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2008-07-25 US Economic Releases

Posted by Sada Mosler on July 25th, 2008


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Durable Goods Orders MoM (Jun)

Survey -0.3%
Actual 0.8%
Prior 0.0%
Revised 0.1%

Better than expected, partially because fiscal and government is kicking in harder than expected.

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Durable Goods Orders YoY (Jun)

Survey n/a
Actual -1.3%
Prior -2.7%
Revised n/a

Still has turned up in a meaningful way, but moving away from recession levels.

When car sales normalize we’ll see a further boost.

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Durables Ex Transportation (Jun)

Survey -0.2%
Actual 2.0%
Prior -0.8%
Revised -0.5%

Headline numbers being held down by car sales.

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Durable Goods Orders ALLX (Jun)

Durables better than expected, likely due to companies taking advantage of new accelerated depreciation allowance

  • Capital goods orders ex-defense and aircraft up 1.4%
  • Defense orders up 30% in past 2mths, so production/shipments likely to improve for some manufacturers in coming months
  • Small appliances up as well. Seems some rebate checks went for down payments on appliances and home improvements.

    Electronics and consumer goods down.

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    U of Michigan Confidence (Jul F)

    Survey 56.4
    Actual 61.2
    Prior 56.6
    Revised n/a

    Better than expected and a possible bottom from a very low level.

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    U of Michigan Confidence ALLX (Jul F)

    Gas prices ‘stabilizing’ likely lead to the modest improvement in the Michigan survey and the ebbing of inflation expectations:

    • Headline confidence rose from 56.6 to 61.2

    Don’t underestimate the fiscal package!

    • 5-10yr inflation expectations fell from 3.4% to 3.2%

    One year steady at 5.1%.

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    Inflation Expectations 1yr Forward (Jul F)

    Survey n/a
    Actual 5.1%
    Prior 5.1%
    Revised n/a

    Two months over 5% is very troubling for the Fed. They see this as a direct cause of inflation.

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    Inflation Expectations 5yr Forward (Jul F)

    Survey n/a
    Actual 3.2%
    Prior 3.4%
    Revised n/a

    Down some but still way too high.

    The Fed wants this back to their long term target of something under 2.5%.

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    New Home Sales (Jun)

    Survey 503K
    Actual 530K
    Prior 512K
    Revised 533K

    Better than expected and last month revised up as well.

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    New Home Sales – Total for Sale (Jun)

    Survey n/a
    Actual 425K
    Prior 448K
    Revised n/a

    Sales can quickly be stifled by dwindling actual inventories.

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    New Home Sales MoM (Jun)

    Survey -1.8%
    Actual -0.6%
    Prior -2.5%
    Revised -1.7%

    Better than expected and from an upwardly revised May number.

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    New Home Sales YoY (Jun)

    Survey n/a
    Actual -33.2%
    Prior -37.8%
    Revised n/a

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    New Home Sales Median Price (Jun)

    Survey n/a
    Actual 230.9
    Prior 227.7
    Revised n/a

    The decline may be about over.

    Median prices are already rising from the lows.

    Watch for a shortage of new homes.

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    New Home Sales TABLE 1 (Jun)

    The three month average has turned higher.

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    New Home Sales TABLE 2 (Jun)

    • New home sales down 0.6% m/m and prices down 2% y/y

    But higher than expected at 530,000, and down from May because May was revised up to 533,000 from 512,000.

    Also, inventories down and prices up, and prices getting very close to being up year over year:

    New home sales fall but stronger than expected

    by Mark Felsenthal

    Sales of newly constructed U.S. single-family homes were stronger than expected in June, falling 0.6 percent to a 530,000 annual pace, a government report showed on Friday, providing a glimmer of hope for the beaten-down housing market.

    Economists polled by Reuters were expecting sales to slow to a 500,000 seasonally adjusted annual sales rate from a previously reported 512,000 pace in May. May’s sales rate was revised up to 533,000, the Commerce Department said.

    The inventory of homes available for sale shrank 5.3 percent to 426,000, the lowest since December 2004. The June sales pace put the supply of homes available for sale at 10 months’ worth.

    The median sales price rose to $230,900 from $227,700 from May, but was down 2 percent from a year earlier, the government said.


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6 Responses to “2008-07-25 US Economic Releases”

  1. Winslow R. Says:

    Have you read Bill Gross’s latest?

    Seems the Fannie and Freddie portion of the new housing bill will allow the treasury to leverage up on MBS bringing mortgage rates down closer to treasury rates.

    If rates mortgage rates fall below 5%, the housing downturn could stabilize and even reverse saving the banking system. If the Saudis are ‘content’ with $130 oil and a large expansion of the deficit, they can buy treasuries while the treasury buys MBS, perhaps the dollar will stabilize. Inflation could moderate.

    Japan’s path toward the zero bound asset deflation accompanied by goods and services inflation.

    Reply

  2. warren.mosler Says:

    Have you read Bill Gross’s latest?

    Seems the Fannie and Freddie portion of the new housing bill will allow the treasury to leverage up on MBS bringing mortgage rates down closer to treasury rates.

    If rates mortgage rates fall below 5%, the housing downturn could stabilize and even reverse saving the banking system.

    IT CAN STABILIZE AND REVERSE EVEN AT HIGHER RATES

    If the Saudis are ‘content’ with $130 oil and a large expansion of the deficit, they can buy treasuries

    DOESN’T MATTER IF THEY BUY TSY’S OR NOT

    while the treasury buys MBS,

    THAT WOULD HELP MBS SPREADS

    perhaps the dollar will stabilize.

    ONLY IF THE NON RESIDENT DESIRE TO ACCUMULATE THEM IS HIGH ENOUGH

    Inflation could moderate.

    LONG SHOT. INFLATION WAS 3+% FOR THE 20 YEARS OIL WAS RELATIVELY FLAT AT ABOUT $15. WHY SHOULD IT GO LOWER WITH OIL AT 120+?

    Reply

  3. Winslow R. Says:

    If rates mortgage rates fall below 5%, the housing downturn could stabilize and even reverse saving the banking system.

    IT CAN STABILIZE AND REVERSE EVEN AT HIGHER RATES

    *I agree if deficit spending on items other than MBS increased sufficiently to support the higher rates but what type of deficit spending would more directly target housing? Housing prices are at late 2003-2004 levels and are gradually falling towards late 2001 prices, which in my estimation would be where home prices at current deficit spending ($500 billion) and current rates of interest (6.75%) would stabilize. 5% interest rates could stabilize prices at 2003 levels. 4% rates, housing prices would likely go back to late 2004 levels.

    Inflation could moderate.

    LONG SHOT. INFLATION WAS 3+% FOR THE 20 YEARS OIL WAS RELATIVELY FLAT AT ABOUT $15. WHY SHOULD IT GO LOWER WITH OIL AT 120+?

    *I agree its a long shot, but if the oil price returns to being ‘relatively flat’ that would moderate future inflation.

    Reply

  4. warren.mosler Says:

    Housing starts can ‘recover’ to 1.5 million annually and still be very low historically.

    oil went flat for several years in the mid 70′s and inflation kept going up.

    Reply

  5. Winslow R. Says:

    oil went flat for several years in the mid 70’s and inflation kept going up.

    *Accompanied by wage increases.

    Reply

  6. warren mosler Says:

    Yes, wages played catch up then as they probably will now.

    But there are numerous international examples of sustained CPI increases without matching wage increases, as lower income groups get crushed. Much like what’s happening in the US today.

    Reply

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