba(255, 255, 255, 0);">Wages of non-managerial workers</b></div><ul style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Average Hourly Earnings for Production and Nonsupervisory Personnel increased $.07, or +0.2%, to $29.71, a YoY gain of +4.5%. This is tied with December for a 2.5 year post-pandemic low.</span></li></ul><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><div><span style="background-color: rgba(255, 255, 255, 0);"><br /></span></div><div><b style="background-color: rgba(255, 255, 255, 0);">Aggregate hours and wages: </b></div></div><ul style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">the index of aggregate hours worked for non-managerial workers increased a strong 1.0%, reversing last month’s big decline. This metric is now up 1.2% YoY.</span></li></ul><ul style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);"> the index of aggregate payrolls for non-managerial workers rose 1.3%, and is now up 5.9% YoY. This is 2.8% above the most recent YoY inflation rate. This is powerful evidence that average working families continue to see gains in “real” spending money.</span></li></ul><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><span style="background-color: rgba(255, 255, 255, 0);"><br /></span></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><div><b style="background-color: rgba(255, 255, 255, 0);">Other significant data:</b></div><ul style="line-height: 1.4; list-style-image: initial; list-style-position: initial; margin: 0.5em 0px; padding: 0px 2.5em;"><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Leisure and hospitality jobs, which were the most hard-hit during the pandemic, rose another 58,000, which is only -17,000, or -0.1% below their pre-pandemic peak.</span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Within the leisure and hospitality sector, food and drink establishments rose 41,600,. This sector has completely recovered from its pandemic downturn. </span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">Professional and business employment increased a meager 9,000. These tend to be well-paying jobs. This series had generally been declining since last May, but in the last 3 months has resumed its increase.</span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">The employment population ratio declined -0.1% to 60.1%, vs. 61.1% in February 2020.</span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0px;"><span style="background-color: rgba(255, 255, 255, 0);">The Labor Force Participation Rate was unchanged at 62.5%, vs. 63.4% in February 2020.</span></li></ul></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><span style="background-color: rgba(255, 255, 255, 0);"><br /></span></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><b style="background-color: rgba(255, 255, 255, 0);">SUMMARY</b></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">This month’s report, as is so often the case, was a study in marked contrasts between the Establishment Survey, which reported generally strong numbers, and the Household Survey, which was very weak. Nowhere was this more apparent than in the comparative YoY gains. In the former survey, jobs have increased 1.8%, while in the latter they are up a paltry 0.4%. With the exception of 1952, and isolated months in 1996, 2011, and 2013, the latter is downright recessionary.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">The poor showing in the Household survey also included the number of unemployed, which increased. Together with the declined in employed people, this gave rise to a new 2 year high in the unemployment rate - very much NOT what initial claims have been forecasting. </div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">There were some negatives in the Establishment Survey as well. In addition to most of the leading jobs sectors, which as indicated above showed declines, the drumbeat of downward monthly revisions resumed.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">But the positives in the Establishment Survey were powerful as well. In addition to the headline number, wage increases are still very good, as were aggregate hours and payrolls. And until goods employment declines, despite the poor Household Survey, it is hard to conceive that any recession is near. </div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">So I will give this a decidedly mixed grade, and be on the lookout for a reversal in the noisier Household Survey.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-88518204355426141042024-03-07T08:13:00.002-06:002024-03-07T08:13:13.909-06:00Initial jobless claims continue positive, suggesting good news for the tomorrow’s February unemployment rate as well<p> </p><p> <i>- by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The most important reason I cover initial jobless claims is because they are an “official” short leading indicator. They are also very good at forecasting the short term trend in the unemployment rate in the monthly jobs report, which will be updated for February tomorrow.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">And the news continues to be positive. Initial claims were unchanged at 217,000, continuing near their 50 year lows from several months ago. The four week moving average declined -750 to 212,250, while continuing claims, which comparatively lag, and are reported with a one week delay, rose 8,000 to 1.906 million, close to a two year high:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnk6MpZ2dLKzOXx0qgbRYyGWF4mI_6-n8849gvMSsq421c-E5FhMeKHP9SU7xa73kUID8SJAj1PLq6rLwFykOZgSQO3kHcPemPv9hOYj2GGwM7lmEIX6O4Kd86e4QHWTGGqjqdaE58bCZWMWKvz3JNmyI0vwzX-98MdssSU5ZDrB91d6FVx_iOxzVOYQmK/s1899/FB8C623A-CC20-4A79-A6FC-70AD04F16355.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="820" data-original-width="1899" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnk6MpZ2dLKzOXx0qgbRYyGWF4mI_6-n8849gvMSsq421c-E5FhMeKHP9SU7xa73kUID8SJAj1PLq6rLwFykOZgSQO3kHcPemPv9hOYj2GGwM7lmEIX6O4Kd86e4QHWTGGqjqdaE58bCZWMWKvz3JNmyI0vwzX-98MdssSU5ZDrB91d6FVx_iOxzVOYQmK/w400-h173/FB8C623A-CC20-4A79-A6FC-70AD04F16355.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">More important for forecasting purposes is the YoY% change. In that regard, initial claims are down -11.4%, and the four week moving average is down -5.6%. While continuing claims are up 7.0%, this is the lowest YoY comparison in almost a year:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi444lePbEjYsL67dX514jjv1p_-OOaMXyP2oyHO4BZxxJvPTrSJikUeYH8X6WDJByXvt-7ZUf88CbSZ-M6CnhQ8tz2_bolgRmb7eGMlxulcOq5H0Z2kYrCJLsk-DCmnZDwIItDopVHfUglEYoKTlY4sVfHpGu-vjIjxB8K6uSLjD57gSPbPdTwCbRuZDwf/s1913/C6218271-FBB6-4C29-A70B-A531C01B048C.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="1913" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi444lePbEjYsL67dX514jjv1p_-OOaMXyP2oyHO4BZxxJvPTrSJikUeYH8X6WDJByXvt-7ZUf88CbSZ-M6CnhQ8tz2_bolgRmb7eGMlxulcOq5H0Z2kYrCJLsk-DCmnZDwIItDopVHfUglEYoKTlY4sVfHpGu-vjIjxB8K6uSLjD57gSPbPdTwCbRuZDwf/w400-h170/C6218271-FBB6-4C29-A70B-A531C01B048C.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Continuing claims rose significantly immediately following the Silicon Valley Bank meltdown, as tech companies all laid off workers. It is likely the increased difficulty in finding suitable new positions in that sector of the economy that has driven the increase in continuing claims. Nevertheless, as I wrote above, they generally lag initial claims, which is the pattern we see in the YoY data.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Finally, as indicated at the outset of this post, initial claims, averaged monthly, have an excellent record of forecasting the trend in the unemployment rate in the ensuing months, and so lead the Sahm rule for forecasting recessions by several months. Here is that update:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfNoQML4D3vPZKvVkdqycNji_sKuWn2A3Bgzt_2LICHuGPpGEswmBlM89PnChw3eyypfZoJvoP1PR6BRQxuuVtccivBi3PhTsqZHr5SXBSRm7A7tyI_mBCBGy6UkryZsGjSmoIXnFQpbfMdr-aTuUNTNiLt9tKN5scFJtsph1Sim7HzD8qI-8gGnbkFCmx/s1907/0888A2C0-BEE0-454C-B276-1835270F981E.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="822" data-original-width="1907" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfNoQML4D3vPZKvVkdqycNji_sKuWn2A3Bgzt_2LICHuGPpGEswmBlM89PnChw3eyypfZoJvoP1PR6BRQxuuVtccivBi3PhTsqZHr5SXBSRm7A7tyI_mBCBGy6UkryZsGjSmoIXnFQpbfMdr-aTuUNTNiLt9tKN5scFJtsph1Sim7HzD8qI-8gGnbkFCmx/w400-h173/0888A2C0-BEE0-454C-B276-1835270F981E.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The downshift in initial jobless claims over the past 6 months has started to be reflected in the monthly unemployment rate. As a result, in tomorrow’s report I am expecting the unemployment rate to remain at 3.7% or decline to 3.6%. An increase above 3.8% is almost certainly not going to happen.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Additionally, based on yesterday’s JOLTS report, since the quits rate (which leads wages YoY) declined to new post-pandemic lows, I am expecting average hourly earnings for nonsupervisory workers to decelerate further YoY from 4.8%, possibly to a new post-pandemic low of 4.5%. This doesn’t mean the jobs report will be poor, just that the supercharged wage growth that immediately followed the pandemic is continuing to ebb.<br /><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-12192189650525921632024-03-06T10:01:00.004-06:002024-03-06T10:03:01.494-06:00January JOLTS report shows more (relative) weakening, downward revisions to 2023<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The JOLTS report for January showed only minor changes compared with December, all to the downside, but was somewhat overshadowed by mainly downward revisions to all of 2023.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Starting with the monthly changes, job <span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;">openings (blue in the graph below), a soft statistic that is polluted by imaginary, permanent, and trolling listings, declined -26,000 to 8.863 million. Actual hires (red) declined -100,000 to 5.687 million. Voluntary quits (gold) declined -54,000 to 3.385 million. In the below graph, they are all normed to a level of 100 as of just before the pandemic:</span></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><div><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto; background-color: white;"><br /></span></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNXhFjlD0Dl1oVbZhYQKsISNZdL-tJTR_a_hcTxRpNMZ4-kLXE-LB05LR-LUtts6J-hp32dNLIaCn_7VgQgLxodcM3KFEzxRM3krn7cO3Bom8CYnDCfsnbTTnpY3WHOzVdnEyk-S63vgmT0ia9EofHsyL5dLNdk0QRF6ybArKwZ2vPV8GWoAmR9p95uYZv/s1911/95DF82CD-89B8-4E48-AAE4-2F95C7DC3C14.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="818" data-original-width="1911" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjNXhFjlD0Dl1oVbZhYQKsISNZdL-tJTR_a_hcTxRpNMZ4-kLXE-LB05LR-LUtts6J-hp32dNLIaCn_7VgQgLxodcM3KFEzxRM3krn7cO3Bom8CYnDCfsnbTTnpY3WHOzVdnEyk-S63vgmT0ia9EofHsyL5dLNdk0QRF6ybArKwZ2vPV8GWoAmR9p95uYZv/w400-h171/95DF82CD-89B8-4E48-AAE4-2F95C7DC3C14.jpeg" width="400" /></a></div><br /><div><br /></div><div><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto; background-color: white;">Openings are at their lowest point except for last November since March 2021. Actual hires and quits are at their lowest in 3 years, and both are significantly lower than they were before the onset of the pandemic, and indeed all the way back to March 2018.</span></span></div><div><br /></div><div>Just as significantly, job openings were revised downward for 11 of the 12 months of 2023:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj19mfv5mCumopfP8QyBFiwqkWD06AwBK6qZLuuSX_hPbZucLMVZ0QVOMvYKd_CchOYreAbOl-_7LP-21_fmB3tNvcghZ-zcyV8jVBp5IMR9nomnIhAWLc_KXPS7r6K0AyO-mUhMclKVo4NVje5JqcbZ6eJsCwoawxWGpTmp5W0KBCSwPGdg6Z4EBW1gK1Z/s1893/81C81DB3-528B-4D4B-9A31-C479DA46E8D7.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="812" data-original-width="1893" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj19mfv5mCumopfP8QyBFiwqkWD06AwBK6qZLuuSX_hPbZucLMVZ0QVOMvYKd_CchOYreAbOl-_7LP-21_fmB3tNvcghZ-zcyV8jVBp5IMR9nomnIhAWLc_KXPS7r6K0AyO-mUhMclKVo4NVje5JqcbZ6eJsCwoawxWGpTmp5W0KBCSwPGdg6Z4EBW1gK1Z/w400-h171/81C81DB3-528B-4D4B-9A31-C479DA46E8D7.jpeg" width="400" /></a></div><br /><div><br /></div><div>Actual hires were revised downward for 8 months, and quits were revised down by 9 months as well (not shown).</div><div><br /></div><div>Meanwhile, for the month layoffs and discharges (blue in the graph below) declined -35,000 (an improvement) to 1.572 million:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAsbrJSsdOOsuHo0yXGy3bI3oZZ2D5Vvny42NJESVXyPN29ERTzhGEmIGfVE6f-8HppLddiX_lImgTxqsSig9ClSThxYWahXFr3pyjkg6Y4lL3TPHaSOtaIw9ZbxSxINTYl6E6L3sFpJ05GFApw4ImgzbBlWSA96TxWTgDXDoNrM7Z5atu1halt8jzhuEr/s1903/1365908E-41FB-4866-98CA-E5B307243243.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="832" data-original-width="1903" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAsbrJSsdOOsuHo0yXGy3bI3oZZ2D5Vvny42NJESVXyPN29ERTzhGEmIGfVE6f-8HppLddiX_lImgTxqsSig9ClSThxYWahXFr3pyjkg6Y4lL3TPHaSOtaIw9ZbxSxINTYl6E6L3sFpJ05GFApw4ImgzbBlWSA96TxWTgDXDoNrM7Z5atu1halt8jzhuEr/w400-h175/1365908E-41FB-4866-98CA-E5B307243243.jpeg" width="400" /></a></div><div><br /></div><div>This is of a piece with the recent decline in more timely weekly initial jobless claims (red, right scale). These were revised *higher* for 7 of the 12 months of 2023 (not shown).</div><div><br /></div><div>All of the revisions above indicated weaker readings for 2023 than previously reported.</div><div><br /></div><div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">Despite this, for a more historical perspective, the below graph norms the rates of hires, quits, and layoffs and discharges to 100 as of this month’s readings, and shows their record in the 20 years before the pandemic:</div><br class="Apple-interchange-newline" style="-webkit-text-size-adjust: auto;" /><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-g-36zu9fauQOgEtGE3JU5hZQvEPah_dePXPQjJgmbu3cDqIemd_16byoDePR3NbgJxlVKMtJsQNc1UIODex9JrM_gLV5Mdx9h5ooDFd3V79JBE1j-5X3gWQplnb_fPyq_odyp8iUbHXP1XiRvwwtB28PC9UPmdDxA1BU2aR5uFAc3Y350AkPsNfSWMIg/s1913/91795D04-736F-48C7-8540-318068979426.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="820" data-original-width="1913" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-g-36zu9fauQOgEtGE3JU5hZQvEPah_dePXPQjJgmbu3cDqIemd_16byoDePR3NbgJxlVKMtJsQNc1UIODex9JrM_gLV5Mdx9h5ooDFd3V79JBE1j-5X3gWQplnb_fPyq_odyp8iUbHXP1XiRvwwtB28PC9UPmdDxA1BU2aR5uFAc3Y350AkPsNfSWMIg/w400-h171/91795D04-736F-48C7-8540-318068979426.jpeg" width="400" /></a></div><div><br /></div><div>So even though January’s numbers were “poor” relative to the past 6 years, they exceeded any point since the inception of the series up until then.</div><div><br /></div><div><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;">Looking forward to Friday’s jobs report, since the quits rate tends to lead average hourly earnings, we see that the quits rate declined to the lowest rate in 6 years!This implies that average hourly earnings will decelerate further in coming months:</span></div><div><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto; background-color: white;"><br /></span></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglwRdipGnGyU7My488hqgmjGrHUKkboePaXj45j1COPLakG2Iqag7kyjCsVbdG3HH6RMxrkQ_QdZ6eVnpo4YG_NztE_1X9x2j3joS7MrV_PLub_mwk5NgOCpR4a2_IjzC13YDwL4kaIiDp8Rfu_nDi06DayGrCaauwrONZYPtj3nn0uOvvDHaj7f25QEME/s1902/98F13E9D-2048-41BF-9845-817CD9CD4489.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="827" data-original-width="1902" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglwRdipGnGyU7My488hqgmjGrHUKkboePaXj45j1COPLakG2Iqag7kyjCsVbdG3HH6RMxrkQ_QdZ6eVnpo4YG_NztE_1X9x2j3joS7MrV_PLub_mwk5NgOCpR4a2_IjzC13YDwL4kaIiDp8Rfu_nDi06DayGrCaauwrONZYPtj3nn0uOvvDHaj7f25QEME/w400-h174/98F13E9D-2048-41BF-9845-817CD9CD4489.jpeg" width="400" /></a></div><div><br /></div><div><br /></div><div>We’ll see in two days.</div></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-29402041398876787362024-03-05T09:00:00.001-06:002024-03-05T09:00:12.594-06:00Real incomes and Presidential approval: most measures did not surpass pre-pandemic levels until 2023, or this year!<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">This post is somewhat of a follow-up to one I wrote two weeks ago, about perceptions of income vs. inflation, as well as following up on yesterday’s post considering the electoral implications of the current economy.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">It’s a truism - if certainly an oversimplification - that people vote their pocketbook. Real incomes are thought by some analysts to be an important determinant of that behavior. But, alas, there’s no one way to measure real income. Back 10 years ago, I occasionally used to track 4 of them. Adding real median household income, there’s five.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">So let’s take a look at the entire pack.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">First off below is an update of all 4 measures of real income I tracked 10 years ago: real nonsupervisory hourly wages, the employment cost index, median real weekly income, and real compensation per hour. Here is the historical look since the turn of the Millennium up until the pandemic, normed to 100 as of just before the pandemic:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZkd762b0Cuiu_puACiufhNq9a_V3WzFNcsSkiRQonHqNX6Gz_OeQ210I7-BgnqMi8_2Ppcrv34sR6iAgur4Ld86iw0QIRycOTwdQiyc1xGvIAcmWpSnPn3AL8vMM6-5VMCEA6AHtRZh7vLwQKeXcylRnyenEpAcBiRJZ7NzoQSfF7b1UIuiSn1XyDU6Z3/s1921/D76F4EE9-3605-4765-9E7A-4CF9CD18A940.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="811" data-original-width="1921" height="169" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZkd762b0Cuiu_puACiufhNq9a_V3WzFNcsSkiRQonHqNX6Gz_OeQ210I7-BgnqMi8_2Ppcrv34sR6iAgur4Ld86iw0QIRycOTwdQiyc1xGvIAcmWpSnPn3AL8vMM6-5VMCEA6AHtRZh7vLwQKeXcylRnyenEpAcBiRJZ7NzoQSfF7b1UIuiSn1XyDU6Z3/w400-h169/D76F4EE9-3605-4765-9E7A-4CF9CD18A940.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The first three tell similar stories. They were generally stagnant during the George W. Bush Administration’s expansion. When gas prices fell below $1.50/gallon late in the Great Recession, there was a brief small spike, followed by a decline for several years thereafter. Finally, beginning in 2013 when the unemployment rate fell below about 7%, real wages rose consistently until the pandemic hit.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The fourth series, real business compensation, is subject to compositional issues. As higher paid professions pulled away from nonsupervisory, non-professional jobs, their pay increased more than the lower tiers of job holders. As a result, their real pay increased significantly during the Bush Administration, and declined only slightly after the Great Recession.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Now here is the update for the past five years:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDnlOn7hoHziAzkk9fqbsczqLccr_ltsTFjN6UJsG1xVywo0p0UNIC4QZ8Ti_GbIqzfgBdIFzzktvrj3iyeOrJ6zIsHoWUkkHQwLXvqxs-Lg0_NIMcbiXYvEl-uBUN_s5tRnxCTI0Cjt-jqFVdcRKHfYQ9kfHMV9iiFeiK4mOmN_wuyjNwDjajFd8c41Xh/s1899/0123F52B-0647-45C0-834A-B06EFE7E7314.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="814" data-original-width="1899" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDnlOn7hoHziAzkk9fqbsczqLccr_ltsTFjN6UJsG1xVywo0p0UNIC4QZ8Ti_GbIqzfgBdIFzzktvrj3iyeOrJ6zIsHoWUkkHQwLXvqxs-Lg0_NIMcbiXYvEl-uBUN_s5tRnxCTI0Cjt-jqFVdcRKHfYQ9kfHMV9iiFeiK4mOmN_wuyjNwDjajFd8c41Xh/w400-h171/0123F52B-0647-45C0-834A-B06EFE7E7314.jpeg" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Once again, the compositional effects of the pandemic stand out. Recall that lower paid services workers, especially in leisure and hospitality, were especially hard hit by pandemic related layoffs. This shows up in the surge in real hourly compensation, and to a lesser extent in real average hourly wages, and median real weekly earnings. </div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">By contrast, the employment cost index tracks pay for the same mix of job categories, so is not subject to the same compositional issues. </div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Further, note that all four show the effects of the spike in gas prices surrounding Russia’s invasion of Ukraine, and the subsequent undoing of that spike.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">But what really stands out is that, except for real average hourly wages, the other three measures of real job income fell below their pre-pandemic levels and stayed there at least into 2023. Real hourly compensation of all workers finally rose above its February 2020 level in the 2nd quarter of 2023 (and most recently is up 1.1%), and real median weekly earnings not until the 4th quarter (up only 0.4%). The employment cost index in real terms is *still* below its pre-pandemic level (by -1.6%).</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Finally, let’s compare with real median household income. Recall from my post two weeks ago that Motio Research has a method for calculating and updating this monthly, rather than having to wait for the annual update in September of the following year. Here’s their most recent graph through January:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTat38muGMsvmhLFEvjEGHC4bN4rE9duSql6o44J3A_ZRZ0SaQ8s6XjXEvv_RT0G-hBh7XX53PMRravtaPjQQTVn3y_Q2n5RgzE8DPpIYBlYqgm_m8n8kmickJoRgi1_ojyWRo3OVdCEUeim3Gb_aIeYCeuYV-GM2r-swaY9QdEMbEX8Uwiv2n7-zHWB-h/s717/378EB069-0EED-4F22-9D97-EAEB03305E13.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="408" data-original-width="717" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTat38muGMsvmhLFEvjEGHC4bN4rE9duSql6o44J3A_ZRZ0SaQ8s6XjXEvv_RT0G-hBh7XX53PMRravtaPjQQTVn3y_Q2n5RgzE8DPpIYBlYqgm_m8n8kmickJoRgi1_ojyWRo3OVdCEUeim3Gb_aIeYCeuYV-GM2r-swaY9QdEMbEX8Uwiv2n7-zHWB-h/w400-h228/378EB069-0EED-4F22-9D97-EAEB03305E13.png" width="400" /></a></div><br /><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Since then <a href="https://econbrowser.com/archives/2024/03/guest-contribution-a-monthly-series-of-u-s-household-income-data#comments" target="_blank">they have published an essay</a> on their methods and the current status of their metric. Most importantly they say:</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><p style="-webkit-text-size-adjust: 100%; border: 0px; caret-color: rgb(68, 68, 68); color: #444444; font-family: "Open Sans", Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1.714286; margin: 0px 0px 1.714286rem; padding: 0px; vertical-align: baseline;"></p><blockquote><p style="-webkit-text-size-adjust: 100%; border: 0px; caret-color: rgb(68, 68, 68); color: #444444; font-family: "Open Sans", Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1.714286; margin: 0px 0px 1.714286rem; padding: 0px; vertical-align: baseline;">The spike and sharp decline in March-October 2020 are primarily attributed to the effect of nonresponse bias in the CPS during the initial months of the pandemic [due to n]onresponse bias … [of] lower-income households . . . . We recommend taking the February 2020 value as the peak for 2020 for practical purposes.</p><p style="-webkit-text-size-adjust: 100%; border: 0px; caret-color: rgb(68, 68, 68); color: #444444; font-family: "Open Sans", Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1.714286; margin: 0px 0px 1.714286rem; padding: 0px; vertical-align: baseline;">. . . . The index reached a post-Covid minimum value in April-May 2023 and has shown renewed strength since June 2023. With a value of 112.8 in January 2024, the index is approaching the pre-Covid peak of 112.9 observed almost four years ago, in February 2020.</p></blockquote><p style="-webkit-text-size-adjust: 100%; border: 0px; caret-color: rgb(68, 68, 68); color: #444444; font-family: "Open Sans", Helvetica, Arial, sans-serif; font-size: 14px; line-height: 1.714286; margin: 0px 0px 1.714286rem; padding: 0px; vertical-align: baseline;"></p>As I noted in my post two weeks ago, this is a powerful explanation for the poor approval ratings of President Biden. By most measures, the median household was worse off following the pandemic up until late last year, and by some measures ever so slightly even now.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Because the short leading indicators continue to suggest improvement in the economy in the months ahead, I do expect real income measures to further improve as well. Once households feel that improvement, Biden’s approval rating, and his standing in the polls, should improve as well.</div><div dir="ltr" style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><div dir="ltr" id="AppleMailSignature"><br /></div></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-68986705936931918112024-03-04T11:39:00.002-06:002024-03-04T11:39:24.258-06:00What real spending and the unemployment rate portend for the 2024 Presidential election (so far)<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The economic news later this week will focus on employment: the JOLTS report for January on Wednesday, weekly jobless claims on Thursday, and of course the February jobs report on Friday.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">In the meantime, since this is a Presidential election year, let me focus on several economic fundamentals that have a long term record of correlating with election result; in particular, today, on real consumer spending and the unemployment rate.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">I am discussing this against a backdrop of months of polling showing that Biden and Trump are locked in a very tight race, including lots of polling that shows Trump ahead. Are such polls supported by the economic fundamentals?</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">To cut to the chase, yes they are. Because what typically matters is not the *abolsute level* of things like the unemployment rate (remember that FDR was elected in a landslide in 1936 with over 10% unemployment, and Obama won handily in 2012 with just under 8% unemployment), but rather the *trajectory* of the consumer economy.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Both real retail sales and the unemployment rate data go all the way back to 1948. Below I show them together in 24 year increments through 2019, and then a close-up on the last several years. Specifically the below shows the Quarterly exchange in each. The data on real spending subtracts 0.2% to account for population change, and change in the unemployment rate is inverted (so that worse shows up as a negative, and multiplied *10 for scale. Discussion follows afterward:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhn2YWx9_ffKbcytXMrFHxlzDOAfDSKlBYUqfShZKN1S4buUuCU8d2b-fwexaUIpRtIjCOXa-qsiFzIu1Ewc2_QcPkiT0N9F-khL-gy8F_hq8mrZNXGyXNfkCzpjna3kMDxDwrdsUoSHUyL9i_Y0W_6XTp5ZHqhSX8O3CU0QFFxJzzlfIg8_PmNsu1qw4Hn/s1908/55B4CB11-CDD4-4E63-8660-738B6DCA7307.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="833" data-original-width="1908" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhn2YWx9_ffKbcytXMrFHxlzDOAfDSKlBYUqfShZKN1S4buUuCU8d2b-fwexaUIpRtIjCOXa-qsiFzIu1Ewc2_QcPkiT0N9F-khL-gy8F_hq8mrZNXGyXNfkCzpjna3kMDxDwrdsUoSHUyL9i_Y0W_6XTp5ZHqhSX8O3CU0QFFxJzzlfIg8_PmNsu1qw4Hn/w400-h175/55B4CB11-CDD4-4E63-8660-738B6DCA7307.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgznFRjDRsrJW6acq7SJhretFOH0CFSSfi9n-SZKmsPC27thh6Kf4obDlkhqKmRF_A_30NRTjjCws_9tYzZI2sJXFXtQ512G8y1hHcawTADU0h9zZmKP5AQ1UyxFYWFw1fHb3jKwaqVLO8zpbYkTBTIxUMAteJ0q1AOcRJ4ax2wVJfyx-5lXxZ40irgIq1-/s1907/1607047E-E4F3-4C4B-ACBA-EDB149230983.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="821" data-original-width="1907" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgznFRjDRsrJW6acq7SJhretFOH0CFSSfi9n-SZKmsPC27thh6Kf4obDlkhqKmRF_A_30NRTjjCws_9tYzZI2sJXFXtQ512G8y1hHcawTADU0h9zZmKP5AQ1UyxFYWFw1fHb3jKwaqVLO8zpbYkTBTIxUMAteJ0q1AOcRJ4ax2wVJfyx-5lXxZ40irgIq1-/w400-h173/1607047E-E4F3-4C4B-ACBA-EDB149230983.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguCMNjB8WbadOYk9zbGtnzTpt6LOSz5KkB-N8bEQbVARPR70PeKarxkwcpob4hwIYdDRktDjzzOkb_WfRQAVyjVkGd9JZvNulrMFNFFxWCVAwwmL_9HbZ0lmn07aIVpfYcPbFznsomG4shgoTArPl3Knp0geasIyDHBnPQtZw_GSMkkkhJ8GrEcXtoQ6_8/s1903/5A863C1D-0F36-4D47-B818-36301DF1F970.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="809" data-original-width="1903" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguCMNjB8WbadOYk9zbGtnzTpt6LOSz5KkB-N8bEQbVARPR70PeKarxkwcpob4hwIYdDRktDjzzOkb_WfRQAVyjVkGd9JZvNulrMFNFFxWCVAwwmL_9HbZ0lmn07aIVpfYcPbFznsomG4shgoTArPl3Knp0geasIyDHBnPQtZw_GSMkkkhJ8GrEcXtoQ6_8/w400-h170/5A863C1D-0F36-4D47-B818-36301DF1F970.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA9il_DKK6k_xWtqP0iywc7BWsvhL_8MRoVepczBu-JFaaGsLDgD2Crj2C_vOdkH8ZSRkBSYjCdrt9qmyA63eUkM73gNUFebjouonH2ni7cQWnQPe5fenkQwdAnaPt6hIrFaRF9uZPdxWkXRB4OigOaY2S6DZIFLlOXnOJqYjm0tAjGqLKIu1niwsf1qJU/s1908/2A1034BF-3E13-4984-861B-779FBBE3476F.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="812" data-original-width="1908" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjA9il_DKK6k_xWtqP0iywc7BWsvhL_8MRoVepczBu-JFaaGsLDgD2Crj2C_vOdkH8ZSRkBSYjCdrt9qmyA63eUkM73gNUFebjouonH2ni7cQWnQPe5fenkQwdAnaPt6hIrFaRF9uZPdxWkXRB4OigOaY2S6DZIFLlOXnOJqYjm0tAjGqLKIu1niwsf1qJU/w400-h170/2A1034BF-3E13-4984-861B-779FBBE3476F.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">For simplicity of analysis, below I divide election years into three levels: where both series are positive, where both average close to 0, and where both are negative.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Positive: 1952, 1964, 1968, 1972, 1984, 1988, 1996, 2004, 2012</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Neutral: 1948, 1956, 1976, 2016, 2024 (so far)</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Negative: 1960, 1980, 1992, 2000, 2008, 2020</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Here’s the summary version: in all but two elections (1952 and 1968), when the data was positive, the incumbent party was returned to power.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">In *every* election where the data was negative, the incumbent party was defeated.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">There is also an element of “what have you done for me lately?” involved in the results. Incumbents with neutral data were re-elected if they had served only one term (1956), but their successor was generally not able to be elected if the incumbent party had served two terms (1976, 2016). The two cases where there was positive data but the incumbent party’s candidate was not elected also took place where it had been in power for two or more terms (1952, 1968). The only other exception was 1948, where Harry Truman got elected even in the face of a recession and neutral spending and unemployment data.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">As indicated above, so far the 2024 taking place against a background of neutral real spending and unemployment data. I suspect in the coming months that situation is going to improve. Since Biden has only served one term, this will be a benefit for him. And apropos of Truman’s 1948 campaign, this GOP dominated (in the House) Congress has been the least productive in many terms. Biden will be able, if he chooses, to run a similar campaign against them (in addition, of course, to all of the other, non-economic issues involved in this election).</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-24702622655087685032024-03-03T07:16:00.002-06:002024-03-03T07:16:14.668-06:00Weekly Indicators for February 26 - March 1 at Seeking Alpha<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p>My “Weekly Indicators” post is <a href="https://seekingalpha.com/article/4675405-weekly-indicators-interest-rates-short-leading-indicators-slowly-improve" target="_blank">up at Seeking Alpha.</a></p><p>With the interest rate environment improving, more of the short leading and coincident data - with a few notable exceptions - is turning a little more positive as well.</p><p>As usual, clicking over and reading will bring you up to the virtual moment as to the state of the economy, and bring me a little lunch money as well.</p>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-48288601877342449472024-03-01T09:55:00.002-06:002024-03-03T07:16:27.619-06:00Manufacturing and construction show softness to start the month<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><p style="font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">As usual, the new month’s data starts out with information on manufacturing and construction.</span></p><div><br /></div><div>The ISM manufacturing index has been a good leading indicator in that sector for 75 years. The difference over time, especially the last 20 years, is that manufacturing makes up a smaller share of the total US economy. As a result, even though it has almost consistently been in contraction ever since late 2022, to levels that before 2000 would always have meant recession, that didn’t happen in 2023.</div><div><br /></div><div>In January, the total index rose to near its equipoise point of 50, and for the first time all year, the more leading new orders index surpassed that level. In February, the two retrenched, as the total index declined to 47.8, and the new orders index declined to 49.2:</div><div><span style="caret-color: rgb(0, 0, 0); color: black;"><br /></span></div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhohL36iQ0yrZXKNpCwpeds5i_GkOp62ESzMatqhR7czmQnI-59ZujX-ohyEZ6OkgFphkZYDWhr1tagb28TvuxzLjeI6hA7uTzo-TChquxpINmOSZl1dvtyuI9CrKdJ7VLPhnybUoEYwQSN5h9BQ-oW1AYDmBAtpKUUqLw8UdnD87Fvjl2GHW8qRUWfrb0f/s782/B55E61E3-B287-45FF-B4A8-4B652F97C5F8.gif" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="474" data-original-width="782" height="243" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhohL36iQ0yrZXKNpCwpeds5i_GkOp62ESzMatqhR7czmQnI-59ZujX-ohyEZ6OkgFphkZYDWhr1tagb28TvuxzLjeI6hA7uTzo-TChquxpINmOSZl1dvtyuI9CrKdJ7VLPhnybUoEYwQSN5h9BQ-oW1AYDmBAtpKUUqLw8UdnD87Fvjl2GHW8qRUWfrb0f/w400-h243/B55E61E3-B287-45FF-B4A8-4B652F97C5F8.gif" width="400" /></a></div><br /></div><div><span style="caret-color: rgb(0, 0, 0); color: black;">Although this indicates softening, on the other hand neither of these is nearly as bad is their low levels last year. In terms of the economy as a whole, count this as a neutral.</span></div><div style="-webkit-text-size-adjust: none; caret-color: rgb(0, 0, 0); color: black;"><div><br /></div><div><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;">After a string of reports indicating strong improvement, both total construction spending and the more leading residential construction spending declined -0.2% in January from their all time nominal highs:</span></div><div><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;"><br /></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKHCvCLnCdM7M43QpF7ZhQGWSnSsKI0ICG05f_34qMMSmPtUkc_21T-mVgAPVScD9R2usdRWR12KY7ADBYqdv0LoQ4aylHICHJn-uLWrHbfepqCa_P7-NgBsfxVMSRwAjZGsfal5EsG92SE7uqYGWh2ZnP7G80Jk7hef5TVQ7pM7lM7rd7Hra4yB9JmYo1/s1911/44036C38-D98E-4D9C-9BE7-F39DF5FAB3E7.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="1911" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKHCvCLnCdM7M43QpF7ZhQGWSnSsKI0ICG05f_34qMMSmPtUkc_21T-mVgAPVScD9R2usdRWR12KY7ADBYqdv0LoQ4aylHICHJn-uLWrHbfepqCa_P7-NgBsfxVMSRwAjZGsfal5EsG92SE7uqYGWh2ZnP7G80Jk7hef5TVQ7pM7lM7rd7Hra4yB9JmYo1/w400-h171/44036C38-D98E-4D9C-9BE7-F39DF5FAB3E7.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51); color: #333333;">This decline is amplified in real terms by the fact that producer prices for construction materials (red) rose a full 2.0% (note: graph normed to 100 as of December 2022 for better clarity):</span></div><div><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto; background-color: white; caret-color: rgb(51, 51, 51);"><br /></span></span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMiqjp-UWf-oIkkULF5mDz37I5zD0FfrVPOMjOj2nQN0LBCMxFqscUuBddHPYqdtOCdwxgB2LU8xnfLzAubxRUT6BKjrB2SaaC4OA9CEFJi1J1_loOseIi0no7p2Ll0Lt4lYC3e3BS2O7ov2ayiyoVTD2KJoJXZA1ykh1Wu-SYi-Xr0oDUeFXNYTDhGMD1/s1919/DA9E095A-1F82-473E-ACB0-AF7561D89625.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="826" data-original-width="1919" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMiqjp-UWf-oIkkULF5mDz37I5zD0FfrVPOMjOj2nQN0LBCMxFqscUuBddHPYqdtOCdwxgB2LU8xnfLzAubxRUT6BKjrB2SaaC4OA9CEFJi1J1_loOseIi0no7p2Ll0Lt4lYC3e3BS2O7ov2ayiyoVTD2KJoJXZA1ykh1Wu-SYi-Xr0oDUeFXNYTDhGMD1/w400-h173/DA9E095A-1F82-473E-ACB0-AF7561D89625.jpeg" width="400" /></a></div><br /><div><br /></div><div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">This is the first negative construction spending report since last May.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">In sum, both leading sectors showed softness in these reports, but not enough to suggest any significant change of trend to a downturn at this point.</div></div></div></div><div class="separator" style="clear: both; text-align: center;"><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-17464338686785131272024-02-29T08:59:00.004-06:002024-02-29T09:02:56.247-06:00January personal income and spending: Goldilocks is knocking at the door<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="background-color: white;">Personal income and spending has become one of the two most important monthly reports I follow, because it nets out the impacts of higher interest rates and abating inflation due to the unlinking of the supply chain. Because real personal spending on services for the past 50 years has generally risen even during recessions, the more leading components of this report have to do with spending on goods. Additionally, there are several components that form part of the NBER’s “official” toolkit for determining when and whether a recession has begun.</span></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="background-color: white;"><br /></span></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="background-color: white;">Now, to the report for January . . . </span></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><span style="background-color: white;"><br /></span></div><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><span style="background-color: white; font-family: UICTFontTextStyleTallBody; font-size: 17px;">Nominally income rose a sharp 1.0% in January, the same increase as last January, suggesting that lots of people got big annual raises. Nominal spending rose 0.2%. Prices as measured by the PCE deflator increased 0.3% for the month, meaning that in real terms income rose 0.7% and spending declined -0.1%. Since just before the pandemic real incomes are up 7.0%, and spending is up 10.4% (NOTE: Data in all graphs below except for YoY comparisons, and the personal saving rate, is normed to 100 as of just before the pandemic):</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZLPtv8Jde0etuCCY6sV6llzU1KPp0VBgQUlcyQ0-1iMjN88vO7PfaMd9JYLiJDrro4o1JKwEheSXRjagGJmSxXa8XGAXF2VCirKUfOx6bJwbBpwYtgDUoxXufkrjqljwPg7JA8g3dYiZ9onkoTueBjUJ4SDVamCnFAumomWA14o5DCHxyiep6piiiTIDb/s1909/55A09360-010F-4201-B900-187D1806E6DA.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="820" data-original-width="1909" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhZLPtv8Jde0etuCCY6sV6llzU1KPp0VBgQUlcyQ0-1iMjN88vO7PfaMd9JYLiJDrro4o1JKwEheSXRjagGJmSxXa8XGAXF2VCirKUfOx6bJwbBpwYtgDUoxXufkrjqljwPg7JA8g3dYiZ9onkoTueBjUJ4SDVamCnFAumomWA14o5DCHxyiep6piiiTIDb/w400-h171/55A09360-010F-4201-B900-187D1806E6DA.jpeg" width="400" /></a></div><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><br /></p><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><span style="background-color: white; font-family: UICTFontTextStyleTallBody; font-size: 17px;">On a YoY basis, the PCE price index is up 2.4%, the lowest since March 2021. For the past 16 months, the YoY measure has been declining at the rate of 0.25%/month, suggesting that it will hit the Fed’s 2.0% target in the next two months:</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHHgquDc-4tC7iUjiYN47wVEWun145t_1P6whGYhYwZf6sZRrwPfw2Xbe0IiecSBWZs2PDWSTVouMRgukI_OWZGVe5F0p0mUgdSpkRw667VSIhFFObcGS9be3xEavK9iXI_WqmAcjHCn0KmReYyNuwbV8l4P4W64VbR-60jiCjsiu2OmX9HsPKg4qMexNj/s1908/A3DED370-8CB0-4228-AA61-96A95FC5E638.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="814" data-original-width="1908" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHHgquDc-4tC7iUjiYN47wVEWun145t_1P6whGYhYwZf6sZRrwPfw2Xbe0IiecSBWZs2PDWSTVouMRgukI_OWZGVe5F0p0mUgdSpkRw667VSIhFFObcGS9be3xEavK9iXI_WqmAcjHCn0KmReYyNuwbV8l4P4W64VbR-60jiCjsiu2OmX9HsPKg4qMexNj/w400-h171/A3DED370-8CB0-4228-AA61-96A95FC5E638.jpeg" width="400" /></a></div><br /><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><span style="background-color: white; font-family: UICTFontTextStyleTallBody; font-size: 17px;">As I indicated above, for the past 50+ years, real spending on services has generally increased even during recessions. It is real spending on goods which declines. Last month real services spending rose 0.4%, while real goods spending declined -1.1%, reversing December’s revised 0.9% gain:</span></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi02XVclEMUvtLThyOD_r5pZG8BAIlwQa28lE-xpFEH2YhW2MtYvT6ReLQVOPMqjTzFG37wuIlEZtZSZOClj73oiYrP1F8LAVBmWxXVnT9FFnTAhxnOvG9kFy5S1CUmEiBGrYiokzq3EbeN8zubV2EPW2Wq-qumtNIeAfjwHgapr_6fZok7c_xgQkijY3vt/s1917/F2728C75-CCC5-492B-A0DC-85C745A15103.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="817" data-original-width="1917" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi02XVclEMUvtLThyOD_r5pZG8BAIlwQa28lE-xpFEH2YhW2MtYvT6ReLQVOPMqjTzFG37wuIlEZtZSZOClj73oiYrP1F8LAVBmWxXVnT9FFnTAhxnOvG9kFy5S1CUmEiBGrYiokzq3EbeN8zubV2EPW2Wq-qumtNIeAfjwHgapr_6fZok7c_xgQkijY3vt/w400-h170/F2728C75-CCC5-492B-A0DC-85C745A15103.jpeg" width="400" /></a></div><br /><p style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: Arial, Tahoma, Helvetica, FreeSans, sans-serif; font-size: 14.85px;"><br /></p><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;">As per form, real services spending has risen consistently since the pandemic, while goods spending have been somewhat of a mirror image of gas prices, which peaked in June 2022.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;">Real durable goods spending tends to turn before non-durable goods spending. The former declined -2.1% for the month (vs. +1.5% in December), while the latter declined -0.5% (vs. +0.6% in December):</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1Nu87lLgmG9vBcz-sNTr3LhG-v4Tegt0YgcK1Bvmf2g0YZ-gPstlIxRO8tktTiNzgiYQgva00o2c_O7B5mv1wg3_iwJOQiMmVgcBiQUgIQ0y7RWpnjxaG_W3wT9546xOpRPuqPtWFKWtkNFxKTWco3LC8irEWVRgiZL3mX4RJu3owovW3DDD_Xzm4phtj/s1916/1A9D3EEB-869C-4B4C-9313-B97D4E8C860C.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="819" data-original-width="1916" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1Nu87lLgmG9vBcz-sNTr3LhG-v4Tegt0YgcK1Bvmf2g0YZ-gPstlIxRO8tktTiNzgiYQgva00o2c_O7B5mv1wg3_iwJOQiMmVgcBiQUgIQ0y7RWpnjxaG_W3wT9546xOpRPuqPtWFKWtkNFxKTWco3LC8irEWVRgiZL3mX4RJu3owovW3DDD_Xzm4phtj/w400-h171/1A9D3EEB-869C-4B4C-9313-B97D4E8C860C.jpeg" width="400" /></a></div><br /><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333; font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;">Durable goods spending had been very much affected over the past several years by the shortage of new vehicle inventory, which has largely abated as 2023 progressed.</div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><div><br /></div><div>Another important metric for the near future of the economy is the personal savings rate. In January it increased 0.1% to 3.8%:</div></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhGLAfC92yDwPLGIgADnCDbmUru1XT3doNluooDz5Ud_bmk4jmthM7LH19pT3c3Zzph8nIm7LXCCgj2D8dAKP-KME58dXmX1lNi6P1xl5Hy0pA2vdmdeWhTF5mOpqnlcLbtxiTuYbby4tU_rpiX9jXBSG-J0YYXRjnASwEu-poLn-qkwTmZVtVYYfugMmJ/s1908/9972EA99-AA9F-4155-B8F5-4B9289511150.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="822" data-original-width="1908" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhGLAfC92yDwPLGIgADnCDbmUru1XT3doNluooDz5Ud_bmk4jmthM7LH19pT3c3Zzph8nIm7LXCCgj2D8dAKP-KME58dXmX1lNi6P1xl5Hy0pA2vdmdeWhTF5mOpqnlcLbtxiTuYbby4tU_rpiX9jXBSG-J0YYXRjnASwEu-poLn-qkwTmZVtVYYfugMmJ/w400-h173/9972EA99-AA9F-4155-B8F5-4B9289511150.jpeg" width="400" /></a></div><br /><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><div>On the positive side, the declining trend in this rate since last May indicates a lot of consumer confidence. But on the negative side it remains close to the all time low readings of 2005-07, indicating vulnerability to an adverse shock. One of my forecasting models uses such a shock as a recession warning indicator. In any event, there is no such shock indicated at the moment.</div><div><div><br /></div><div>Also as indicated above, the NBER pays particular attention to several other aspects of this release. Real income excluding government transfers (like the 2020 and 2021 stimulus payments) continued to increase, up 0.3% for the month, to yet another new record high:</div></div></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3EDn2qfOMWHlsYjjRI4LASKvSR-IKHvsZ3HyE-taE89zEMemJaexrKvsXrwOqjhU9ADl51qJc438O3pSkR1-uLnimReRZOfCe4XUWeLV8fsvphqzJrBc_Ln74B7abg_EVVr4AjEdXr5VqAotyI66yyzrEdKfA7TMN2dqeIyar_Ka1tq9TCfX0zfjTjbb6/s1913/A71550B4-E992-46D0-B9B0-350BC5FA581A.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="815" data-original-width="1913" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3EDn2qfOMWHlsYjjRI4LASKvSR-IKHvsZ3HyE-taE89zEMemJaexrKvsXrwOqjhU9ADl51qJc438O3pSkR1-uLnimReRZOfCe4XUWeLV8fsvphqzJrBc_Ln74B7abg_EVVr4AjEdXr5VqAotyI66yyzrEdKfA7TMN2dqeIyar_Ka1tq9TCfX0zfjTjbb6/w400-h170/A71550B4-E992-46D0-B9B0-350BC5FA581A.jpeg" width="400" /></a></div><br /><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><div>This has been something of a mirror image of gas prices, rising consistently since June 2022.</div><div><br /></div><div>Finally, the deflator in this morning’s report is used to calculate real manufacturing and trade sales, another metric relied upon by the NBER. This increased a strong 1.0%,also to another new record high:</div></div><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwelNHOTr5etaCO1hhyf766OaheyN2YTMAHro1a7noNzuv5t_Z6C4U7SIWQtw3Z5evDbIm4VZbJB12vswGC4A7NZvFk4Lo3HoCYDurqqat-yDPg8KpC4uIPCBoTVhYps2Rp5vU54I2Gk2K2tW2vjuJK4wdoEXNwB2HpLeuv-_41ajX2X78k7v0-04IhUb-/s1908/333A971C-DD59-4C24-BFFA-7657E8A8ED93.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="832" data-original-width="1908" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwelNHOTr5etaCO1hhyf766OaheyN2YTMAHro1a7noNzuv5t_Z6C4U7SIWQtw3Z5evDbIm4VZbJB12vswGC4A7NZvFk4Lo3HoCYDurqqat-yDPg8KpC4uIPCBoTVhYps2Rp5vU54I2Gk2K2tW2vjuJK4wdoEXNwB2HpLeuv-_41ajX2X78k7v0-04IhUb-/w400-h175/333A971C-DD59-4C24-BFFA-7657E8A8ED93.jpeg" width="400" /></a></div><br /><div style="-webkit-text-size-adjust: auto; caret-color: rgb(51, 51, 51); color: #333333;"><br /></div><div><div><span style="background-color: white;"><span style="color: #333333;"><span style="-webkit-text-size-adjust: auto;">In summary, with the exception of real spending on goods - which really just took back December’s big increases - this was an excellent report. Inflation is now very close to the Fed’s preferred baseline rate, and both incomes and spending are up substantially. As I wrote last month, you would be well within your rights to call this a “Goldilocks” economy.</span></span></span></div></div></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-48334018891783583092024-02-29T07:53:00.006-06:002024-02-29T07:53:50.787-06:00Initial claims still very positive, especially YoY<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Before I get to this morning’s personal income and spending report, let’s get the latest weekly update to jobless claims out of the way.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">New jobless claims rose 13,000 to 215,000, while the four week moving average declined -3,000 to 212,500. Continuing claims, contrarily, rose 45,000 to 1.905 million, their second highest reading in over 2 years (but remains extremely low compared with the 40 years before the pandemic):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSDkXmJLNEtSKypSxgghb2DgcrCrHOezY3g09D7zkaXtE6uwP8s3BALV9SI3at3Eewv_1NIqnKhhNoXG-4VK6CyPrADV7aqgF2kcgwQYPSWtChMEQXYF275060ThRmsuH6nmGWkpS8M9iRpaGt9eAZlgaTzLZQHLX39QIdRW2WW3KhLEikP6MX5fECYevs/s1902/43F20745-BBFA-4363-8C9D-B541FC2E9A83.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="821" data-original-width="1902" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSDkXmJLNEtSKypSxgghb2DgcrCrHOezY3g09D7zkaXtE6uwP8s3BALV9SI3at3Eewv_1NIqnKhhNoXG-4VK6CyPrADV7aqgF2kcgwQYPSWtChMEQXYF275060ThRmsuH6nmGWkpS8M9iRpaGt9eAZlgaTzLZQHLX39QIdRW2WW3KhLEikP6MX5fECYevs/w400-h173/43F20745-BBFA-4363-8C9D-B541FC2E9A83.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">On the more important YoY basis for forecasting purposes, both the one week and four week average of new claims are down -2.7%, while continuing claims are up 10.9%, which remains better than almost all readings in the past 10 months:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiE2zb3pQoGqil5XmclxWFBPbHreupcMda7KK08P3OWCLJy8dYNyQdn7TilS_AipHIZ9dldsWmeQ9UL1RPDkcs95ymOK3sKqnoXXPEPmz1gIYskSNlEexDwznKF6P7d-UsONGFRegr0b2mAPD7oMXp0RLGO_25siiyi7TDFpcT0AptnnVFRJO091NwGKyyX/s1913/60147C9F-EBE1-4AC5-A7C5-5BE354A623D8.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="830" data-original-width="1913" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiE2zb3pQoGqil5XmclxWFBPbHreupcMda7KK08P3OWCLJy8dYNyQdn7TilS_AipHIZ9dldsWmeQ9UL1RPDkcs95ymOK3sKqnoXXPEPmz1gIYskSNlEexDwznKF6P7d-UsONGFRegr0b2mAPD7oMXp0RLGO_25siiyi7TDFpcT0AptnnVFRJO091NwGKyyX/w400-h174/60147C9F-EBE1-4AC5-A7C5-5BE354A623D8.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Finally, for purposes of forecasting the unemployment rate, the February average of claims continues to suggest that the unemployment rate will remain steady or decline in the next few months:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihWD3RaG3CTm1BuxveBq92Ii4xrKqHQkxai8UxD7MlWXjTLbQC96ODGLYr4sBAAPJLZG4t2viYkeGUTHu9xBciWfos8zWN9M-vv1OJhTqMljMjk73iLDEBt8hdUFK_rsZb-tJeNo3oqe1QWiWqvW00fC4GDfb37uVYJU44d7hiQnlw2fK0xBMus_pjR7OD/s1908/790E7B68-2147-4387-8220-83F984A08381.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="805" data-original-width="1908" height="169" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEihWD3RaG3CTm1BuxveBq92Ii4xrKqHQkxai8UxD7MlWXjTLbQC96ODGLYr4sBAAPJLZG4t2viYkeGUTHu9xBciWfos8zWN9M-vv1OJhTqMljMjk73iLDEBt8hdUFK_rsZb-tJeNo3oqe1QWiWqvW00fC4GDfb37uVYJU44d7hiQnlw2fK0xBMus_pjR7OD/w400-h169/790E7B68-2147-4387-8220-83F984A08381.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The Sahm rule for recessions is not going to be triggered in the nearest future.<br /><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-68788893987307392992024-02-28T09:36:00.001-06:002024-02-28T09:36:08.962-06:00The state of freight<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"></span><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">There’s no significant economic news today. Yesterday we did get durable goods orders, which are an official leading indicator. I don’t pay too much attention to them, because they are so volatile. Thus yesterday’s big -6.1% decline (blue in the graph below) is more likely than not just noise, particularly because “core” capital goods orders (red) increased 0.1%, and have been generally tending sideways. Another segment which is also an official leading indicator, consumer durable goods orders (gold), have been trending higher for the past six months:</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBkHyLRDhiq9wVb86rDYLrwhFOuUIUO-5t-6RTzIM8oJOKRH-in7mWVKf9jU-40aLXIvIJpWBNkugCPQ503x2IEAtgKelhD3duFs2pBSPutmkQ73czoFd-8Xe1dJly0_kZOxyBtUoLiaeHKnKnFpnVIuV0hhz4_jjwYxS3PkTK9T9vVmJ1PYvt9k1wW593/s1908/9A51FF8C-ADC9-41C8-8D7A-9AD1FCC4DE3F.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="815" data-original-width="1908" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBkHyLRDhiq9wVb86rDYLrwhFOuUIUO-5t-6RTzIM8oJOKRH-in7mWVKf9jU-40aLXIvIJpWBNkugCPQ503x2IEAtgKelhD3duFs2pBSPutmkQ73czoFd-8Xe1dJly0_kZOxyBtUoLiaeHKnKnFpnVIuV0hhz4_jjwYxS3PkTK9T9vVmJ1PYvt9k1wW593/w400-h171/9A51FF8C-ADC9-41C8-8D7A-9AD1FCC4DE3F.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Another important - and less noisy - way to look at the manufacturing and consumption aspects of the economy is to compare transportation with real sales. Note that comparing *production,* which seems logical, won’t work because so many products are imported and so are not caught in domestic production data. But they are caught in sales. The theory goes back to Charles Dow (he of the Dow Jones averages) who pointed out that every product that is produced, must be shipped to market before it is sold. Thus if there is a disconnect between production and transportation, something is amiss, and probably not to the upside.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">To cut to the chase, here’s the comparison of real total sales and transportation going back to the start of the Millennium (which is when the freight index data starts):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjICG46bUXy_3Bd3iholatB0WVSKQnt7JYkONh1jS1vqb3xIvnSEFJvsGywl0zJyCQnyzpGFB5Ha7L7zq4_FBo6McQUYwgBq39mwPsGcaP2wXugs_FAtyyt_y3DeYLx2QV3iwV4yF5dZZVIIrdkqxeXqj8EvWB986YCxyEeRBqpFrrNySCzgNdhr3Zx_7qI/s1905/4058431C-CE97-4209-B08E-A58F9DFF68CB.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="817" data-original-width="1905" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjICG46bUXy_3Bd3iholatB0WVSKQnt7JYkONh1jS1vqb3xIvnSEFJvsGywl0zJyCQnyzpGFB5Ha7L7zq4_FBo6McQUYwgBq39mwPsGcaP2wXugs_FAtyyt_y3DeYLx2QV3iwV4yF5dZZVIIrdkqxeXqj8EvWB986YCxyEeRBqpFrrNySCzgNdhr3Zx_7qI/w400-h171/4058431C-CE97-4209-B08E-A58F9DFF68CB.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">You can see that they closely track one another, with a few exceptions that have gotten resolved within 12-24 months. Notably, before the 2001 and 2008 recessions, freight turned down significantly first.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Here is the close-up on the last several years:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVGKfI02u8CR8U-mvLn4rkP1l8v6Wud9roWVCHfxZr9IxLBba5F7LS9e0sb42NsmDCsC5Z7kymFN_OkcrTec-uPNeSL7W1OzNCnRQ4T8YJyw11hlV60Nc47l-RhSKESLkYQEHSibk0F64mK7v13AhrjGnSTxd_9NS2sZeQzcSlrCaRmuzLXkIMgfmaCncO/s1911/4FC8C536-5EF7-42AD-88C2-31DC9AF9C29F.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="803" data-original-width="1911" height="168" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVGKfI02u8CR8U-mvLn4rkP1l8v6Wud9roWVCHfxZr9IxLBba5F7LS9e0sb42NsmDCsC5Z7kymFN_OkcrTec-uPNeSL7W1OzNCnRQ4T8YJyw11hlV60Nc47l-RhSKESLkYQEHSibk0F64mK7v13AhrjGnSTxd_9NS2sZeQzcSlrCaRmuzLXkIMgfmaCncO/w400-h168/4FC8C536-5EF7-42AD-88C2-31DC9AF9C29F.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">We had a significant downturn in transportation early last year, but the trend has appeared to reverse higher in the past six months.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Another aspect of transportation, which has a solid historical leading quality is sales of heavy weight trucks. Here’s what they look like YoY (red) compared with passenger vehicles and light weight trucks (blue):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBhAkCfB3g26uz8DJU5UjctXeZgZihshZaa_AidqtSCsNEj-Wvz1jRfXoHQmDM-PbvcWSDJd7FBoAqDnh6eDVXFRkOK2OEawRH5kjLU91dQ9Z7KH2UnLG4LN0H3IyKa3lbltcICK18Av3DryTqGqcRWRtgRBBr4qP-iARUJ6-YVyqj1Vz_iIRofS7eHpk1/s1900/E51424EC-E1D0-4093-8238-927E7007A6C5.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="821" data-original-width="1900" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBhAkCfB3g26uz8DJU5UjctXeZgZihshZaa_AidqtSCsNEj-Wvz1jRfXoHQmDM-PbvcWSDJd7FBoAqDnh6eDVXFRkOK2OEawRH5kjLU91dQ9Z7KH2UnLG4LN0H3IyKa3lbltcICK18Av3DryTqGqcRWRtgRBBr4qP-iARUJ6-YVyqj1Vz_iIRofS7eHpk1/w400-h173/E51424EC-E1D0-4093-8238-927E7007A6C5.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Not every downturn presages a recession, but every recession has been preceded by a downturn. And heavy weight truck sales always turn down before light vehicle sales.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Here’s the close-up of that for the past several years:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbJKiIM002PD1JF_BCkNfgX6ruFZlWfx3wG1X09AGgm3U17ZR37VHIsqcgLUkb0fa29q5cdHkCwTjxVjBvNnX9gq8QO1V7Jj2JqKQPFC6uXmqmEf6Ppy2sSBJB0rSSnDb8CYdkbWxROQnprcyyouqfIC4HixsmTuNUDhhh6O8dunDVAEqv6s3LyLG7Ih9j/s1900/CE6F6EBE-A961-4127-A499-BB037C31CA0F.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="824" data-original-width="1900" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbJKiIM002PD1JF_BCkNfgX6ruFZlWfx3wG1X09AGgm3U17ZR37VHIsqcgLUkb0fa29q5cdHkCwTjxVjBvNnX9gq8QO1V7Jj2JqKQPFC6uXmqmEf6Ppy2sSBJB0rSSnDb8CYdkbWxROQnprcyyouqfIC4HixsmTuNUDhhh6O8dunDVAEqv6s3LyLG7Ih9j/w400-h174/CE6F6EBE-A961-4127-A499-BB037C31CA0F.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">We have had a relatively minor downturn YoY during the autumn, but as of December that *may* have been resolving. We’ll find out in the next week when the January data is released.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Finally, trucks need to be driven (duh!). So employment in the trucking industry has also been a leading indicator. There, the news is definitely not good:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvWohBo5fJr-tp9SPGtWlZOO-h2BsssGFX6noLMJ9EPmSi4x6BW51kvXAaEtnm5mZPA6wGdhB9Me51Jt_siwHHmHbzIRb6_Xa-qM1aZBg9t4IHbelfDQp8JYavFn4rwh95SKiMYPzGfrE9tiL152NCjS81nnz3WFrQ9p-WAg2VGZ8DtJprBigyfP4sHWbw/s1917/9C4DA711-493C-4CC5-8DDA-CC049D8BCBD0.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="819" data-original-width="1917" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvWohBo5fJr-tp9SPGtWlZOO-h2BsssGFX6noLMJ9EPmSi4x6BW51kvXAaEtnm5mZPA6wGdhB9Me51Jt_siwHHmHbzIRb6_Xa-qM1aZBg9t4IHbelfDQp8JYavFn4rwh95SKiMYPzGfrE9tiL152NCjS81nnz3WFrQ9p-WAg2VGZ8DtJprBigyfP4sHWbw/w400-h171/9C4DA711-493C-4CC5-8DDA-CC049D8BCBD0.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The big downturn in summer 2023 was the bankruptcy and closure of a major trucking company, with the resulting unemployment of its former employees. Some of that has been recovered since, but not that much, suggesting that the bankruptcy was signal, not noise. </div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">As indicated above, motor vehicle sales will be updated within the next week. Trucking employment will be a week from Friday as part of the February employment report.<br /><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-9717978675319232042024-02-27T09:23:00.003-06:002024-02-27T09:23:49.924-06:00Repeat sales house price indexes continue to increases on par with past expansions<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">House prices lag home sales, which in turn lag mortgage rates. Yesterday we got the final January reading on sales. This morning we got the final monthly (for December) read on prices, for repeat sales of existing homes.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The FHFA purchase only price index rose 0.1% on a seasonally adjusted basis, and is up 6.6% YoY. Meanwhile the Case Shiller National index rose 0.2% for the month, and was is up 5.1% YoY. Here’s what the monthly numbers look like for the past five years:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZZhy3K_2vF18B1W5LPaBdNzAtB8tqdUJdWbYk7BXNDLpNFzeMLp3SwIgM2MECP72sqtfqnrh6v2KHxYtV-QKxqSnk2Vb2miosBGTKMe3qFGmXPDTZM0ZQYeTKPbpuSCoIO1SnrjtPGuKrzDk77c5dQkafy4v8BXaHuqTaKKSDrlIhnfre9WvTah4ARFzY/s1904/265FA442-35DB-439A-B61B-E896E8B50493.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="826" data-original-width="1904" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZZhy3K_2vF18B1W5LPaBdNzAtB8tqdUJdWbYk7BXNDLpNFzeMLp3SwIgM2MECP72sqtfqnrh6v2KHxYtV-QKxqSnk2Vb2miosBGTKMe3qFGmXPDTZM0ZQYeTKPbpuSCoIO1SnrjtPGuKrzDk77c5dQkafy4v8BXaHuqTaKKSDrlIhnfre9WvTah4ARFzY/w400-h174/265FA442-35DB-439A-B61B-E896E8B50493.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Note that this month’s increase was the lowest since last January for both indexes.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Further, although the 6.6% and 5.1% YoY increases appear to be major, the long term graph of both of them below, compared with the CPI for shelter (red, *2.5 for scale) shows that this is actually similar to gains during the majority of the past 25 years outside of recessions:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqm-D7COMtbRTdq2O3lfILJUvL90HV770MlsvroIbS4Pt3fECIJcmaHCbVd6OtCOtSpSFpq1y4j4hD0il4QrM9S45k2ihTBT1jXxRdGaiX1iXXSf8Rw8Q8Nqw-bza6m7BjnHLy9aOWF6HMr45Lov0qH8ZsuTFtPuuqLD0RDgx8Avv6wzcTrHNNpku3BqsA/s1907/10B76FE2-C031-4B8C-9022-F97F50558153.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="835" data-original-width="1907" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqm-D7COMtbRTdq2O3lfILJUvL90HV770MlsvroIbS4Pt3fECIJcmaHCbVd6OtCOtSpSFpq1y4j4hD0il4QrM9S45k2ihTBT1jXxRdGaiX1iXXSf8Rw8Q8Nqw-bza6m7BjnHLy9aOWF6HMr45Lov0qH8ZsuTFtPuuqLD0RDgx8Avv6wzcTrHNNpku3BqsA/w400-h175/10B76FE2-C031-4B8C-9022-F97F50558153.jpeg" width="400" /></a></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">For the month, the YoY increase in the FHFA index declined -0.1% from 6.7% in November, while the YoY increase in the Case Shiller index rose 0.5% from November’s 5.1%. As shown in the first graph above, this is because we had a period of actual declines in prices late in 2022. If present trends continue, these YoY comparisons will drop out in two months, and the YoY deceleration will continue.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">It is likely that chronic under-building of houses in the decade after the Great Recession has much to do with such price increases outstripping worker pay.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Additionally, because house prices lead “Owners’ Equivalent Rent” in the CPI, the above graph shows that we can expect further declines toward the more normal 2.5%-3.0% YoY range over the coming months in that very important inflation metric. <br /><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-73125647256185330282024-02-26T13:20:00.002-06:002024-02-26T13:20:26.438-06:00New home sales and YoY prices change little; expect sideways trend to follow similar recent trend in mortgage rates <p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">This week we conclude January’s housing market data with repeat sales prices tomorrow, and new single family home sales, which were reported this morning.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Per my usual caveat, while new home sales is that they are the most leading of the housing metrics, they are noisy and heavily revised. Which was the case this month, as last month’s number was revised downward by about 2%, or 13,000. January sales increased 10,000 from that revised number (blue in the graph below) to 661,000 annualized. The slightly less leading but much less noisy single family permits is also shown (red, right scale):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEga2XpV1FJ9PgEAsMeHiICKxDNXKoQkHeE1RpH0YY65a2GlYsNyDa_GkPFn3V4h4C1Pc2ARMaUGTUUunAzndIPShX__6t4spQ1OJ0yWpxvAduAxvxNyWBXFJHMxlnur-qBkv5N5RLzGV-cVvGdG0lVFGTLuRTP2bai3U94MvO_JKX3sXXuz8jG19AXDoGdu/s1900/E778C1EC-FB95-4EFF-A1FD-EC9546E229A1.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="1900" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEga2XpV1FJ9PgEAsMeHiICKxDNXKoQkHeE1RpH0YY65a2GlYsNyDa_GkPFn3V4h4C1Pc2ARMaUGTUUunAzndIPShX__6t4spQ1OJ0yWpxvAduAxvxNyWBXFJHMxlnur-qBkv5N5RLzGV-cVvGdG0lVFGTLuRTP2bai3U94MvO_JKX3sXXuz8jG19AXDoGdu/w400-h171/E778C1EC-FB95-4EFF-A1FD-EC9546E229A1.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The likelihood is that single family permits will stall out at current levels and quite likely even decline in coming months, following the recent downward trend in sales.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Now let’s compare sales with the even more leading metric of mortgage rates. Both are shown YoY (rates inverted, and *25 for scale):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMPFiLJ7UlSeGttyvKQhm-P92k-g1qElTsYdAoCreIU3fByTA3jUyZ4_6o7lXK0bArP9RIhbQLlg-ZjReBik096dCv2jDu9CtHKhGGCra4YwivRleFv9_l6OX07msmSVAM0bZ7xDHZrHVwy0tbK2JaqeyVxEFJArOjwV7Q5ZRalovqAyFKXbVJpC0FP_Q9/s1912/212F6892-31C4-49A5-A03E-EFAC3167ECEC.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="816" data-original-width="1912" height="171" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMPFiLJ7UlSeGttyvKQhm-P92k-g1qElTsYdAoCreIU3fByTA3jUyZ4_6o7lXK0bArP9RIhbQLlg-ZjReBik096dCv2jDu9CtHKhGGCra4YwivRleFv9_l6OX07msmSVAM0bZ7xDHZrHVwy0tbK2JaqeyVxEFJArOjwV7Q5ZRalovqAyFKXbVJpC0FP_Q9/w400-h171/212F6892-31C4-49A5-A03E-EFAC3167ECEC.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">We are unlikely to see much more YoY improvement in new home sales. Since one year ago they stood at 649,000, this suggests their current absolute level is about where they are likely to remain in the next few months.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Finally, here’s the YoY update on median prices, which are not seasonally adjusted (red), which lag sales (blue):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgf_40AUwK61pKtaRBaT9wcsSaG6VvKTwE1w9AShHikDwk4ZJtwr4OsK1uxWQV7u9on9sH3lyPxZuXGRSXE9dyl3k1X6Cm7svF8uketDeTJcPFh-m3gi3oNxxWeu6QAps2WocxXFfZHwgvYk7TfNAmZn4GO-NN4vCqLQuPi9aO8u01o_-fuQmqEuryKD_Mt/s1899/917D7496-3B89-4875-A2B3-E763D8B838B9.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="817" data-original-width="1899" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgf_40AUwK61pKtaRBaT9wcsSaG6VvKTwE1w9AShHikDwk4ZJtwr4OsK1uxWQV7u9on9sH3lyPxZuXGRSXE9dyl3k1X6Cm7svF8uketDeTJcPFh-m3gi3oNxxWeu6QAps2WocxXFfZHwgvYk7TfNAmZn4GO-NN4vCqLQuPi9aO8u01o_-fuQmqEuryKD_Mt/w400-h173/917D7496-3B89-4875-A2B3-E763D8B838B9.jpeg" width="400" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">We will probably continue to see negative YoY comparisons in prices for some months to come before the situation abates.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Generally speaking I am not expecting much in the way of big moves in new home sales or prices until there is a significant change in mortgage rates.<br /><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-40029031888160653852024-02-24T08:28:00.004-06:002024-02-24T08:28:39.386-06:00Weekly Indicators for February 19 - 23 at Seeking Alpha<p> </p><p> -<i> by New Deal democrat</i></p><p><br /></p><p>My “Weekly Indicators” post is <a href="https://seekingalpha.com/article/4673095-weekly-indicators-more-mixed-signals" target="_blank">up at Seeking Alpha</a>.</p><p>For an economy that seems to be crushing along, there sure are a lot of mixed signals. Some indicators, like the stock market, are soaring. Others, like temporary hiring, are at recessionary levels.</p><p>As usual, clicking over and reading will bring you up to the virtual moment as to the state of the economy, and will reward me just a little bit for my efforts in organizing and collating the data for you.</p>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-38670990189105309392024-02-23T09:29:00.004-06:002024-02-23T09:33:34.837-06:00The “gold standard” of employment reports suggests that last summer’s job growth was even weaker than we thought<p> </p><p><i> - by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">While the monthly jobs report gets all the headlines, the “gold standard” for actual employment gains and losses is the Quarterly Census of Employment and Wages (QCEW), which as its name indicates, unlike the payrolls report is not a survey but rather an actual census of about 97% of all employers, via their withholding tax reports. The downside of the QCEW is that it is reported with a serious lag (4 or more months after the end of a quarter), and it also can be revised up until a year later. Once that happens, the nonfarm payrolls data from the previous year is also revised to be in accord.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Additionally, unlike the monthly jobs report, the QCEW is not seasonally adjusted. The Philadelphia Fed does estimate those season adjustments several weeks later, which is helpful.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">All of which is by way of introduction to the fact that the QCEW for Q3 of last year was reported on Wednesday, and it suggests that job growth was weaker than officially reported.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Let’s start with the comparison data. Below are both the Establishment surveyand Household survey’s employment data YoY beginning January 2022 through the end of Q3 last year:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS7wgCO7t8jaGAVtyV3eYqHw3zlYb6ynj1a5Ys-U6knanhB5fDnX5gNTMwN4Qs6o-P99ovaHj7cf5WNa-GoAcNZ391LMlM-WILdOJbi575-sJYHrOrTrL4sOgscX7A-gDrEQ5RPI7jPaW6sGgJDNKU7LhKmzRKxtYgDyaY6i9i2VMz0TTelT6JqeJB7z81/s1917/2848EFD2-FE49-460E-96C1-314C3A584DF4.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="829" data-original-width="1917" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiS7wgCO7t8jaGAVtyV3eYqHw3zlYb6ynj1a5Ys-U6knanhB5fDnX5gNTMwN4Qs6o-P99ovaHj7cf5WNa-GoAcNZ391LMlM-WILdOJbi575-sJYHrOrTrL4sOgscX7A-gDrEQ5RPI7jPaW6sGgJDNKU7LhKmzRKxtYgDyaY6i9i2VMz0TTelT6JqeJB7z81/w400-h173/2848EFD2-FE49-460E-96C1-314C3A584DF4.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">As remarked from time to time, while the Establishment survey is larger and less noisy, the Household survey numbers have been lower compared with the Establishment survey’s ever since March 2022. As of June 2023, the Establishment survey showed a 2.1% YoY gain vs. a 1.8% gain in the Household survey. By September, that had decelerated to 2.0% and 1.7%, respectively.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Unfortunately, the QCEW does not come with adequate graphing data, and FRED doesn’t supply it either, so the below table will have to do:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhX7XSuQP_ERuusH1cjQS2vvjGMwV5PkVhG9ke91HhY6EnbHf3FGOstph4gh3_lIrypOYKV6aP0PR84Z1OyqhxfMHQRp8slIMELsuiXdSniU1H-cBEbgtnayv68fLcNzwTjKKRO5YrgmdRCN5mZ6b-p47VljaNJXC_MpMxLFRQVLeRAAFZ_H7GBU0hHNQYM/s1098/36FE1E76-638E-49D6-8F64-F18375910862.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="178" data-original-width="1098" height="65" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhX7XSuQP_ERuusH1cjQS2vvjGMwV5PkVhG9ke91HhY6EnbHf3FGOstph4gh3_lIrypOYKV6aP0PR84Z1OyqhxfMHQRp8slIMELsuiXdSniU1H-cBEbgtnayv68fLcNzwTjKKRO5YrgmdRCN5mZ6b-p47VljaNJXC_MpMxLFRQVLeRAAFZ_H7GBU0hHNQYM/w400-h65/36FE1E76-638E-49D6-8F64-F18375910862.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">With the annual revisions, the payrolls report reflects the YoY% changes in the QCEW quite well through June of last year. But with Q3, a significant downward divergence has opened up. </div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">This is primarily due to a much bigger than usual decline in July. To show you this, here are the non-seasonally adjusted comparison monthly numbers for the first nine months of 2023 for nonfarm payrolls (left) vs. the QCEW (right)(all number in thousands):</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">JAN. -2,523 -2,302</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">FEB. 1,129. 789</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">MAR. 436. 516</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">APR. 948. 834</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">MAY. 931. 1,116</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">JUN. 710. 828</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">JUL. -861. -2,122</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">AUG. 374. 795</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">SEP. 490. 791</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">TOTAL 2,634. 1,247</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">During the first six months of the year, the differences in the two measures largely netted out. The huge difference is in July, which was only partially made up in the next two months.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Let me reiterate that this is non-seasonally adjusted data. The seasonally adjusted payroll numbers for July through September (in thousands) were 184, 210, and 246, respectively.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">But since the QCEW shows a net loss of -535,000 jobs in Q3 vs. the unadjusted nonfarm payrolls number, it’s at least possible that after the revisions are finalized, at least one of those three months is going to show an actual loss of jobs on a seasonally adjusted basis. </div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Two final caveats: First, similar declines in Q3 jobs in the QCEW numbers were reported in 2017 through 2019, which also showed up in the unadjusted payrolls report (red), but the seasonally adjusted figures (blue) showed gains:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidNeD7Fcr-pumHi84wU-J91darFzhqW9N6ejssjpPYBn33jqQbIL1WSpGzajhoqZCy7GeLiArtjwEdA0eC4C3YouqdYE32cbWvVBgjYmjzTukqovTHO1UI4Zfodnoq8hYJMyeeGzMD9bgqyQI7tW79pmO6nCBiD_Dr4SHyPOb7B2e0Jtv-Tmgmxfe28W44/s1913/361CB1EE-4B01-4872-A261-7D0411E1D934.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="814" data-original-width="1913" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEidNeD7Fcr-pumHi84wU-J91darFzhqW9N6ejssjpPYBn33jqQbIL1WSpGzajhoqZCy7GeLiArtjwEdA0eC4C3YouqdYE32cbWvVBgjYmjzTukqovTHO1UI4Zfodnoq8hYJMyeeGzMD9bgqyQI7tW79pmO6nCBiD_Dr4SHyPOb7B2e0Jtv-Tmgmxfe28W44/w400-h170/361CB1EE-4B01-4872-A261-7D0411E1D934.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Secondly, we had a similar episode of a big decline in the Q2 2022 QCEW report, which resulted in an estimate of seasonally adjusted job losses by the Philadelphia Fed, but which were subsequently revised away in the next Quarter’s QCEW update.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">But as you may recall, I have been increasingly concerned by the relatively poor performance of YoY tax withholding, which throughout 2023 decelerated from sharply higher levels to nominally negative by the end of December. Since tax withholding dollar amounts are affected by inflation as well as wages and hours worked, they don’t measure exactly the same thing as the QCEW, so caution is certainly in order. Nevertheless, on a preliminary basis, there is reason to believe that employment was even weaker last summer than the tepid monthly payroll gains have suggested.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-24133969261351572092024-02-22T09:45:00.000-06:002024-02-22T09:45:02.232-06:00The bottoming process in existing home sales continues, as YoY price comparisons increase<p> </p><p> - <i>by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The bifurcation of the housing market between new and existing home components continues, as existing home sales continue near their bottom, but with a little improvement.</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Specifically, in January sales increased 120,000 on an annualized basis from an upwardly revised (by 80,000) 3.88 million to 4.00 million. This is the seventh month in a row that the annualized rate has varied between 3.85 million and 4.11 million:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLIzSHoDr4D2YiHX_dRCKk_eh82hScPteF-1xUpzxE931IU8dxzvrpTdVtLLST1uZE-UNpJsCV30U29C5ZxeOIkon-UlkHu04gXs7Ko2yv-2bP5DjP7xQYOfZTdEa9O1edVpB_-fXxbjFuLYwziAUR9T80Hx4UQ_98ZMHeBvJFI0UZ2NHCtaWz7siDZ0DG/s1322/7E40DE75-EFE4-402D-98DD-2A9248CEFDB1.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="743" data-original-width="1322" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgLIzSHoDr4D2YiHX_dRCKk_eh82hScPteF-1xUpzxE931IU8dxzvrpTdVtLLST1uZE-UNpJsCV30U29C5ZxeOIkon-UlkHu04gXs7Ko2yv-2bP5DjP7xQYOfZTdEa9O1edVpB_-fXxbjFuLYwziAUR9T80Hx4UQ_98ZMHeBvJFI0UZ2NHCtaWz7siDZ0DG/w400-h225/7E40DE75-EFE4-402D-98DD-2A9248CEFDB1.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Because of the low inventory, the non-seasonally adjusted median price for an existing home increased to up 5.1% YoY, the highest YoY comparison since 2022:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUPH9e_3-o8YAKxhHNAO0SQZ-YkH6wXKsw-Oi3-X-xxFvFfd23rIpB8W41cOIdKE6M4cbDtXp_XYx9yb5nqWhmrxmu7fmt4IJqtLbbjRDsUlI4eWk4sRPlfUOJJaFl6gcNHtzUNIX5BPEWmKkBpQBZxWGERNddK7yTlm01E9-AudbRMSEL5l7JLenGL-tu/s2094/6DCA6451-BD11-4B7F-87BB-66CAE8039EF9.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1126" data-original-width="2094" height="215" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUPH9e_3-o8YAKxhHNAO0SQZ-YkH6wXKsw-Oi3-X-xxFvFfd23rIpB8W41cOIdKE6M4cbDtXp_XYx9yb5nqWhmrxmu7fmt4IJqtLbbjRDsUlI4eWk4sRPlfUOJJaFl6gcNHtzUNIX5BPEWmKkBpQBZxWGERNddK7yTlm01E9-AudbRMSEL5l7JLenGL-tu/w400-h215/6DCA6451-BD11-4B7F-87BB-66CAE8039EF9.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The YoY improvement is consistent with what we have recently seen in the FHFA and Case Shiller repeat sales house price indexes:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdpRx94CShtCrUO1xi4QA5gauICsaQdhgil_PmpIENMtHexvynJx1Hotn8vkWgx5RINi1niOnQh-h3w6KDYfj9f434uC1XzAZLSysuXFzC-cx4HMukPXfdZeU6wNdMdBUv6UKGD28XqMoY6ZfSIHEsvTPEXYiJPORU8rjvzZ-D5UGWn_PMjz3yZY74OHsB/s1903/B2E4DC49-9DED-4397-A77D-807E51CD4F5A.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="805" data-original-width="1903" height="169" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdpRx94CShtCrUO1xi4QA5gauICsaQdhgil_PmpIENMtHexvynJx1Hotn8vkWgx5RINi1niOnQh-h3w6KDYfj9f434uC1XzAZLSysuXFzC-cx4HMukPXfdZeU6wNdMdBUv6UKGD28XqMoY6ZfSIHEsvTPEXYiJPORU8rjvzZ-D5UGWn_PMjz3yZY74OHsB/w400-h169/B2E4DC49-9DED-4397-A77D-807E51CD4F5A.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">It is also consistent with the slight improvement (to “less negative”) in the YoY comparisons in new apartment leases, as reported in the National Rent Index earlier this week:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBrAJjz9YiYK67ssrGLiQl6mAdrSHEud1E1KACGZrAz6KZAezf7yaHH2dDqLG3sCmv1LYdan1GUPFd3UPljsnlLU428InOKElC_9vfG7du1S0_3R5v0t96b2k_M-cDfwl1qmcUPzeS1SENZe3otyxMoqSBjnPdzvpTCWjBc3iH8JWREG0vf8WOWpCVseBr/s980/85A9BA54-3201-4589-80F8-E52A6B2C72C7.webp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="692" data-original-width="980" height="283" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiBrAJjz9YiYK67ssrGLiQl6mAdrSHEud1E1KACGZrAz6KZAezf7yaHH2dDqLG3sCmv1LYdan1GUPFd3UPljsnlLU428InOKElC_9vfG7du1S0_3R5v0t96b2k_M-cDfwl1qmcUPzeS1SENZe3otyxMoqSBjnPdzvpTCWjBc3iH8JWREG0vf8WOWpCVseBr/w400-h283/85A9BA54-3201-4589-80F8-E52A6B2C72C7.webp" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The monthly non-seasonally adjustment in rentals better shows the bottoming process there:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHph1_CmXs0WCGGLAdV-DQwyxku3WLkNjKyDVkJB1nsvevuVT6paiZ3gq8K8zM_nrjD5OI3JpRBjMqm7FakxHF1C3lTQespq2OiOXMZWqpL1aPQx5BBciQTALyRNBcWZywI3OKON1E75dmQK35ahSk1Ah_Rw7aktg7dHAEMKWJBUOTwJ3Ly_kIUgORHkR7/s980/554FE78D-64CB-4450-B2B8-760BD98F67C7.webp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="652" data-original-width="980" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHph1_CmXs0WCGGLAdV-DQwyxku3WLkNjKyDVkJB1nsvevuVT6paiZ3gq8K8zM_nrjD5OI3JpRBjMqm7FakxHF1C3lTQespq2OiOXMZWqpL1aPQx5BBciQTALyRNBcWZywI3OKON1E75dmQK35ahSk1Ah_Rw7aktg7dHAEMKWJBUOTwJ3Ly_kIUgORHkR7/w400-h266/554FE78D-64CB-4450-B2B8-760BD98F67C7.webp" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Because of the all-time high in new apartment and condo completions, there has been more downward pressure on rents than on single family houses. The present situation remains that very few people are interested in trading in 3% mortgages for 7% mortgages, so existing home sales are somewhat frozen, while developers can adjust the footprint, amenities, mortgage rebates, and prices in new houses to generate more demand. <br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.comtag:blogger.com,1999:blog-2301429786427499687.post-7610604327000926002024-02-22T07:48:00.003-06:002024-02-22T07:50:13.055-06:00The good news on jobless claims continues<p> </p><p> -<i> by New Deal democrat</i></p><p><br /></p><p><span style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The good news on jobless claims continued this week, as initial claims declined -12,000 to 201,000. The four week moving average also declined, by -3,500 to 215,250. Continuing claims, with the usual one week delay, declined -27,000 to 1.862 million:</span></p><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmv7MjpQIsUDbB6W-fHlMnUOpyydDefiPYTf7JNawxAoBJrUvhh2wC8ohNpVm05ulSiLcoDf6L8aVjwiYfq_WNw3i-QCi59Qw2FWZyiPQWjHBe-QIvH6iS41_rBsa2uV563zSvYo9exiKwtOpAcUrWvhdV93043_JPn2b18KV-kUF_gfKsLYpdMjTVa7hC/s1907/35416296-C26C-46D7-85CF-7F0F97FB20B1.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="823" data-original-width="1907" height="173" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmv7MjpQIsUDbB6W-fHlMnUOpyydDefiPYTf7JNawxAoBJrUvhh2wC8ohNpVm05ulSiLcoDf6L8aVjwiYfq_WNw3i-QCi59Qw2FWZyiPQWjHBe-QIvH6iS41_rBsa2uV563zSvYo9exiKwtOpAcUrWvhdV93043_JPn2b18KV-kUF_gfKsLYpdMjTVa7hC/w400-h173/35416296-C26C-46D7-85CF-7F0F97FB20B1.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Needless to say, this also helped the YoY comparisons, which are more important for forecasting purposes. Initial claims are down -7.4%, the four week average is up a mere 1.1%, and continuing claims are up 8.6%. In the case of the last, that is the lowest YoY comparison since last March:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_L3LiMzooxkHVx3yC4U2FTljjPKKb-Wha72xRXbRWqPgYhIJ-4ykWT75ROII_XPwxq-kakqVZk_Rx3Xccc6mw9kAad-28Qtmkys4LdzZw2-uObk0mkTpTLIgQbNWCyeCsxoHmQ-UsabHJEMdFdToWCN1nDMntgmqWJ1wIHobN4A117Knr4rW5CCrxxRo6/s1897/9F8C9397-6750-4F1C-8B6E-E0A0CDF853D9.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="822" data-original-width="1897" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_L3LiMzooxkHVx3yC4U2FTljjPKKb-Wha72xRXbRWqPgYhIJ-4ykWT75ROII_XPwxq-kakqVZk_Rx3Xccc6mw9kAad-28Qtmkys4LdzZw2-uObk0mkTpTLIgQbNWCyeCsxoHmQ-UsabHJEMdFdToWCN1nDMntgmqWJ1wIHobN4A117Knr4rW5CCrxxRo6/w400-h174/9F8C9397-6750-4F1C-8B6E-E0A0CDF853D9.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Recall that continuing claims, considered by itself, triggered some recession comparisons a few months ago. But that was not supported by initial claims, so was a false signal. For initial claims to even trigger a “watch,” let alone a recession warning, they need to be up over 10%, and remain so for over a month.</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">Finally, here’s the update on the monthly average of initial claims leading the unemployment rate, and thus also leading the Sahm rule for recessions:</div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPSPr898nTlJn1823nMMAaGHukuKe0WIZJkmd5AvHMlqSZFcRIp3mrKVl6g8NQoM93lj8Y3TZm-ehcXi6Pj-BW06ebYQd1y0rzr9J34wJwmbWfDMse2M1cnx803eWg0BGXM4Vtx0boQfQ4Pjd8zmIcw7N579CCruCeKkquzoHOWFpkqml6Lr9YFS4JIIRk/s1908/009421C4-6C7D-4C59-A9C3-1AC9FD22AACD.jpeg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="831" data-original-width="1908" height="174" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPSPr898nTlJn1823nMMAaGHukuKe0WIZJkmd5AvHMlqSZFcRIp3mrKVl6g8NQoM93lj8Y3TZm-ehcXi6Pj-BW06ebYQd1y0rzr9J34wJwmbWfDMse2M1cnx803eWg0BGXM4Vtx0boQfQ4Pjd8zmIcw7N579CCruCeKkquzoHOWFpkqml6Lr9YFS4JIIRk/w400-h174/009421C4-6C7D-4C59-A9C3-1AC9FD22AACD.jpeg" width="400" /></a></div><br /><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;"><br /></div><div style="font-family: UICTFontTextStyleTallBody; font-size: 17px;">The unemployment rate is like to decline in the next few months, or at worst remain steady. Any increase that would trigger the Sahm rule is off the table for now.<br /><br /></div>New Deal democrathttp://www.blogger.com/profile/04897611870066748049noreply@blogger.com