The week so far

Posted on November 20, 2014 @ 9:24 am (Thursday) by WARREN MOSLER

First, thanks to all for contributing to the record $41 million raised this year for Dana Farber by the PMC!!!

This all directly funds the discretionary research that makes Dana Farber what they are- the best!

If you are looking for good news on the economy don’t read the rest…

Industrial Production

The builders may be a bit more optimistic than before, and there are fewer of them, but housing starts and sales remain weak a about half the usual rate for this point in the cycle,
and a higher % are the smaller/cheaper multifamily units:

Housing Market Index

Housing Starts

The architectural index slowed some and remains at relative weak levels:

And mtg purchase apps were up some due to seasonal adjustments but remain down 6% year over year:

Again, seems nothing is growing faster this year vs last year, which as a point of logic means overall growth is less than last year.

And reports of capital spending cuts on energy related investments continue to be reported, while money saved by consumers at the pump is not yet
translating into spending elsewhere.

Exports remain under pressure as well, including reports of containers for export at Long Beach way down, etc.

Q3 GDP had two ‘suspect’ prints that added 2% to Q3’s 3.5% GDP print- an outsized export increase and an outsized govt spending increase, both of which historically ‘mean revert’ with the subsequent report. So excluding those two, Q3 would have only grown by 1.5%, and Q4, if anything, is so far slowing some since Q3. So if the two suspect releases do revert, Q4 could easily be negative.

Small bus optimism index, wholesale inventories and trade

Posted on November 13, 2014 @ 11:47 am (Thursday) by WARREN MOSLER

Going nowhere as it struggles to maintain what were the recession lows of prior cycles:

Wholesale Trade

Highlights
Wholesale inventories, up 0.3 percent in September, held steady relative to sales at only a slightly elevated level. Wholesale sales rose only 0.2 percent in the month, keeping the stock-to-sales ratio in the sector unchanged at 1.19, a reading that is at the high end of recent trend.

Wholesale auto inventories, which rose heavily relative to sales in August, fell back slightly, to a ratio of 1.58 from 1.59. Unit vehicle sales, released last week by manufacturers, firmed slightly in September which suggests that wholesale auto inventories may be a little on the light side right now which is good news for manufacturers.

Apparel wholesale inventories also lightened up as did hardware inventories. But there are sectors showing unwanted builds including computers, machinery, drugs, and paper products.

Data released last week in the factory orders report showed no unwanted inventory pressures for manufacturers in September. The missing piece for September inventories, retail inventories, will be released Friday with the business inventories report. Lean levels of inventories may be a negative for GDP calculations but are a plus for the production and employment outlooks.

Euclid Advance retail

Posted on November 12, 2014 @ 4:21 pm (Wednesday) by WARREN MOSLER

Euclid asserts that its metrics illustrate a cautious outlook for industry revenues, and estimates sales growth in the following retail verticals of:

5.7% decline year-over-year in general merchandise, apparel, furniture and other (GAFO) retail sales

0.9% growth year-over-year in clothing and apparel sales

2.7% decline year-over-year in general merchandise sales

mortgage purchase apps

Posted on November 12, 2014 @ 9:42 am (Wednesday) by WARREN MOSLER

Up 1% for the week, but down 11% vs same week last year.

Back to where we were some 20 years ago when the economy was bad and the population was a whole lot lower…

MBA Purchase Applications

Highlights
Low mortgage rates have yet to give much of a lift to purchase applications for home mortgages. The purchase index rose only 1.0 percent in the November 7 week and is down 11 percent from a year ago. The year-on-year rate is little changed from September when rates started to move lower. The refinancing index did move higher earlier but has been in retreat in recent weeks, down a sharp 11.0 percent from the prior week. The average rate for 30-year conforming mortgages ($417,000 or less) rose 2 basis points in the week to 4.19 percent.

State and local govt charts

Posted on November 12, 2014 @ 8:42 am (Wednesday) by WARREN MOSLER

The bulk of the boost is coming from state and municipal governments. After tightening their budgets for three years following the end of the recession, they began stepping up spending in 2013 and continued to do so this year

Except state taxes are growing faster, a headwind for the private sector.

But income taxes down- not sure why.

Not sure what this is about either:

Total tax collections still rising:

Up some but still historically low:

Very minor increases here:

Overall the states are still running deficits and are motivated eliminate them:

My Tuesday New School presentation has been postponed until May

Posted on November 10, 2014 @ 4:39 pm (Monday) by WARREN MOSLER

Obama- small govt conservative champion!

Posted on November 10, 2014 @ 4:39 pm (Monday) by WARREN MOSLER

Also interesting: For the first time since 2008, the public sector will add jobs in 2014. State and local governments started adding a few jobs last year, but austerity has been ongoing at the Federal level. According to the WSJ The Federal Government Now Employs the Fewest People Since 1966

Not since July 1966 has the federal government’s workforce been so small. … But that’s only the raw numbers! As a share of the total workforce … data going back to 1939 would show no point where the federal government’s share of employment was so low.

In the last 75 years (when the BLS started tracking the data), the public sector (non-military) shed jobs in 12 years. Three of those years were at the end of WWII, two in the early ’80s, and the last five consecutive years (unprecedented streak since the Great Depression).

capital expenditures

Posted on November 10, 2014 @ 4:28 pm (Monday) by WARREN MOSLER

With energy investment now in decline due to the Saudi price cuts look for this component of GDP to head south, as yet another ‘borrowing to spend’ generator fails to sustain its growth rate and odds of negative Q4 GDP growth increase dramatically.

Shale Drillers Idle Rigs From Texas to Utah Amid Oil Rout

By Lynn Doan

Nov 7 (Bloomberg) — The shale-oil drilling boom in the U.S. is showing early signs of cracking.

Rigs targeting oil sank by 14 to 1,568 this week, the lowest since Aug. 22, Baker Hughes Inc. (BHI) said yesterday. The Eagle Ford shale formation in south Texas lost the most, dropping nine to 197. The nation’s oil rig count is down from a peak of 1,609 on Oct. 10.

Credit check- more deceleration

Posted on November 10, 2014 @ 4:19 pm (Monday) by WARREN MOSLER

For the economy to grow more this year than last year, on average the ‘pieces’ need to grow at higher rates, which isn’t happening as previously discussed.

And underneath it all, for every agent that spends less than his income (demand leakages) another has to spend more than his income, or the output doesn’t get sold.

For all practical purposes, ‘spending more than income’ comes down to ‘borrowing to spend’ rather than depleting ‘savings accounts’ to spend.

And with the largest agent that spends more than its income- government deficit spending- on the decline, we need ‘borrowing to spend’ to increase that much more to sustain positive GDP growth.

Unfortunately the growth rate of credit expansion looks to be going the wrong way.

Bank lending: