U.S. Data/Dudley

Karim writes:

Data: General impression is manufacturing is slowing but ‘building blocks’ for consumer getting better (sorry for delay)


  • Personal income up 0.5% in Aug and now running 3.3% y/y

This is a very significant positive. With personal income rising at this rate the chances of negative growth are slim and none.

  • Savings rate back up to 5.8% from 5.7%

Funded by the ongoing federal deficit.

  • Also of interest is core PCE at 0.1%, keeps Y/Y rate at 1.4% for the 3rd straight month-pretty far from deflation territory and close to the Fed’s desired 1.5-2.0% range

Coupled with the unemployment rate keeps the Fed on hold for now.

Also, watch car sales as today’s data looks pretty good. Cars and housing would be the signal that domestic credit expansion is beginning to kick in.


  • “Business results (top and bottom line) continue to meet or exceed our operating plan and exceed prior year performance by double digits.” (Chemical Products)
  • “Business continues flat relative to prior month and is expected to remain flat. Commodities continue to be the main concern heading into 2011.” (Food, Beverage & Tobacco Products)
  • “Our business is softening due to seasonal considerations. Overall, our situation is much better than 2009.” (Machinery)
  • “Customers seem to be pulling back on orders. I suspect that they are trying to reduce their inventory for the approaching year-end.” (Transportation Equipment)
  • “Strategic customers reducing order quantities.” (Computer & Electronic Products)

Most ISM categories weaker, but still in expansion mode; New Orders vs Inventories Spread not looking great

ISM Sept Aug
Index 54.4 56.3
Prices paid 70.5 61.5
Production 56.5 59.9
New Orders 51.1 53.1
Inventories 55.6 51.4
Employment 56.5 60.4
Export Orders 54.5 55.5
Imports 56.5 56.5


  • Key line in speech today: “further action is likely to be warranted unless the economic outlook evolves in away that makes me more confident that we will see better outcomes for both employment and inflation before too long.”
  • Doesn’t sound too patient!

And looks to me like better days are coming.