The Center of the Universe http://moslereconomics.com The Site of Economist Warren Mosler Tue, 27 Sep 2016 14:30:51 +0000 en-US hourly 1 State tax receipts, Redbook retail sales, Case-Shiller house prices, PMI services, Richmond Fed manufacturing, consumer confidence http://moslereconomics.com/2016/09/27/state-tax-receipts-redbook-retail-sales-case-shiller-house-prices-pmi-services-richmond-fed-manufacturing-consumer-confidence/ Tue, 27 Sep 2016 14:30:51 +0000 http://moslereconomics.com/?p=27956 This too has followed the shale boom/bust cycle and is headed lower: No recovery here: This looks back over the last three months and seems to be decelerating from already modest levels: Up a bit but still low: The flash Markit US Services PMI came in at 51.9 in September of 2016 from 51 in […]

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This too has followed the shale boom/bust cycle and is headed lower:

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No recovery here:

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This looks back over the last three months and seems to be decelerating from already modest levels:

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Up a bit but still low:

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The flash Markit US Services PMI came in at 51.9 in September of 2016 from 51 in August, reaching the highest figure in five months and above market expectations of 51.1. Activity picked up for the first time in three months due to ongoing new business growth while new orders, employment and inflationary pressures eased.
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Still contracting:

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Here some good news! But as per the chart something changed after the collapse in oil capex? Maybe because confidence is one man, one vote, not one dollar, one vote?
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New home sales, Dallas Fed http://moslereconomics.com/2016/09/26/new-home-sales-dallas-fed-2/ Mon, 26 Sep 2016 15:18:29 +0000 http://moslereconomics.com/?p=27948 Settling back down. Without permit growth this isn’t going anywhere; Highlights New home sales may have fallen back by a monthly 7.6 percent in August, but the 609,000 annualized rate is still above Econoday’s consensus for 598,000. And a major plus in the report is a surprise 5,000 upward revision to July which now stands […]

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Settling back down. Without permit growth this isn’t going anywhere;

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Highlights

New home sales may have fallen back by a monthly 7.6 percent in August, but the 609,000 annualized rate is still above Econoday’s consensus for 598,000. And a major plus in the report is a surprise 5,000 upward revision to July which now stands at a cycle high of 659,000 and a monthly gain from June of 13.8 percent. The volatility of this series had made a downward revision to July a major risk in today’s report.

Prices are coming down which points to builder discounting. The median, at $284,000, is down 3.1 percent on the month and down 5.4 percent on the year. Prices aren’t getting much lift from stubbornly low supply which is at 4.6 months. Total new homes for sale, at 235,000, did rise in the month but only slightly. Year-on-year, supply is up 8.3 percent which, however, is far under the 20.6 percent gain in year-on-year sales.

Sales strength is coming out of the West, a focused region for builders where the 162,000 annualized rate is up 8.0 percent on the month and a whopping 35.0 percent on the year. All other regions show monthly declines including the largest region which is the South where the 343,000 rate is down 12.3 on the month but still up 15.9 percent on the year.

This is a very positive report which underscores the accelerating strength of the new home market, strength that is making up for less far momentum on the resale side.

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Highlights

The Dallas production index, at 16.7 in today’s September report, continues to remain positive despite weakness in underlying demand. The general activity index remains in the negative column, at minus 3.7 to extend its long uninterrupted negative streak that started with the 2014 collapse in oil prices. New orders are at minus 2.9 this month with backlog orders at minus 1.1. Hiring is flat and the Dallas sample continues to draw down inventories, in part reflecting the month’s strength in production but also tight management given what are only modestly positive expectations in future business strength. Price data show weakness in selling prices but gains for wages & benefits. This report isn’t uniformly negative and joins what have been similarly weak but still mixed reports from other regional Feds this month.

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Rail traffic, Philly Fed state index, NY Fed nowcast http://moslereconomics.com/2016/09/25/rail-traffic-philly-fed-state-index-ny-fed-nowcast/ Sun, 25 Sep 2016 14:07:57 +0000 http://moslereconomics.com/?p=27939 Rail Week Ending 17 September 2016: Data Looks Better This Week Week 37 of 2016 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. However, the data was an improvement over last week. Not looking so good: This one’s coming down […]

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Rail Week Ending 17 September 2016: Data Looks Better This Week

Week 37 of 2016 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. However, the data was an improvement over last week.

Not looking so good:
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This one’s coming down as well:

September 23, 2016: Highlights

  • The FRBNY Staff Nowcast stands at 2.3% and 1.2% for 2016:Q3 and 2016:Q4, respectively.
  • Negative news since the report was last published two weeks ago pushed the nowcast down 0.5 percentage point for both Q3 and Q4.
  • The largest negative contributions over the last two weeks came from manufacturing, retail sales, and housing and construction data.
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    Eurozone Composite PMI, US Manufacturing PMI http://moslereconomics.com/2016/09/23/eurozone-composite-pmi-us-manufacturing-pmi/ Fri, 23 Sep 2016 14:36:09 +0000 http://moslereconomics.com/?p=27933 Also down and a bit lower than expected: United States Manufacturing PMI The flash Markit manufacturing PMI for the United States declined to 51.4 in September of 2016 from 52 in August and below market expectations of 51.9. New business growth eased further, output slowed and export orders fell for the first time in four […]

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    Also down and a bit lower than expected:

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    United States Manufacturing PMI

    The flash Markit manufacturing PMI for the United States declined to 51.4 in September of 2016 from 52 in August and below market expectations of 51.9. New business growth eased further, output slowed and export orders fell for the first time in four months while payrolls increased.

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    KC Fed, Recent presentation http://moslereconomics.com/2016/09/23/kc-fed-recent-presentation/ Fri, 23 Sep 2016 13:31:04 +0000 http://moslereconomics.com/?p=27928 Better, apart from employment and prices, which happen to be the Fed’s mandate. So interesting that the KC Fed President wants to hike rates: Highlights Just about every month the Kansas City manufacturing index is in the negative column, but not in September which comes in at plus 6 for the second positive reading this […]

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    Better, apart from employment and prices, which happen to be the Fed’s mandate. So interesting that the KC Fed President wants to hike rates:

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    Highlights

    Just about every month the Kansas City manufacturing index is in the negative column, but not in September which comes in at plus 6 for the second positive reading this year and the best reading since December 2014. New orders are sharply higher, at plus 12 vs August’s minus 7 with backlogs holding steady. Production and shipments are especially strong this month, at plus 15 and plus 16 vs negative readings in August. Employment, however, is still contracting, at minus 3. Prices are very soft especially selling prices which are at minus 7 for a second straight month. Kansas City, like the Dallas region, has been getting hit hard by low energy and commodity prices though this report does mark a rare respite.

    Slides from yesterday’s presentation:

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    Fed comments, Chicago Fed, Existing home sales http://moslereconomics.com/2016/09/22/fed-comments-chicago-fed-existing-home-sales/ Thu, 22 Sep 2016 17:00:09 +0000 http://moslereconomics.com/?p=27921 So growth and employment prospects are lower than those of their prior meeting, when they didn’t raise rates. And their forecasts continue to decelerate: Fed Trims Interest-Rate, Growth Forecasts By Michael S. Derby Sept 21 (WSJ) — Federal Reserve officials cut their growth forecast for this year to 1.8%, from 2.0% in June, and held […]

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    So growth and employment prospects are lower than those of their prior meeting, when they didn’t raise rates. And their forecasts continue to decelerate:

    Fed Trims Interest-Rate, Growth Forecasts

    By Michael S. Derby

    Sept 21 (WSJ) — Federal Reserve officials cut their growth forecast for this year to 1.8%, from 2.0% in June, and held steady their view for next year at 2.0%. Notably, they lowered their long-run view on the economy’s growth rate to 1.8% from 2%. In their forecasts, central bankers’ median projection for the jobless rate this year rose slightly to 4.8%, versus 4.7% in June. For 2017 officials see the jobless rate, now at 4.9%, coming in at 4.6%. The long run jobless rate is still seen at 4.8%. For this year they project the personal-consumption expenditures price index to come in at 1.3%, from June’s 1.4%, with 2017 inflation at 1.9%. Inflation will go back to desired 2% levels in 2018.

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    Seems the Fed is still doesn’t understand that it’s always an unspent income story.

    Fed chief Yellen’s news conference after FOMC meeting

    By Andrea Ricci

    Sept 21 (Reuters) — “Investment spending really has been quite weak for some time and we are really not certain exactly what is causing that. Part of it of course has been the huge contraction in drilling activity associated with falling oil prices, but the weakness in investment spending extends beyond that sector and I’m not certain of exactly what explains that … I’m not aware of evidence that suggests that it’s political uncertainty.” “Since monetary policy is only modestly accommodative, there appears little risk of falling behind the curve in the near future, and gradual increases in the federal funds rate will likely be sufficient to get to a neutral policy stance over the next few years.

    3 month average remains in negative territory:

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    Highlights

    August was a soft month for the bulk of the economy, a monthly dip that is now confirmed by the national activity index which fell to minus 0.55 from July’s revised plus 0.24. All four main components posted monthly declines and all four are in the negative column. Production-related indicators, after a brief pop higher into the plus column in July, pulled the index down 0.33 in the month. The decline here largely reflects broad weakness in the August production industrial report. Employment-related indicators came in at minus 0.09 followed by personal consumption & housing, at minus 0.08, and sales, orders & inventories at minus 0.05. What indications we have for September are limited but do include this morning’s dip in jobless claims which is a positive indication for the month’s employment component.

    Another disappointment for the hawks:

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    Highlights

    Prices are soft and resales aren’t coming into the market. Existing home sales fell a monthly 0.9 percent in August to a 5.33 million annualized rate, roughly the same rate where it was a year ago at 5.29 million for a thin 0.8 percent gain. And the single-family component isn’t showing much life, down 2.3 percent in the month and up only 0.6 percent on the year. Saving the August report are condos which jumped 10.5 percent in the month to a 630,000 rate for a year-on-year gain of 1.6 percent.

    Supply is very thin and is holding down sales. Supply on a monthly basis is at 4.6 months with 3.3 percent fewer existing homes for sale, at 2.04 million from July’s 2.11 million. Prices aren’t offering great incentives for possible sellers, with the median down 1.3 percent in the month to $240,200 for a year-on-year rate of 5.1 percent which, however, is still respectable in a low wage growth economy.

    There hasn’t been a lot of action this year in the resale market though the new home market is definitely showing life and, by itself, is likely to make housing a modest positive for the 2016 economy. In a final note, regional sales data are evenly balanced in today’s report, ranging from no year-on-year change for the Northeast to only a 0.9 percent gain for the South.

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    Mtg purchase applications, Architectural billings index http://moslereconomics.com/2016/09/21/mtg-purchase-applications-architectural-billings-index/ Wed, 21 Sep 2016 15:37:09 +0000 http://moslereconomics.com/?p=27916 So much for last week’s glimmer of hope: Back down to recession levels:

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    So much for last week’s glimmer of hope:
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    Back down to recession levels:

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    Housing market index, Redbook retail sales, Housing starts http://moslereconomics.com/2016/09/20/housing-market-index-redbook-retail-sales-housing-starts/ Tue, 20 Sep 2016 14:39:27 +0000 http://moslereconomics.com/?p=27905 Up a bit, but until permits increase not much chance of home building increasing: Been going from bad to worse: Highlights Redbook’s sample is not pointing to any September improvement for core retail sales. Year-on-year same-store sales rose only 0.2 percent in the September 17 week, about in line with August and noticeably lower than […]

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    Up a bit, but until permits increase not much chance of home building increasing:

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    Been going from bad to worse:

    Highlights

    Redbook’s sample is not pointing to any September improvement for core retail sales. Year-on-year same-store sales rose only 0.2 percent in the September 17 week, about in line with August and noticeably lower than July — two months when the government’s ex-auto ex-gas reading posted 0.1 percent monthly declines. Rates in this report don’t always match those in actual government data which focuses our attention on trends, and the trend for this report is not favorable.

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    Down for reasons previously discussed, and new permits are down as well:

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    Credit check http://moslereconomics.com/2016/09/18/credit-check-16/ Sun, 18 Sep 2016 21:18:59 +0000 http://moslereconomics.com/?p=27898 A very small move up but the deceleration trend is intact: This has been moving lower as well for a while now: As always, and by identity, if anyone spent less than his income, another must have spent more than his income, or the output would not have been sold. So when the oil related […]

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    A very small move up but the deceleration trend is intact:

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    This has been moving lower as well for a while now:

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    As always, and by identity, if anyone spent less than his income, another must have spent more than his income, or the output would not have been sold.

    So when the oil related capital expenditure collapsed late in 2014, it caused a general deceleration of growth that has yet to show any signs of reversal.

    That is, spending continues to decelerate, causing inventory to go unsold, which leads to reduced production and reduced incomes, further slowing spending, in a downward spiral that can’t reverse until some entity spends sufficiently more than its income. At some point growth goes negative, and it wouldn’t surprise me if data revisions indicate that growth has already gone negative, perhaps as much as a year ago.

    The current slowdown has begun to reduce the growth of tax revenues, which ‘automatically’ causes government to begin increasing its deficit.

    If this is the only source of increased deficit spending the process of deceleration will continue until the Federal deficit gets large enough to offset the net desires to not spend incomes. Historically this has generally translated into a Federal deficit that exceeds 5% of GDP, depending on ‘non government’ (US residents + non residents) deficit spending, which accomplishes the same thing. In fact, the reason the Fed lowers interest rates is to support private sector deficit spending. Unfortunately lower rates hasn’t done that, and is unlikely to do that, for reasons previously discussed.

    Currently the Federal deficit is running at something less than 3% of GDP, so there’s probably a long way to go:

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    Long Beach container counts, Ship building orders http://moslereconomics.com/2016/09/16/long-beach-container-counts-ship-building-orders/ Fri, 16 Sep 2016 13:00:03 +0000 http://moslereconomics.com/?p=27893 Notice the change of course after oil capital expenditures collapsed: http://www.marinelog.com/index.php?option=com_k2&view=item&id=23076:bimco-shipbuilding-orders-at-20-year-low&Itemid=231

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    Notice the change of course after oil capital expenditures collapsed:

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    http://www.marinelog.com/index.php?option=com_k2&view=item&id=23076:bimco-shipbuilding-orders-at-20-year-low&Itemid=231
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