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By New_Deal_democrat March 1, 2014 10:25 am
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Weekly Indicators: weakly positive edition
In the rear view mirror, 4th quarter 2013 GDP was revised down by close to -1% annualized. In January data reported this past week, new home sales set a five year record, although they were only up 2% YoY. House prices continued to rise.  Pending home sales rose slightly, but were close to -10% negative YoY.  Durable goods orders fell, but core capital goods orders rose.  The Chicago PMI for February rose slightly.  Consumer sentiment was mixed. Expectations declined slightly, while current conditions were rated slightly more favorable.

 

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.

 

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 or at the weaker end of that normal range.

 

Steel production from the American Iron and Steel Institute 

  • -0.8% w/w
  • -2.3% 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 last month, and this week the YoY number got worse.

 

Transport

 Railroad transport from the AAR 

  • +3,600 carloads up 1.3% YoY
  • +7,900 carloads up +4.8% ex-coal
  • +15,200 or +6.4% intermodal units
  • +19,100 or +3.7% YoY total loads

Shipping transport

Rail transport had been very mixed YoY at midyear 2013, 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 most of February, but jumped this week.  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 again 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 unchanged
  • 2.73% 10 year treasury bonds down -0.02%
  • 2.40% credit spread between corporates and treasuries up +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 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 -4%
  • YoY purchase applications down -15%
  • w/w refinance applications down -11%

Both refinance applications and purchase applications at their post-recession lows set a short time ago, and this week purchase applications made a new 19 year low!

Housing prices

  • YoY this week +10.9%

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 at the lower end of its recent range.  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:

  • +0.5% w/w
  • unchanged YoY
  • +3.1% from their bottom

Loans turned up at the end of 2011, but with higher interest rates, the comparisons rolled over and had been consistently negative since April 2013.  This was their third week in a row of improvement, and for the first time in ages, they are neutral rather than negative.

Money supply

M1 

  • -0.7% w/w
  • +1.4% m/m
  • +7.9% YoY Real M1

 M2 

  • +0.3% w/w
  • +0.9% m/m
  • +4.9% 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

  • 348,000 up +8,000
  • 4 week average 338,250 down -250

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 +1.74% 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 month.

 

Tax Withholding 

  • $166.4 B for the first 18 days of February 2014  vs. $159.3 last year, up +$7.1 B or +7.1%
  • $178.8 B for the last 20 days ending Thursday vs. $168.9 B for 20 days ending Thursday 1 year ago, up +9.9 B +5.9%.

YoY Tax withholding comparisons are now clean.  Both measures show improvement YoY, although this week was poorer than the last few weeks.

 

Oil prices and usage

  • Oil up +$0.39 to $102.59 w/w
  • Gas up $0.06 to $3.44 w/w
  • Usage 4 week average YoY down -1.5%

The price of Oil made its yearly seasonal low three months ago, but held nearly steady until beginning its seasonal climb three weeks ago. The 4 week average for gas usage was negative this week for the fifth consecutive week, and may be 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 and LIBOR are both somnolent, and both near 3 year lows.

 

JoC ECRI Commodity prices

  • Up +0.70 to 128.15 w/w
  • +0.42 YoY 

Just like last week, a lot of the data was very close to neutral this week.

Among the long leading indicators, treasury rates fell slightly, but are still significantly below their December highs. Money supply continued its rebound.  Bank lending rates remain low.  On the other hand, mortgage applications sank further and are at post-recession lows.  Real estate loans turned neutral, an improvement from many months of being negative.

 

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, gas, oil and other commodities were  all close to neutral again this week.

 

The coincident reports were also very mixed.  Both consumer spending and tax withholding were positive, but faded with no obvious weather excuse.  Shipping was mixed.  Steel production was negative.  YoY comparisons of gas usage are negative again. On the other hand, rail traffic was strong this week, the mirror image of last week.

 

The weakness that spread throughout the short leading and coincident indicators with few exceptions in the last couple of weeks abated somewhat, but is only weakly positive.  It remains critical to see whether or not the recent weakness continues after the winter weather breaks.

 

Have a nice weekend!

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