The Lehmann Letter (SM)
ECONOMIC INDICATOR PUBLICATION SCHEDULE
November 2011
Source (* below)……Series Description……Day & Date
Quarterly Data
BLS……….Productivity………….Thu, 3rd
BEA……….GDP & Profits…..……Tue, 22nd
Monthly Data
ISM..Purchasing managers’ index…Tue, 1st
BEA.New-vehicle sales.(Approximate).Fr1, 4th
BLS………….Employment………… Fri, 4th
Fed. Consumer credit..(Approximate).Mon, 7th
Census…….......Inventories…….... Tue, 15th
BLS………...Producer prices……. Tue, 15th
Fed……….Capacity utilization……Wed, 16th
BLS……….Consumer prices.….. Wed, 16th
Census……...Housing starts…….Thu, 17th
Conf Bd…….Leading indicators….Fri, 18th
NAR………Existing-home sales….Mon, 21st
Census……….Capital goods…….. Wed, 23rd
Conf Bd….Consumer confidence.. Tue, 29th
Census……..New-home sales…...Mon, 28th
*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, October 29, 2011
Friday, October 28, 2011
Still No Sign of Recession
The Lehmann Letter (SM)
Yesterday the Commerce Department reported 2.5% third-quarter GDP growth:
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Some fear that we are slipping into or will soon slip into recession. But recession has not begun as long as GDP – the total output of goods and services - continues to advance.
This letter believes we will avoid recession as the economy continues to slowly improve. Unfortunately “slowly” is the key word. Rapid progress can’t occur until residential construction, motor vehicles and other durables hasten their improvement. And that won’t happen until household balance sheets recover: Liquidity rises, asset prices grow, debt falls and net worth improves. So far no one has explained how all that will happen.
© 2011 Michael B. Lehmann
Yesterday the Commerce Department reported 2.5% third-quarter GDP growth:
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Some fear that we are slipping into or will soon slip into recession. But recession has not begun as long as GDP – the total output of goods and services - continues to advance.
This letter believes we will avoid recession as the economy continues to slowly improve. Unfortunately “slowly” is the key word. Rapid progress can’t occur until residential construction, motor vehicles and other durables hasten their improvement. And that won’t happen until household balance sheets recover: Liquidity rises, asset prices grow, debt falls and net worth improves. So far no one has explained how all that will happen.
© 2011 Michael B. Lehmann
Thursday, October 27, 2011
Wish We Could Do The Same
The Lehmann Letter (SM)
Investors around the world celebrated Europe's plan to resolve its debt crisis. The details must be arranged and the plan implemented, but a good start has been made.
Meanwhile consider the irony. Here we have a continent of disparate peoples, cultures, history and nations that has fought like cats and dogs for centuries. But over the past 65 years Europe has slowly knit itself into a coherent and cohesive economic union. The job is not finished and pitfalls remain, but at the end of World War II most would have thought this kind of progress to be impossible.
Now consider us: One nation that seems to increasingly take its cue from the years preceding the Civil War. One-hundred-fifty years ago compromise was an alien concept. So it seems today, despite the obvious fact that the issues that divide us are not nearly as serious as the issue of slavery. So why can't we reach a compromise on economic matters such as federal spending and taxes? We send delegations to Northern Ireland and the Middle East in order to effect compromise, yet compromise remains elusive at home. We ask others to find the middle ground, to be reasonable, to be statesmen. Yet we cannot practice what we preach. Strange.
© 2011 Michael B. Lehmann
Investors around the world celebrated Europe's plan to resolve its debt crisis. The details must be arranged and the plan implemented, but a good start has been made.
Meanwhile consider the irony. Here we have a continent of disparate peoples, cultures, history and nations that has fought like cats and dogs for centuries. But over the past 65 years Europe has slowly knit itself into a coherent and cohesive economic union. The job is not finished and pitfalls remain, but at the end of World War II most would have thought this kind of progress to be impossible.
Now consider us: One nation that seems to increasingly take its cue from the years preceding the Civil War. One-hundred-fifty years ago compromise was an alien concept. So it seems today, despite the obvious fact that the issues that divide us are not nearly as serious as the issue of slavery. So why can't we reach a compromise on economic matters such as federal spending and taxes? We send delegations to Northern Ireland and the Middle East in order to effect compromise, yet compromise remains elusive at home. We ask others to find the middle ground, to be reasonable, to be statesmen. Yet we cannot practice what we preach. Strange.
© 2011 Michael B. Lehmann
Wednesday, October 26, 2011
While The World Waits
The Lehmann Letter (SM)
While the world waits for news from Europe, the American economy proceeds in low gear.
This morning the Census Bureau released reports on September capital-goods expenditures and new home sales.
New orders for nondefense capital goods (nonmilitary machinery and equipment) held steady at $76.0 billion:
http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
Place this number on the chart and you'll see that new orders for capital goods have snapped back sharply from their recession lows. But they have not yet returned to the peak levels they enjoyed before the recession.
Nondefense Capital Goods
(Click on chart to enlarge)
(Recessions shaded)
New home sales are in far worse shape. The chart reveals that they continue to scrape along the bottom. September's 313,000 confirms the trend:
http://www.census.gov/const/newressales.pdf
New Home Sales
(Click on chart to enlarge)
(Recessions shaded)
Today's data do not offer any kind of breakthrough. Neither business capital expenditures nor household purchases of new homes are strong enough to significantly boost the economy or substantially reduce unemployment.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
While the world waits for news from Europe, the American economy proceeds in low gear.
This morning the Census Bureau released reports on September capital-goods expenditures and new home sales.
New orders for nondefense capital goods (nonmilitary machinery and equipment) held steady at $76.0 billion:
http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
Place this number on the chart and you'll see that new orders for capital goods have snapped back sharply from their recession lows. But they have not yet returned to the peak levels they enjoyed before the recession.
Nondefense Capital Goods
(Click on chart to enlarge)
(Recessions shaded)
New home sales are in far worse shape. The chart reveals that they continue to scrape along the bottom. September's 313,000 confirms the trend:
http://www.census.gov/const/newressales.pdf
New Home Sales
(Click on chart to enlarge)
(Recessions shaded)
Today's data do not offer any kind of breakthrough. Neither business capital expenditures nor household purchases of new homes are strong enough to significantly boost the economy or substantially reduce unemployment.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
Tuesday, October 25, 2011
Bad News
The Lehmann Letter (SM)
This morning the Conference Board released its October consumer confidence survey:
http://www.conference-board.org/press/pressdetail.cfm?pressid=4321
You can evaluate the 39.8 figure, following September's 46.4 reading, by putting them in context on the chart.
Consumer Confidence
(Click on chart to enlarge)
(Recessions shaded)
Not only is the index heading south, it's back to recession levels. Households are gloomy and that is a bad sign for future expenditures on homes, cars, other durables and discretionary items in general. It does not necessarily mean that we are headed back into recession. But it is further confirmation that the economy will remain sluggish.
It's also a bad sign for President Obama's reelection prospects. Consumer confidence had been falling and was at recession levels when Ronald Reagan asked the nation in 1980, "Are you better off today than you were four years ago?" Low consumer confidence hurt President George H. W. Bush in 1992 and also hurt the Republicans in 2008. When households are gloomy, they want a change in Washington. It doesn't matter who's to blame.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
This morning the Conference Board released its October consumer confidence survey:
http://www.conference-board.org/press/pressdetail.cfm?pressid=4321
You can evaluate the 39.8 figure, following September's 46.4 reading, by putting them in context on the chart.
Consumer Confidence
(Click on chart to enlarge)
(Recessions shaded)
Not only is the index heading south, it's back to recession levels. Households are gloomy and that is a bad sign for future expenditures on homes, cars, other durables and discretionary items in general. It does not necessarily mean that we are headed back into recession. But it is further confirmation that the economy will remain sluggish.
It's also a bad sign for President Obama's reelection prospects. Consumer confidence had been falling and was at recession levels when Ronald Reagan asked the nation in 1980, "Are you better off today than you were four years ago?" Low consumer confidence hurt President George H. W. Bush in 1992 and also hurt the Republicans in 2008. When households are gloomy, they want a change in Washington. It doesn't matter who's to blame.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
Monday, October 24, 2011
Worth Reading
The Lehmann Letter (SM)
The world is waiting for Europe’s response to its sovereign-debt (what government’s owe) crisis, while we worry about the impact of households’ debt upon household spending.
Here are two recent articles worth reading.
On today’s New York Times op-ed page, Paul Krugman is pessimistic:
http://www.nytimes.com/2011/10/24/opinion/the-hole-in-europes-bucket.html?_r=1&ref=todayspaper
Prof. Krugman believes that Europe’s opportunity to act has passed. He believes Europe’s post-WWII string of successes is now be over.
This letter is not so gloomy. Let’s wait and see.
Regarding domestic developments, Saturday’s Wall Street Journal had an excellent account describing the debilitating impact of household debt on consumer expenditures:
http://online.wsj.com/article/SB10001424052970204294504576614942937855646.html?KEYWORDS=jon+hilsenrath+++ruth+simon
As this letter has stated many times: We’re in a balance-sheet crisis. Too much debt, too little liquidity and shrinking net worth have hobbled households. They’ve reduced their key purchases (homes, autos, durables and other discretionary items) that drive our economy.
© 2011 Michael B. Lehmann
The world is waiting for Europe’s response to its sovereign-debt (what government’s owe) crisis, while we worry about the impact of households’ debt upon household spending.
Here are two recent articles worth reading.
On today’s New York Times op-ed page, Paul Krugman is pessimistic:
http://www.nytimes.com/2011/10/24/opinion/the-hole-in-europes-bucket.html?_r=1&ref=todayspaper
Prof. Krugman believes that Europe’s opportunity to act has passed. He believes Europe’s post-WWII string of successes is now be over.
This letter is not so gloomy. Let’s wait and see.
Regarding domestic developments, Saturday’s Wall Street Journal had an excellent account describing the debilitating impact of household debt on consumer expenditures:
http://online.wsj.com/article/SB10001424052970204294504576614942937855646.html?KEYWORDS=jon+hilsenrath+++ruth+simon
As this letter has stated many times: We’re in a balance-sheet crisis. Too much debt, too little liquidity and shrinking net worth have hobbled households. They’ve reduced their key purchases (homes, autos, durables and other discretionary items) that drive our economy.
© 2011 Michael B. Lehmann
Wednesday, October 19, 2011
Residential Real Estate and Consumer Confidence
The Lehmann Letter (SM)
At first glance the Census Bureau's latest housing starts report looks good:
http://www.census.gov/const/newresconst.pdf
September starts were up by 15% to 658,000.
If you study the chart, however, you will receive a little lesson on the use of statistics.
Housing Starts
(Click on chart to enlarge)
(Recessions shaded)
The 15% increase seems good until you notice that 658,000 starts still leaves us in the doldrums. It will take many months of 15% increases, without any backsliding, before we reach the 1 million total that will truly signal a breakthrough.
That's too bad because the real-estate malaise holds everything back. See, for instance, the following article in today's New York Times:
http://www.nytimes.com/2011/10/19/business/economic-outlook-in-us-follows-home-prices-downhill.html?_r=1&ref=todayspaper
Millions of consumers have lost confidence in their prospects because of the deterioration in their homes' values. Their balance sheets have shrunk and equity contracted. Liquidity is in short supply. They can’t spend like they used to.
This is a sharp reversal from the decades leading up to the recent crisis. Most households borrowed and bought, confident that rising asset values (homes and stock market) would make everything possible. Liquidity was not a priority.
How that has changed. Spending on autos and other durable goods has suffered as well as real-estate purchases. We’re in a funk and the way out has not yet become apparent.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
At first glance the Census Bureau's latest housing starts report looks good:
http://www.census.gov/const/newresconst.pdf
September starts were up by 15% to 658,000.
If you study the chart, however, you will receive a little lesson on the use of statistics.
Housing Starts
(Click on chart to enlarge)
(Recessions shaded)
The 15% increase seems good until you notice that 658,000 starts still leaves us in the doldrums. It will take many months of 15% increases, without any backsliding, before we reach the 1 million total that will truly signal a breakthrough.
That's too bad because the real-estate malaise holds everything back. See, for instance, the following article in today's New York Times:
http://www.nytimes.com/2011/10/19/business/economic-outlook-in-us-follows-home-prices-downhill.html?_r=1&ref=todayspaper
Millions of consumers have lost confidence in their prospects because of the deterioration in their homes' values. Their balance sheets have shrunk and equity contracted. Liquidity is in short supply. They can’t spend like they used to.
This is a sharp reversal from the decades leading up to the recent crisis. Most households borrowed and bought, confident that rising asset values (homes and stock market) would make everything possible. Liquidity was not a priority.
How that has changed. Spending on autos and other durable goods has suffered as well as real-estate purchases. We’re in a funk and the way out has not yet become apparent.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
Wednesday, October 12, 2011
Uh Oh!
The Lehmann Letter (SM)
So many eyes are turned to Europe, sometimes a domestic statistic escapes widespread attention.
The Federal Reserve recently reported that consumer credit fell by $114.0 billion in August (the latest available month) on a seasonally-adjusted annual basis:
http://www.federalreserve.gov/releases/g19/current/g19.htm
(Subtract the August level from the July level and multiply by 12.)
You can see from the chart that these data display considerable volatility, so one month’s drop may not signal anything significant. But you can also see that, after many months of decline, consumer credit began growing once again. Now we must be on the alert: Is the August report a statistical vagary, or does it signal a downturn?
Consumer Credit
(Click on chart to enlarge)
(Recessions shaded)
Everyone knows the economy is weak and the recovery anemic. This could be an early signal that households intend to further reduce their expenditures.
Stay tuned.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
So many eyes are turned to Europe, sometimes a domestic statistic escapes widespread attention.
The Federal Reserve recently reported that consumer credit fell by $114.0 billion in August (the latest available month) on a seasonally-adjusted annual basis:
http://www.federalreserve.gov/releases/g19/current/g19.htm
(Subtract the August level from the July level and multiply by 12.)
You can see from the chart that these data display considerable volatility, so one month’s drop may not signal anything significant. But you can also see that, after many months of decline, consumer credit began growing once again. Now we must be on the alert: Is the August report a statistical vagary, or does it signal a downturn?
Consumer Credit
(Click on chart to enlarge)
(Recessions shaded)
Everyone knows the economy is weak and the recovery anemic. This could be an early signal that households intend to further reduce their expenditures.
Stay tuned.
(To be fully informed visit http://www.beyourowneconomist.com/)
© 2011 Michael B. Lehmann
Wednesday, October 5, 2011
Recession?
The Lehmann Letter (SM)
Today’s New York Times carried a grim front-page article on Europe’s prospects:
http://www.nytimes.com/2011/10/05/business/global/europe-finds-slope-ahead-is-growing-ever-steeper.html?ref=todayspaper
Entitled, “In Europe, Signs of 2nd Recession With Wide Reach,” its key paragraph said:
“Greece, Ireland, Portugal and Spain are already in downturns or fighting to avoid them, as high unemployment and austerity belt-tightening take their toll. But in the last few weeks, even prosperous Germany and France, the Continent’s powerhouses, have started to be dragged down, hurt by the ebbing of business orders from indebted countries in the rest of Europe.”
In other words: Greece, Ireland, Portugal and Spain are cutting their spending and raising their taxes to reduce their debts and meet European demands for austerity (as the price for receiving assistance from Europe). But these actions have depressed their economies, making them poor markets for European goods. This raises the likelihood of recession throughout Europe.
Meanwhile Fed chairman Ben Bernanke testified before the Joint Economic Committee of Congress yesterday:
http://www.federalreserve.gov/newsevents/testimony/bernanke20111004a.htm
Here are some of his key comments:
“Nevertheless, it is clear that, overall, the recovery from the crisis has been much less robust than we had hoped….
“The pattern of sluggish growth was particularly evident in the first half of this year, with real gross domestic product (GDP) estimated to have increased at an average annual rate of less than 1 percent…..
“Consumer behavior has both reflected and contributed to the slow pace of recovery. Households have been very cautious in their spending decisions, as declines in house prices and in the values of financial assets have reduced household wealth, and many families continue to struggle with high debt burdens or reduced access to credit…..”
This letter continues to believe that we’re in for a period of sluggish growth, not recession. Europe, however, may be a different matter.
© 2011 Michael B. Lehmann
Today’s New York Times carried a grim front-page article on Europe’s prospects:
http://www.nytimes.com/2011/10/05/business/global/europe-finds-slope-ahead-is-growing-ever-steeper.html?ref=todayspaper
Entitled, “In Europe, Signs of 2nd Recession With Wide Reach,” its key paragraph said:
“Greece, Ireland, Portugal and Spain are already in downturns or fighting to avoid them, as high unemployment and austerity belt-tightening take their toll. But in the last few weeks, even prosperous Germany and France, the Continent’s powerhouses, have started to be dragged down, hurt by the ebbing of business orders from indebted countries in the rest of Europe.”
In other words: Greece, Ireland, Portugal and Spain are cutting their spending and raising their taxes to reduce their debts and meet European demands for austerity (as the price for receiving assistance from Europe). But these actions have depressed their economies, making them poor markets for European goods. This raises the likelihood of recession throughout Europe.
Meanwhile Fed chairman Ben Bernanke testified before the Joint Economic Committee of Congress yesterday:
http://www.federalreserve.gov/newsevents/testimony/bernanke20111004a.htm
Here are some of his key comments:
“Nevertheless, it is clear that, overall, the recovery from the crisis has been much less robust than we had hoped….
“The pattern of sluggish growth was particularly evident in the first half of this year, with real gross domestic product (GDP) estimated to have increased at an average annual rate of less than 1 percent…..
“Consumer behavior has both reflected and contributed to the slow pace of recovery. Households have been very cautious in their spending decisions, as declines in house prices and in the values of financial assets have reduced household wealth, and many families continue to struggle with high debt burdens or reduced access to credit…..”
This letter continues to believe that we’re in for a period of sluggish growth, not recession. Europe, however, may be a different matter.
© 2011 Michael B. Lehmann
Saturday, October 1, 2011
October’s Economic Indicators
The Lehmann Letter (SM)
ECONOMIC INDICATOR PUBLICATION SCHEDULE
October 2011
Source (* below)……Series Description……Day & Date
Quarterly Data
BEA……….GDP & Profits…..……Thu, 27th
Monthly Data
ISM..Purchasing managers’ index…Mon, 3rd
BEA.New-vehicle sales.(Approximate).Wed, 5th
BLS………….Employment………… Fri, 7th
Fed. Consumer credit..(Approximate).Fri, 7th
Census…….......Inventories…….... Fri, 14th
Fed……….Capacity utilization……Mon, 17th
BLS………...Producer prices……. Tue, 18th
BLS……….Consumer prices.….. Wed, 19th
Census……...Housing starts…….Wed, 19th
NAR………Existing-home sales….Thu, 20th
Conf Bd…….Leading indicators….Thu, 20th
Conf Bd….Consumer confidence.. Tue, 25th
Census……..New-home sales…...Wed, 26th
Census……….Capital goods…….. Wed, 26th
*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
ECONOMIC INDICATOR PUBLICATION SCHEDULE
October 2011
Source (* below)……Series Description……Day & Date
Quarterly Data
BEA……….GDP & Profits…..……Thu, 27th
Monthly Data
ISM..Purchasing managers’ index…Mon, 3rd
BEA.New-vehicle sales.(Approximate).Wed, 5th
BLS………….Employment………… Fri, 7th
Fed. Consumer credit..(Approximate).Fri, 7th
Census…….......Inventories…….... Fri, 14th
Fed……….Capacity utilization……Mon, 17th
BLS………...Producer prices……. Tue, 18th
BLS……….Consumer prices.….. Wed, 19th
Census……...Housing starts…….Wed, 19th
NAR………Existing-home sales….Thu, 20th
Conf Bd…….Leading indicators….Thu, 20th
Conf Bd….Consumer confidence.. Tue, 25th
Census……..New-home sales…...Wed, 26th
Census……….Capital goods…….. Wed, 26th
*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
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