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By New_Deal_democrat December 7, 2013 10:08 am
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Weekly Indicators: thankful for positivity, but Thanksgiving Day anomalies abound edition
In the rear view mirror,3rd quarter GDP was revised up to +3.6%, in line with the recent stronger ISM manufacturing readings, speaking of which, November's was strong also. November payrolls came in very positively, over 200,000, and the unemployment rate fell again to a new post-recession low.  At their current pace, we should finally have a new record high jobs report next summer and a sub-6% unemployment rate at the end of 2014. Motor vehicle sales for November also made a post-recession high, but the USM non-manufacturing report decelerated slightlly. Consumer sentiment continued its post-government shutdown rebound. Personal spending for October rose, but personal income fell, and real personal income may have fallen as much as -0.5%.  Factory orders for October also fell. Meanwhile, both new home sales and construction spending were reported to have fallen in September and then rebounded in Octobe.
Finally, although I don't normally report on stock indexes as part of my weekly roundup, both the DJIA and the S&P 400 made new highs before falling back later in the week.

The high frequency weekly indicators are an almost simultaneous "nowcast" of the economy, and although they can be noisy, taken together they will show a continuation or turning of a trend before it shows up in the monthly data. 

This week let's start with the long leading indicators again:

Interest rates and credit spreads

  • 5.37% BAA corporate bonds down -003%
  • 2.74% 10 year treasury bonds unchanged
  • 2.63% credit spread between corporates and treasuries down -0.03%

Interest rates for corporate bonds had been falling since being just above 6% in January 2011, hitting 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 decisively rose more than 1.5% above that mark by September, before  declining somewhat. They were basically steady this week. After declining to near 2 year lows, spreads increased slightly in the last month. Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

  • -10.6% w/w purchase applications
  • -4.1% YoY purchase applications
  • -17.5% w/w refinance applications

Refinancing applications decreased sharply since April due to higher interest rates, and remain near post-recession lows. Purchase applications also declined from their multiyear highs in April, and also turned negative YoY seven weeks ago.  This week both types of applicationswere at or near their worst levels since the absolute bottom in 2009.

Housing prices

  • YoY this week +11.2%

Housing prices bottomed at the end of November 2011 on Housing Tracker, and averaged an increase of +2.0% to +2.5% YoY during 2012. This weeks's YoY comparison remained below the new 7 year record set two weeks ago.

Real estate loans, from the FRB H8 report:

  • -0.2% w/w
  • -0.9% YoY
  • +1.3% from its bottom

Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  Since April, with higher interest rates, the comparisons stalled and are now quite negative, retreating back to near their post recession lows, although the last two weeks taken together showed some improvement

Money supply


  • +0.3% w/w
  • -22% m/m
  • +8.2% YoY Real M1


  • +0.1% w/w
  • -05% m/m
  • +5.2% YoY Real M2

Real M1 made a YoY high of about 20% in January 2012 and decelerated since then.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. Earlier this year both moderated, then firmed a little, but have softened again in the last few weeks. 

Consumer spending

Gallup's 14 day average of consumer spending now has very difficult YoY comparisons, and it has shown immediately.  Last year the ICSC varied between +1.5% and +4.5% YoY in, while Johnson Redbook was generally below +3%.  The ICSC this week also retreated from the middle of its 2013 range, while Johnson Redbook had one of its strongest post-recession YoY comparisons this week. 

Steel production from the American Iron and Steel Institute

  • -2.1% w/w
  • +3.9% YoY

 Steel production over the last several years has generally been in a decelerating uptrend.  After a strongly positive move in the last several months, in the last couple of weeks YoY comparisons have declined significantly.


 Railroad transport from the AAR 

  • -39,300 carloads down -15.3% YoY (vs. +44,000 last week)
  • -23,600 carloads down -13.5% ex-coal (vs, +49,000 last week)
  • -28,900 or -13.9% intermodal units (vs. +38,000 last week)
  • -70,500 or -15.2% YoY total loads (vs. +117,000 last week)

Shipping transport

Rail transport had been very mixed YoY during midyear, but has almost continuously improved since then.  Although this week's numbers look awful, I am showing them in conjuncition with last week's numbers,which was the report's strongest reading yet. This looks like a Thanksgiving Day YoY anomaly.  The Harpex index had been improving slowly from its January 1 low of 352, but flattened out in the last half a year, and is now declining slightly. The Baltic Dry Index hit a 3 year high over several months ago, turned back down, but rebounded sharply for the second week in a row. In the larger picture, both the Baltic Dry Index and the Harpex declined sharply since the onset of the recession, and have been in a range near their bottom for about 2 years, but stopped falling earlier this year, and now are in uptrends.

Employment metrics

 Initial jobless claims

  • 298,000 down -18,000
  • 4 week average 322,250 down -9500

The American Staffing Association Index was unchanged at 103. It is up +13.5% YoY

Tax Withholding 

  • $159.2 B for the month of November vs. $140.2 B last year, up +$19.0 B or +13.6%
  • $159.2 B for the last 20 reporting days vs. $144.7 B last year, up +14.2 B or +9.8%

Temporary staffing had been flat to negative YoY in spring, but broke out positively for the last four months. Tax withholding was awful in October, presumably due to the federal government shutdown, but has now fully rebounded.  Initial claims have also returned to being positive. 

Oil prices and usage

  • Oil up $4.87 to $97.65 w/w
  • Gas down -$0.02 at $3.27 w/w
  • Usage 4 week average YoY up +3.7%

The price of Oil appears to have made its yearly seasonal low,and rose sharply this week. The 4 week average for gas usage remains strongly 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 remains close to the bottom of its 3 year range. LIBOR increased this week from its 3 year low.

JoC ECRI Commodity prices

  • Up +0.51 to 123.38 w/w
  • +0.93 YoY

 This was a decidedly mixed week.  The long leading indicator of interest rates was largely unchanged, but remains a full 1% higher than they were in April.  Interest rates have significantly knocked back all of the housing metrics, as real estate remain poor, and mortgage applications were absolutely awful, just barely above their recession lows (but this may be in part a Thanksgiving Day seasonality anomaly.  Money supply is positive and steady, but relatively soft compared with the last several years.  

The shorter leading indicators were all positive. Temporary employment remained at a new post-recession high this and is still strongly positive as it has been in the last four months. The oil choke collar has disengaged, as gas prices, and are back near three year lows, and usage has increased, although Oil prices look like they have made their annual low.  Initial jobless claims improved again. Commodities turned slightly positive, are also remain slightly higher than one year ago. The recent highs in the stock market are yet another positive short-to-medium leading indicator, as is the improvement in manufacturing hours worked and short term unemployment as reported in the November jobs report yesterday. 

Coincident indicators were mixed. Although rail traffic was awful this week, that looks like an anomaly of Thanksgiving Day placement YoY.  Steel production is positive albeit more muted. Bank lending rates remain at or near record lows. House prices remain strongly positive. Tax withholding had an excellent November. Gallup consumer spending is now only slightly positive, due to challenging YoY comparisons, Johnson Redbook, on the other hand, had one of its best YoY comparisons in 4 years.  This may also be a Thanksgiving Day YoY anomaly.  The ICSC index was near the middle of its range.

In the beginning of 2013, based on leading indicators at that time, I thought the economy would bounce back in  the second half, and indeed the economy is doing quite well at the moment, which was confirmed in spades with the Q3 GDP revisions.  Housing and especially interest rates must be watched carefully as to the end of 2014 and 2015.

Have a nice weekend.

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