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By New_Deal_democrat February 22, 2014 10:49 am
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Weekly Indicators: Housing is dead. Long live the Consumer! edition
In January data reported this past week, the Index of Leading Indicators rose, indicating that the expansion is expected to continue through summer.  Both producer and consumer prices rose slightly.  The Empire and Philly manufacturing indexes fell, although the former remained in expansion.  Housing permits, starts, and existing home sales all were awful.


As always, my reminder that the purpose of my weekly reports on the high frequency weekly indicators is to provide an up-to-this-week snapshot of the economy, a way to "mark to market" my own opinions and a vehicle for you to do so with yours as well.


Is "The Big Chill" still in place?  Let's start with consumer spending again:


Consumer spending

Gallup's 14 day average of consumer spending averaged between $80 and $100 for most of 2013, with frequent YoY comparisons over $20, and few less than +$10.  In 2013 the YoY range for the ICSC declined to between +1.5% and +3.0%, while Johnson Redbook YoY rallied from +2% to a high over +4%.  All three measures are now close to if not back in that normal range.


Steel production from the American Iron and Steel Institute 

  • +3% w/w
  • -1.6% YoY

Steel production over the last several years has generally been in a decelerating uptrend.  After a strongly positive move late in 2013, YoY comparisons have turned negative again, although this week for the second week in a row the comparison improved.



 Railroad transport from the AAR 

  • -7,800 carloads down -2.9% YoY
  • +200 carloads down +0.1% ex-coal
  • -13,500 or -5.7% intermodal units
  • -21,800 or -4.3% YoY total loads

Shipping transport

Rail transport had been very mixed YoY during midyear, but almost continuously improved after that, ending 2013 on a very positive note.  After rebounding from January's polar vortex, rail traffic was negative again for the third week in a row.  The Harpex index slowly rose, then stabilized, but has slowly declined since July 2013. The Baltic Dry Index made a new 3 year high in December 2013, seasonally retreated, but rose somewhat this week.  Both the Baltic Dry Index and the Harpex Index were in a range near their bottom for about 2 years, but rose significantly above those ranges in 2013.


Interest rates and credit spreads

  • 5.13% BAA corporate bonds up +0.04%
  • 2.75% 10 year treasury bonds up +0.07%
  • 2.38% credit spread between corporates and treasuries down -0.03%

Interest rates for corporate bonds made a low of 4.46% in November 2012. Treasuries fell to a possible once-in-a-lifetime low of 1.47% in July 2012, but rose over 1.6% above that mark in late 2013.  Yields declined significantly ever since the relatively poor December employment report nearly two months ago.  Spreads increased slightly from a new 3 year low set two weeks ago.  Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

  • w/w purchase applications down -6%
  • YoY purchase applications down -17%
  • w/w refinance applications down -3%

Both refinance applications and purchase applications are just barely above near their post-recession lows set a short time ago. 

Housing prices

  • YoY this week +10.6%

Housing prices bottomed in November 2011 on Housing Tracker, and YoY comparisons rose to just shy of +12% in late 2013. This weeks's YoY comparison was, relatively speaking, one of the lowest in months.  The continuation of the sharp YoY increase in prices might actually be a negative, given the pasting that housing has taken due to higher mortgage rates.

Real estate loans, from the FRB H8 report:

  • +0.4% w/w
  • -0.5% YoY
  • +2.6% from their bottom

Loans turned up at the end of 2011, but since April 2013, with higher interest rates, the comparisons rolled over and have been consistently negative since, having retreated back to near their post recession lows, although this was the second week of improvement.

Money supply


  • -1.0% w/w
  • +4.0% m/m
  • +9.5% YoY Real M1


  • +0.4% w/w
  • +0.9% m/m
  • +4.5% YoY Real M2

In January 2012, YoY Real M1 made a high of about 20%, and YoY Real M2 made a high of about 10.5%.  Growth in both decelerated since then.  Real M2 reading made a new 2 year low one month ago, but has improved substantially since, as has Real M1.


Employment metrics

 Initial jobless claims

  • 339,000 down -3,000
  • 4 week average 338,500 up +1,750

Initial claims seem to have stabilized at their autumn levels, although there does seem to be some comparative weakness.


The American Staffing Association Index was unchanged at 91. It is up +2.27% YoY.


Seasonality has now dissipated. Only late 2007 and early 2008 were better than 2013. The YoY measures has been fading, however, in the last few weeks.


Tax Withholding 

  • $130.6 B for the first 13 days of February 2014  vs. $120.3 last year, up +$10.3 B or +8.6%
  • $181.4 B for the last 20 days ending Thursday vs. $167.2 B for 20 days ending Thursday 1 year ago, up +14.2 B +8.5%.

YoY Tax withholding comparisons are now clean.  Both measures show improvement YoY.


Oil prices and usage

  • Oil up +$1.90 to $102.20 w/w
  • Gas up $0.07 to $3.38 w/w
  • Usage 4 week average YoY down -1.0%

The price of Oil made its yearly seasonal low three months ago, but held nearly steady until beginning its seasonal climb in two weeks ago. The 4 week average for gas usage was negative this week for the fourth consecutive week, and is probably the result of the particularly nasty winter weather.  In the larger picture, it continues to look like in 2013 the Oil choke collar finally loosened its hold on the economy slightly.

Bank lending rates

The TED spread leveled off this week.  LIBOR rose from its 3 year low set last week.


JoC ECRI Commodity prices

  • Up +1.71 to 127.45 w/w
  • +0.62 YoY 

A lot of the data was very close to neutral this week.

Among the long leading indicators, interest rates rose this week, but are still significantly below their December highs. Money supply continued its rebound.  Bank lending rates remain low.  On the other hand, mortgage applications are at or very close to post-recession lows.  Real estate loans have remained negative, although less so this week.


Last year's weakness in the long leading indicators appears to have now shown up in the short leading indicators.  Temporary jobs, initial jobless claims, and gas and oil are all close to neutral.  Commodities turned slightly positive this week.


The coincident reports were also very mixed.  Consumer spending was all positive, if not so strong as for most of last year.  Tax withholding also remained quite positive.  But rail traffic was quite negative again.  Shipping was mixed.  Steel production was negative.  YoY comparisons of gas usage are negative again.


The weakness that spread throughout the short leading and coincident indicators with few exceptions in the last couple of weeks is abating.  That all of the consumer spending reports are back to being significantly positive is particularly helpful.  Still, it is critical to see whether or not the recent weakness continues after the winter weather breaks (I think it won't ex-housing).


Have a nice weekend!

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