Are We Feeling Better?

The Lehmann Letter ©

Today the Census Bureau announced 384,000 new homes sold in June. That’s the best report since last November and was greeted as good news.

But look at the chart.

New Home Sales

(Click on image to enlarge.)



Recessions shaded

New home sales remain mired in a deep slump. We’ve got to climb well past 400,000 before rejoicing. Half-a-million would help.

(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2009 Michael B. Lehmann

On Vacation

The Lehmann Letter ©

The blogger is going on vacation and will blog (even more) intermittently. There will be occasional posts between now and Labor Day.

Have a good summer

© 2009 Michael B. Lehmann

Inventory/Sales Ratio Keeps Falling

The Lehmann Letter ©

Today’s Census Bureau sales and inventory report for May reveals more good news:

http://www.census.gov/mtis/www/mtis_current.html

(Click on image to enlarge.)



This blog has been upbeat about these data because the inventory/sales ratio has fallen throughout the year. Businesses are liquidating their inventories faster than their sales have fallen. Eventually inventories will have declined sufficiently that businesses can begin to restock their shelves. At that point production should revive.


© 2009 Michael B. Lehmann

Consumer Credit

The Lehmann Letter ©

Today the Federal Reserve released May’s consumer-credit report:

http://www.federalreserve.gov/releases/g19/Current/

Consumer credit shrank by $39.6 billion at a seasonally adjusted annual rate.


Consumer Credit

(Click on chart to enlarge)




(Recessions shaded)


When people feel good, they borrow and spend. When they feel lousy, they repay. Consumers are now repaying their debts.

The table below reports consumer credit at the end of the month. You can derive the monthly change by subtracting one month from the next and multiplying by 12.

Jan 2008 2,526.0
Feb 2008 2,536.9
Mar 2008 2,549.0
Apr 2008 2,555.8
May 2008 2,565.5
Jun 2008 2,574.1
Jul 2008 2,581.8
Aug 2008 2,575.8
Sep 2008 2,582.8
Oct 2008 2,578.1
Nov 2008 2,568.8
Dec 2008 2,562.0
Jan 2009 2,566.2
Feb 2009 2,555.0
Mar 2009 2,539.4
Apr 2009 2,522.9
May 2009 2,519.6

Consumer credit outstanding is now less than it was 18 months ago.

The economy won’t rebound until this number grows again.

(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2009 Michael B. Lehmann

First Week

The Lehmann Letter ©

The Bureau of Labor Statistics’ employment report was a bad start for July’s first week: http://stats.bls.gov/news.release/empsit.nr0.htm

The economy lost 467,000 jobs in June, substantially more than May’s 345,000 loss. You can see from the chart that’s better than the early months of the year, but a disappointment for hopes that strong recovery would rapidly shrink this number.

Job Growth

(Click on chart to enlarge)



Recessions shaded

As this blog has consistently stated, the economy can not pop back as long as the foreclosure crisis continues. As foreclosed properties are relentlessly dumped on the market, home prices keep heading south. Without a recovery in home prices, don’t expect an upsurge in residential building. And as long as residential construction remains in the doldrums, the economy and employment will languish. Residential real estate got us into this mess, and we can’t get out until it begins to recover.

(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of Economic Indicators.)

© 2009 Michael B. Lehmann