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By New_Deal_democrat January 18, 2014 9:00 am
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Weekly Indicators: I'm blaming the polar vortex edition
In monthly news for December, industrial production and capacity utilization rose.  Housing permits and starts fell, and had their lowest YoY increase in over 2 years.  Consumer sentiment also fell. Retail sales rose, but after adjusting for inflation, real sales actually declined slightly.  

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.

This week let's start with some coincident indicators, because they suddenly went cold.  I'm blaming the polar vortex for keeping people indoors and freight from moving (seriously!):


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.  This week was one of the worst comparisons in over a year.  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%.  Both of these had mediocre to poor weeks as well.


Steel production from the American Iron and Steel Institute 

  • +0.4% w/w
  • -0.1% 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 weakened and briefly turned negative, which was true again this week. 



 Railroad transport from the AAR 

  • -22,100 carloads down - 8.2% YoY
  • -13,400 carloads down -8.0% ex-coal
  • -15,800 or -6.7% intermodal units
  • -37,000 or -7.6% YoY total loads

Shipping transport

Rail transport had been very mixed YoY during midyear, but almost continuously improved since then, ending 2013 on a very positive note.  This week rail traffic was completely derailed.  The Harpex index slowly rose, then stabilized, then fell slightly in 2013, ending at a low of 390. The Baltic Dry Index made a new 3 year high in December 2013, and seasonally has retreated sharply since then.  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

  • 5.28% BAA corporate bonds down -0.07%
  • 2.96% 10 year treasury bonds down -0.05%
  • 2.32% credit spread between corporates and treasuries down -0.02%

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.  Yields declined since the relatively poor December employment report.  Spreads declined to yet another new 3 year low.  Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

  • w/w purchase applications up 12%
  • YoY purchase applications down -10%
  • w/w refinance applications up +11%

Refinance applications rebounded from another post-recession low that they set one week ago, but are still below where they were before Christmas.  Purchase applications similarly rebounded but are also near their post-recession low set in 2011. 

Housing prices

  • YoY this week +11.0%

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 continued to back off slightly from that comparison.

Real estate loans, from the FRB H8 report:

  • -0.2% w/w
  • -1.2% YoY
  • +1.1% from their bottom

Loans turned up at the end of 2011, but since April 2013, with higher interest rates, the comparisons rolled over and are now consistently negative, retreating back to near their post recession lows.  It appears that the only thing maintaining the housing recovery is cash purchases.

Money supply


  • -0.2% w/w
  • +0.3% m/m
  • +6.7% YoY Real M1


  • +0.2% w/w
  • +0.4% m/m
  • +3.3% 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 has decelerated since then.  This week's Real M2 reading is the lowest since then.  If its present deceleration continues, then soon Real M2 will drop into its "red zone" of below +2.5% YoY.


Employment metrics

 Initial jobless claims

  • 326,000 down -4,000
  • 4 week average 335,000 down -14,000

Initial claims continue are returning to their autumn levels, although there does seem to be some slight comparative weakness since then.

The American Staffing Association Index rose seasonally by 3 to 86. It is down -0.52% YoY.


 Seasonality should dissipate in one more week. Only late 2007 and early 2008 were better than 2013.

Tax Withholding 

  • $108.0 B for the first 11 days of January vs. $103.5 last year, up +$4.5 B or +4.3%
  • Reporting for the last 20 days omitted.

In January 2013, tax withholding increased 2%.  The last 2012 weeks will go out of the comparison period by the end of this month, making YoY Tax withholding comparisons clean.


Oil prices and usage

  • Oil up +$1.65 to $92.72 w/w
  • Gas unchanged at $3.33 w/w
  • Usage 4 week average YoY up +4.8%

The price of Oil made its yearly seasonal low two months ago, but has been generally holding steady. The 4 week average for gas usage remains positive. In the larger picture, it looks like in 2013 the Oil choke collar finally loosened its hold on the economy slightly.

Bank lending rates

The TED spread has risen somewhat from near the bottom of its 3 year range in the last few weeks. LIBOR made yet another 3 year low.

JoC ECRI Commodity prices

  • Up +2.07 to 126.96 w/w
  • -0.91 YoY

Rail traffic and consumer spending reports really took a hit in the last week.  Until shown otherwise, I suspect it is a one-week occurrence due to the extreme cold for the reporting week.January tax withholding is starting out reasonably positive. Steel production was neutral.  House prices remain very positive.  Bank lending rates remain near or at record lows.


The longer leading indicators continue to decelerate or to be outright negative.  Interest rates improved slightly this week. Housing has taken a big hit, which may have finally shown up in permits and starts.  Money supply is still a positive, but has continued its deceleration.  If its current trend continues, Real M2 will become a negative within the next several months, becoming the second of the 4 long leading indicators to flash red.


Shorter leading indicators were mixed, with seasonality still a factor. Temporary employment was negative YoY this week, but this is probably due to extreme seasonality.  The oil choke collar is still disengaged.  Initial jobless claims are returning to near their autumnal strength.  Commodities have turned negative.


While there is weakness, the tone of reports is still positive.  In the next few weeks, seasonal influences will abate.  We'll also have an update on the long leading indicator of corporate profits.


Have a nice weekend!

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