Revising a number from very, very bad to very bad isn’t really good news, or even mixed. Real gross domestic product is now thought to have decreased at an annual rate of 5.7 percent in the first quarter of 2009. The advance estimate for first quarter GDP change was a decline of 6.1 percent.
I have not been logging the corporate profits indicator that is released along with GDP. That number moved away from its fourth quarter red ink, a decline of a quarter-trillion dollars, to a modest increase of $43 billion. (Please comment on whether or not I should be including this indicator in my calculations and analysis.)
The GNI closes out May at 36.1 percent. While that’s certainly better than the 14.7 percent in January, there is still a lot of bad news out there. Next week will be very interesting as we run up to the May employment situation on Friday through April construction spending, personal income, and factory shipments, and a revised first quarter productivity estimate.
Friday, May 29, 2009
Thursday, May 28, 2009
A crocus sighting? Or just a croak?
I had thought my computer had lost the power to shock me; then I opened the Census Bureau’s Economic Indicators page. Any uptick, even one as small as April’s, in housing sales, especially coupled with firmness in mid-range pricing and another tick down in the months of inventory on hand, has to be regarded as promising.
While the small increase in durable goods orders also was good to hear, the details of that report, declining shipments and unfilled orders in particular, were not as good. Thus, the durable goods block in my good news diffusion index (GNI) was filled with a more conservative 0.5 rather than the 1.0.
After these two releases were logged, the May GNI read 38.2 percent, up 6.9 percentage points from April. The only release left on my calendar for May, unfortunately, is the preliminary report on first quarter GDP. So, let’s not start unrestrained celebrations yet.
Sales of new one-family houses in April 2009 were at a seasonally adjusted annual rate of 352,000; a modest 0.3% above March. The median sales price of new houses sold in April 2009 was $209,700, up a bit over the month; the average sales price was $254,000, down an even smaller bit. A good report, and something of a surprise.
New orders for manufactured durable goods in April increased $3.0 billion or 1.9 percent to $161.5 billion. This was the second increase in the last three months. Inventories, unfilled orders, and shipments fell. After some vacillation, I have decided to bend over backwards and call this a mixed report. (A painful example of the innate conservatism of the social sciences.)
While the small increase in durable goods orders also was good to hear, the details of that report, declining shipments and unfilled orders in particular, were not as good. Thus, the durable goods block in my good news diffusion index (GNI) was filled with a more conservative 0.5 rather than the 1.0.
After these two releases were logged, the May GNI read 38.2 percent, up 6.9 percentage points from April. The only release left on my calendar for May, unfortunately, is the preliminary report on first quarter GDP. So, let’s not start unrestrained celebrations yet.
Sales of new one-family houses in April 2009 were at a seasonally adjusted annual rate of 352,000; a modest 0.3% above March. The median sales price of new houses sold in April 2009 was $209,700, up a bit over the month; the average sales price was $254,000, down an even smaller bit. A good report, and something of a surprise.
New orders for manufactured durable goods in April increased $3.0 billion or 1.9 percent to $161.5 billion. This was the second increase in the last three months. Inventories, unfilled orders, and shipments fell. After some vacillation, I have decided to bend over backwards and call this a mixed report. (A painful example of the innate conservatism of the social sciences.)
Tuesday, May 19, 2009
It ain't over til it's over
The recession ain’t over yet, apparently. The housing-related sectors of the economy led us down, and will have to stabilize before we can stop the slide. The May good news diffusion index slipped to 33.3 on a very poor housing starts report.
Privately-owned housing starts in April 2009 were at an annual rate of 458,000. This is 12.8 percent below the revised March 2009 estimate of 525,000. This is bad, very bad. It’s only saved from being completely disastrous by the relatively stable-to-positive signs in the single-family components of starts and permits.
The rest of the month’s reports include the preliminary first quarter GDP release and the advance report on durable goods orders, neither which we should expect to much good news in, and the now very critical May 25th report on new home sales.
Privately-owned housing starts in April 2009 were at an annual rate of 458,000. This is 12.8 percent below the revised March 2009 estimate of 525,000. This is bad, very bad. It’s only saved from being completely disastrous by the relatively stable-to-positive signs in the single-family components of starts and permits.
The rest of the month’s reports include the preliminary first quarter GDP release and the advance report on durable goods orders, neither which we should expect to much good news in, and the now very critical May 25th report on new home sales.
Friday, May 15, 2009
A brave mid-month scrabble
Good news on prices and a bit of an edge-up in real earnings outweighed a troublesome industrial production report. The good news diffusion index now reads 35.7 percent, compared with less than 15 percent at the beginning of the year.
Businesses are scrabbling hard to find the brake-the-slide traction we mentioned yesterday; holding the line on prices is a good thing. With most of this month’s remaining indicators on the production rather than pricing side, however, I’d expect the news index to slip a bit before we close out the month.
On a seasonally-adjusted basis, the CPI-U was unchanged in April after falling 0.1 percent in March. The index for all items less food and energy increased 0.3 percent in April after increasing 0.2 percent in March. Moderate price increases are very good news at this juncture.
Real average weekly earnings rose by 0.1 percent in April 2009 due to a 0.1 percent increase in average hourly earnings. Average weekly hours and the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) were unchanged. Over the year real earnings increased 2.6 percent. Rising real earnings are good news at any juncture.
Industrial production decreased 0.5 percent in April after having fallen 1.7 percent in March. The capacity utilization rate for total industry fell further in April, to 69.1 percent, a low over the history of this series, which begins in 1967. Bad news.
Businesses are scrabbling hard to find the brake-the-slide traction we mentioned yesterday; holding the line on prices is a good thing. With most of this month’s remaining indicators on the production rather than pricing side, however, I’d expect the news index to slip a bit before we close out the month.
On a seasonally-adjusted basis, the CPI-U was unchanged in April after falling 0.1 percent in March. The index for all items less food and energy increased 0.3 percent in April after increasing 0.2 percent in March. Moderate price increases are very good news at this juncture.
Real average weekly earnings rose by 0.1 percent in April 2009 due to a 0.1 percent increase in average hourly earnings. Average weekly hours and the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) were unchanged. Over the year real earnings increased 2.6 percent. Rising real earnings are good news at any juncture.
Industrial production decreased 0.5 percent in April after having fallen 1.7 percent in March. The capacity utilization rate for total industry fell further in April, to 69.1 percent, a low over the history of this series, which begins in 1967. Bad news.
Thursday, May 14, 2009
May showers turn colder
So far this month, barely a quarter of the news has been good as the economy seeks enough traction to brake its decline. The effort hasn’t gone well so far in May and hadn’t gone well in April. The good news diffusion index is at 27.3 so far this month, down from 31.3 in April and 36.9 in March.
March 2009 sales of merchant wholesalers were $310.9 billion, down 2.4 percent from last month. End-of-month inventories were $411.7 billion, down 1.6 percent from last month. Bad news in the middle of the distribution chain.
The Nation's international deficit in goods and services increased to $27.6 billion in March from $26.1 billion in February, as exports decreased more than imports. Both terms of this equation and the sum are bad.
Retail and food service sales for April reached $337.7 billion, a decrease of 0.4 percent from the previous month. Bad, albeit less bad than March.
Total business sales for March were $971.7 billion, down 1.6 percent from February. Month-end inventories were $1,404.1 billion, down 1.0 percent from last month. No good news here.
The Import Price Index rose 1.6 percent in April. A 15.4 percent increase in import petroleum prices more than offset a 0.4 percent decline in the price index for nonpetroleum imports. Export prices also rose in April, increasing 0.5 percent. This is mixed news; no over-the-month increase of 1.6 percent in import prices is good, even if oil is to blame. However, the almost-too-big increase in export prices gives a sign that there is some demand out there.
The Producer Price Index for Finished Goods increased 0.3 percent, seasonally adjusted, in April. This rise followed a 1.2-percent decline in March and a 0.1-percent increase in February. Prices for finished goods other than foods and energy inched up 0.1 percent compared with no change in March. Moderate firmness in pricing is good news; the specter of deflation pushes further away.
March 2009 sales of merchant wholesalers were $310.9 billion, down 2.4 percent from last month. End-of-month inventories were $411.7 billion, down 1.6 percent from last month. Bad news in the middle of the distribution chain.
The Nation's international deficit in goods and services increased to $27.6 billion in March from $26.1 billion in February, as exports decreased more than imports. Both terms of this equation and the sum are bad.
Retail and food service sales for April reached $337.7 billion, a decrease of 0.4 percent from the previous month. Bad, albeit less bad than March.
Total business sales for March were $971.7 billion, down 1.6 percent from February. Month-end inventories were $1,404.1 billion, down 1.0 percent from last month. No good news here.
The Import Price Index rose 1.6 percent in April. A 15.4 percent increase in import petroleum prices more than offset a 0.4 percent decline in the price index for nonpetroleum imports. Export prices also rose in April, increasing 0.5 percent. This is mixed news; no over-the-month increase of 1.6 percent in import prices is good, even if oil is to blame. However, the almost-too-big increase in export prices gives a sign that there is some demand out there.
The Producer Price Index for Finished Goods increased 0.3 percent, seasonally adjusted, in April. This rise followed a 1.2-percent decline in March and a 0.1-percent increase in February. Prices for finished goods other than foods and energy inched up 0.1 percent compared with no change in March. Moderate firmness in pricing is good news; the specter of deflation pushes further away.
Friday, May 8, 2009
A modest May flower
Through the end of the first week, the good news diffusion index May is off a better start than it got in April. Thirty percent of the news has been good so far in May.
New orders for manufactured goods in March decreased 0.9 percent to $345.3 billion. Bad news continues for factories.
Total construction spending for March was 0.3 percent above February. A ray of sunshine, albeit not significantly bright, and entirely in public sector work.
In March, consumer credit decreased at an annual rate of 5.2 percent. Revolving credit decreased at an annual rate of 6.8 percent, and nonrevolving credit decreased at an annual rate of 4.2 percent. Still falling—a bad thing even if the Fed pointed out a more mixed set of signals in the first quarter totals.
Productivity rose 0.8 percent in the nonfarm business sector in first-quarter, as hours fell faster than output. Unit labor costs increased 3.3 percent. A mixed report. The unit costs were driven by wage gains.
Nonfarm payroll employment continued to decline in April (-539,000), and the unemployment rate rose from 8.5 to 8.9 percent. Obviously bad news; we can anticipate this report being bleak for quite a while.
The composite index of five labor market indicators dropped 2.1 percent in April. Four of the five indicators fell. Those were, in order of their contribution to the decline, goods-producing employment, the unemployment rate, the long-term (15+weeks) unemployment rate, and the aggregate hours index. The employment-to-population ratio was unchanged.
There may be a bud of hope in the fact that the index edged back a little closer to its 6-month moving average. In the past, the trough in the difference between the MA and the series has been closely associated with the timing of the recession trough.
New orders for manufactured goods in March decreased 0.9 percent to $345.3 billion. Bad news continues for factories.
Total construction spending for March was 0.3 percent above February. A ray of sunshine, albeit not significantly bright, and entirely in public sector work.
In March, consumer credit decreased at an annual rate of 5.2 percent. Revolving credit decreased at an annual rate of 6.8 percent, and nonrevolving credit decreased at an annual rate of 4.2 percent. Still falling—a bad thing even if the Fed pointed out a more mixed set of signals in the first quarter totals.
Productivity rose 0.8 percent in the nonfarm business sector in first-quarter, as hours fell faster than output. Unit labor costs increased 3.3 percent. A mixed report. The unit costs were driven by wage gains.
Nonfarm payroll employment continued to decline in April (-539,000), and the unemployment rate rose from 8.5 to 8.9 percent. Obviously bad news; we can anticipate this report being bleak for quite a while.
The composite index of five labor market indicators dropped 2.1 percent in April. Four of the five indicators fell. Those were, in order of their contribution to the decline, goods-producing employment, the unemployment rate, the long-term (15+weeks) unemployment rate, and the aggregate hours index. The employment-to-population ratio was unchanged.
There may be a bud of hope in the fact that the index edged back a little closer to its 6-month moving average. In the past, the trough in the difference between the MA and the series has been closely associated with the timing of the recession trough.
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