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By New_Deal_democrat May 3, 2014 11:28 am
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Weekly Indicators: schizophrenic consumer spending edition
The big monthly data for April reported this past week was the big payrolls number and big drop in the unemployment rate.  The labor force declined by nearly a million, which the BLS said was because of a lack of new entrants in the past month,which is a little strange.
Also for April, motor vehicle sales declined slightly m/m, and have generally been flat for nearly a year.  The ISM manufacturing index improved, and the Chicago PMI index improved strongly.
March data included positive factory orders, construction spending, personal income and personal spending.  In the rear view mirror, first quarter GDP flatlined, with the long leading indicator of real fixed residential investment declining for the second quarter in a row.  Real median wages declined slightly.

My weekly report on the high frequency weekly indicators is meant to provide an up-to-this-week snapshot of the economy.  They will confirm a trend or indicate a switch in trend well before monthly reports -- a claim that the flat first quarter GDP fully bore out in my opinion. They are also a way to mark my, and your, opinions to market and keep us close to reality.


Let's start with employment again:


Employment metrics

 Initial jobless claims

  • 344,000 up +15,000
  • 4 week average 320,000 up +3,250

Initial claims rose this week, as did the 4 week average, and have to be counted as a slight negative at this point.


The American Staffing Association Index was down -1 to 95.It is up +3.09% YoY.


This Index backed off its all-time seasonal high. The YoY comparison faded in February but since then has stabilized and then rallied.


Tax Withholding 

  • $167.6 B for the month of April vs. $163.6 B last year, up +$4.0 B or +2.4%
  • $154.6 B for the last 20 days ending Thursday vs. $149.5 B for 20 days ending Thursday 1 year ago, up +$5.1 B or +3.4%.


April was relatively poor, but the rolling 20 day sum improved this week. I have suggested previously that the poor retail sales during the winter might presage a poor month or two of hiring this spring.  Given yesterday's report, obviously that didn't happen in April!


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 was between from +2% to a high over +4%.  This week was totally mixed, with both Johnson Redbook and ICSC in the higher end of their ranges, and a negative Gallup for the second week in a row.


Steel production from the American Iron and Steel Institute 

  • +1.5% 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 turned negative again in January and have been mixed since, and decidedly so in the last month.



 Railroad transport from the AAR 

  • +26,200 carloads up 9.5% YoY
  • +17,800 carloads up 10.4% ex-coal
  • +16,600 or +6.7% intermodal units
  • +33,100 or +6.2% YoY total loads

Shipping transport

Rail transport ended 2013 on a very positive note.  Rail traffic was very volatile in February but has rebounded sharply since.  Although it rose again this week, the Harpex index slowly rose, then stabilized, but slowly declined since July 2013. The Baltic Dry Index made a new 3 year high in December 2013, then fluctuated and declined, but increased 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 beginning in 2013.


Interest rates and credit spreads

  • 4.86% BAA corporate bonds unchanged
  • 2.71% 10 year treasury bonds up +0.04%
  • 2.15% credit spread between corporates and treasuries down -0.04%

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 since the beginning of January, and this week were near the bottom of that range.  Spreads made a new post-recession low this week.  Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

  • w/w purchase applications down -4%
  • YoY purchase applications down -21%
  • w/w refinance applications down -7%

Both refinance applications and purchase applications are still near their recent post-recession lows, and this week's YoY purchase comparison is likely to be the worst of 2014

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. In early March the YoY reading has declined silightly since then.  The still sharp YoY increase in prices, which are now roughly halfway between their 2006 peak and 2012 trough, might actually be a negative, given higher mortgage rates. 

Real estate loans, from the FRB H8 report:

  • +0.3% w/w
  • +0.8% YoY
  • +4.3% from their bottom

Loans turned up at the end of 2011, but with higher interest rates, the comparisons rolled over and had been almost consistently negative since April 2013, although they have improved since March.

Money supply


  • +0.2% w/w
  • +2.4% m/m
  • +8.7% YoY Real M1


  • -0.2% w/w
  • +0.1% m/m
  • +4.7% 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 then decelerated.  Real M2 made a new 2 year low several months ago.  Both Real M1 and Real M2 improved substantially since, at YoY rates that have stabilized in the last few weeks.


Oil prices and usage

  • Oil down -$0.84 to $99.76 w/w
  • Gas up +.03 to $3.71 w/w
  • Usage 4 week average YoY up +2.1%

The price of gas began its seasonal climb in February.  It is slightly higher than it was exactly one year ago, but remains below 2 and 3 years ago.  The 4 week average for gas usage was again positive this week.  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 and LIBOR are both still quiet, although both are up slightly from their recent lows.


JoC ECRI Commodity prices

  • Down -0.46 to 129.03 w/w
  • +2.87 YoY 

As to the long leading indicators, once again treasury rates remained steady but below their December highs. Money supply continued its recent rebound.  Bank lending rates remain low.  Even real estate loans were slightly positive. Only mortgage applications remained negative. That Q1 real residential fixed investment declined for the second quarter in a row (partially due to the severe winter) is a caution for next year.


The short leading indicators remained mixed.  Initial jobless claims increased enough to be a negative. On the other hand, credit spreads made yet another post-recession low. Temporary jobs backed off from their seasonal all-time high slightly.  Commodities were slightly positive.  Gas increased, but the oil choke collar has disengaged.


The coincident reports were more mixed.  Consumer spending was very mixed.  Rail transport was strongly positive. Shipping was up.  Tax withholding was mildly positive, and steel were mixed.


We are seeing both a pop from the winter flatlining, and the feeding through of some weakness into short leading and coincident reports, from last year's deceleration in the long leading indicators.  My take is that 2014 remains all clear, but I am increasingly cautious about 2015.


Have a nice weekend!

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