The Lehmann Letter (SM)
I’ll be away on vacation, returning the week of July 11th.
Here are July’s economic indicators.
ECONOMIC INDICATOR PUBLICATION SCHEDULE
July 2011
Source (* below)……Series Description……Day & Date
Quarterly Data
BEA…………………….GDP …..……Fri, 29th
Monthly Data
ISM..Purchasing managers’ index…Fri, 1st
BEA.New-vehicle sales.(Approx).Wed, 6th
BLS………….Employment………… Fri, 8th
Fed Consumer credit..(Approx).Fri, 8th
Census……...Inventories…….... Thu, 14th
BLS………….Producer prices……. Thu, 14th
BLS………….Consumer prices.….. Fri, 15th
Fed……….Capacity utilization……Fri, 15th
Census……...Housing starts…….Tue, 19th
NAR………Existing-home sales….Wed, 20th
Conf Bd…….Leading indicators….Thu, 21st
Census……..New-home sales…...Tue, 26th
Conf Bd….Consumer confidence.. Tue, 26th
Census……….Capital goods…….. Wed, 27th
*BEA = Bureau of Economic Analysis of the U.S. Department of Commerce
*BLS = Bureau of Labor Statistics of the U.S. Department of Labor
*Census = U.S. Bureau of the Census
*Conf Bd = Conference Board
*Fed = Federal Reserve System
*ISM = Institute for Supply Management
*NAR = National Association of Realtors
© 2011 Michael B. Lehmann
Saturday, June 25, 2011
Thursday, June 23, 2011
Home Sales: Bumping Along the Bottom
The Lehmann Letter (SM)
Today’s new-home sales report from the Census Bureau is as depressing as the last report:
http://www.census.gov/const/newressales.pdf
319,000 new homes were sold in May. Take a look at the chart and you can see we’re bumping along the bottom.
New Home Sales
(Click on chart to enlarge.)
Recessions shaded
Here’s the deal: No construction recovery = No prosperity.
Slack home sales = Slack recovery.
It’s as simple as that.
(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.)
© 2011 Michael B. Lehmann
Today’s new-home sales report from the Census Bureau is as depressing as the last report:
http://www.census.gov/const/newressales.pdf
319,000 new homes were sold in May. Take a look at the chart and you can see we’re bumping along the bottom.
New Home Sales
(Click on chart to enlarge.)
Recessions shaded
Here’s the deal: No construction recovery = No prosperity.
Slack home sales = Slack recovery.
It’s as simple as that.
(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.)
© 2011 Michael B. Lehmann
Monday, June 20, 2011
Foreclosure Slowdown: What Does It Mean?
The Lehmann Letter (SM)
Foreclosure Slowdown: What Does It Mean?
Take a look at Sunday's front-page New York Times article on foreclosures:
http://www.nytimes.com/2011/06/19/business/19foreclosure.html?_r=1&ref=davidstreitfeld
The pace of foreclosures has slowed dramatically, especially in those states (roughly half) where foreclosure involves a court procedure.
How will this affect residential construction's recovery? We all know that dumping foreclosed properties on the market depresses real-estate prices and dampens residential construction. But……….. Does dumping foreclosed properties on the market all at once, and sharply depressing home prices, speed recovery? Or is recovery best served when foreclosed properties are offered for sale over a longer period of time, thereby mitigating the effect in any single year?
And that's not all. Will the slowdown, whether or not the courts are involved, compel banks to renegotiate a larger share of loans and thus reduce foreclosures and more swiftly stabilize the market? If that's the case, the foreclosure slowdown will aid market-price recovery and ultimately boost residential construction.
There is one thing we do know: These questions increase rather than reduce uncertainty, and that can't be good for any market.
© 2011 Michael B. Lehmann
Foreclosure Slowdown: What Does It Mean?
Take a look at Sunday's front-page New York Times article on foreclosures:
http://www.nytimes.com/2011/06/19/business/19foreclosure.html?_r=1&ref=davidstreitfeld
The pace of foreclosures has slowed dramatically, especially in those states (roughly half) where foreclosure involves a court procedure.
How will this affect residential construction's recovery? We all know that dumping foreclosed properties on the market depresses real-estate prices and dampens residential construction. But……….. Does dumping foreclosed properties on the market all at once, and sharply depressing home prices, speed recovery? Or is recovery best served when foreclosed properties are offered for sale over a longer period of time, thereby mitigating the effect in any single year?
And that's not all. Will the slowdown, whether or not the courts are involved, compel banks to renegotiate a larger share of loans and thus reduce foreclosures and more swiftly stabilize the market? If that's the case, the foreclosure slowdown will aid market-price recovery and ultimately boost residential construction.
There is one thing we do know: These questions increase rather than reduce uncertainty, and that can't be good for any market.
© 2011 Michael B. Lehmann
Thursday, June 16, 2011
Housing Starts Remain Dismal
The Lehmann Letter (SM)
Take a look at this morning’s Census Bureau report on May housing starts:
http://www.census.gov/const/newresconst.pdf
Then place the 560,000 figure in the chart.
Housing Starts
(Click on chart to enlarge.)
Recessions shaded
See any reason to cheer?
There isn’t any. And the economy can’t do what we want – prosper and provide jobs for all who seek them – until we do begin cheering about housing starts. But that won’t happen until we are on a solid trajectory to a report double that of today’s. And that won’t happen any time soon.
(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.)
© 2011 Michael B. Lehmann
Take a look at this morning’s Census Bureau report on May housing starts:
http://www.census.gov/const/newresconst.pdf
Then place the 560,000 figure in the chart.
Housing Starts
(Click on chart to enlarge.)
Recessions shaded
See any reason to cheer?
There isn’t any. And the economy can’t do what we want – prosper and provide jobs for all who seek them – until we do begin cheering about housing starts. But that won’t happen until we are on a solid trajectory to a report double that of today’s. And that won’t happen any time soon.
(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.)
© 2011 Michael B. Lehmann
Friday, June 10, 2011
Lukewarm
The Lehmann Letter (SM)
Two reports in the past week illustrate the lukewarm pace of this recovery.
The Commerce Department announced that May new-vehicle sales fell to 11.8 million at a seasonally-adjusted annual rate from 13.1 million in April. This may be due to the effect of the Japanese earthquake and tsunami upon sales and production in this country.
But the slowdown could be due to households' unwillingness to compromise their balance sheets with fewer liquid assets and more debt. After all, the old car may last a little longer or a used car may do just as well.
You can see from the chart that new-vehicle sales were well over 15 million annually for a decade before they collapsed in the recent recession. They must climb back to 15 million or higher before the economy becomes sufficiently robust to return to full employment.
New-Vehicle Sales
(Click on chart to enlarge.)
Recessions shaded
The Federal Reserve announced that April consumer credit grew by $75.6 billion at a seasonally adjusted annual rate. That continues a string of positive reports since the beginning of the year.
But you'll notice that, in the decade prior to the recent recession, consumer credit’s monthly advance was about $100 billion. Balance-sheet concerns now prevent consumers from undertaking the larger debt-levels consistent with strong economic expansion.
Consumer Credit
(Click on chart to enlarge.)
Recessions shaded
These reports are critical in understanding the economy's strength. If new-vehicle sales and growth in consumer credit have reached a plateau, the economy cannot return to full employment. Only by breaking out into the higher ranges of yesteryear can do the economy achieve robust conditions.
(The charts were 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.)
© 2011 Michael B. Lehmann
Two reports in the past week illustrate the lukewarm pace of this recovery.
The Commerce Department announced that May new-vehicle sales fell to 11.8 million at a seasonally-adjusted annual rate from 13.1 million in April. This may be due to the effect of the Japanese earthquake and tsunami upon sales and production in this country.
But the slowdown could be due to households' unwillingness to compromise their balance sheets with fewer liquid assets and more debt. After all, the old car may last a little longer or a used car may do just as well.
You can see from the chart that new-vehicle sales were well over 15 million annually for a decade before they collapsed in the recent recession. They must climb back to 15 million or higher before the economy becomes sufficiently robust to return to full employment.
New-Vehicle Sales
(Click on chart to enlarge.)
Recessions shaded
The Federal Reserve announced that April consumer credit grew by $75.6 billion at a seasonally adjusted annual rate. That continues a string of positive reports since the beginning of the year.
But you'll notice that, in the decade prior to the recent recession, consumer credit’s monthly advance was about $100 billion. Balance-sheet concerns now prevent consumers from undertaking the larger debt-levels consistent with strong economic expansion.
Consumer Credit
(Click on chart to enlarge.)
Recessions shaded
These reports are critical in understanding the economy's strength. If new-vehicle sales and growth in consumer credit have reached a plateau, the economy cannot return to full employment. Only by breaking out into the higher ranges of yesteryear can do the economy achieve robust conditions.
(The charts were 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.)
© 2011 Michael B. Lehmann
Friday, June 3, 2011
54,000
The Lehmann Letter (SM)
The Bureau of Labor Statistics reported the economy added 54,000 jobs in May:
http://stats.bls.gov/news.release/empsit.nr0.htm
There were 83,000 private-sector gains and 29,000 public-sector losses.
The chart indicates that month-to-month data vary. But the chart also shows increases averaging around a quarter-million during periods of robust economic expansion. We can continue to hope for the best.
Job growth
(Click on chart to enlarge.)
But it will take more than hope to bring the unemployment rate down from 9.1% to an acceptable 5% level. The economy requires consistent monthly job growth between 200,000 and 300,000 over the next several years to achieve that acceptable level.
Success of this sort requires robust improvement in all major areas. As long as housing remains in the doldrums, anemic homebuilding will be an anchor holding back all other sectors. That's why the foreclosure crisis affects all of us, even if we dwell in residences that are secure from financial difficulty.
(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.)
© 2011 Michael B. Lehmann
The Bureau of Labor Statistics reported the economy added 54,000 jobs in May:
http://stats.bls.gov/news.release/empsit.nr0.htm
There were 83,000 private-sector gains and 29,000 public-sector losses.
The chart indicates that month-to-month data vary. But the chart also shows increases averaging around a quarter-million during periods of robust economic expansion. We can continue to hope for the best.
Job growth
(Click on chart to enlarge.)
But it will take more than hope to bring the unemployment rate down from 9.1% to an acceptable 5% level. The economy requires consistent monthly job growth between 200,000 and 300,000 over the next several years to achieve that acceptable level.
Success of this sort requires robust improvement in all major areas. As long as housing remains in the doldrums, anemic homebuilding will be an anchor holding back all other sectors. That's why the foreclosure crisis affects all of us, even if we dwell in residences that are secure from financial difficulty.
(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.)
© 2011 Michael B. Lehmann
Wednesday, June 1, 2011
Housing: Conflicting Views
The Lehmann Letter (SM)
Today’s stock market rout focused on the weak labor market.
In this letter’s view, the housing slump lies at the center of the economy’s problems. But some believe a turn-around is imminent.
A front-page story in today’s Wall Street Journal presented the problem:
http://online.wsj.com/article/SB10001424052702303657404576357170425058088.html?mod=ITP_pageone_0
A front-page story in the NY Times’s business section shared the views of those who think housing is about to break out of its slump:
http://www.nytimes.com/2011/06/01/business/01housing.html?_r=1&ref=todayspaper
We’ll see.
© 2011 Michael B. Lehmann
Today’s stock market rout focused on the weak labor market.
In this letter’s view, the housing slump lies at the center of the economy’s problems. But some believe a turn-around is imminent.
A front-page story in today’s Wall Street Journal presented the problem:
http://online.wsj.com/article/SB10001424052702303657404576357170425058088.html?mod=ITP_pageone_0
A front-page story in the NY Times’s business section shared the views of those who think housing is about to break out of its slump:
http://www.nytimes.com/2011/06/01/business/01housing.html?_r=1&ref=todayspaper
We’ll see.
© 2011 Michael B. Lehmann
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