As per the chart, decelerating in line with the deceleration in real estate related bank lending:

Highlights

Spring 2017 was not the greatest for the nation’s housing sector where data have been mixed at best. Permits have been down and spending data are flat to down with construction spending unchanged in May which hits the very lowest estimate in Econoday’s consensus range.

And the weakness is in residential spending, down 0.6 percent overall and including declines for single-family homes, residential improvements, and especially in May for multi-family units.

Private nonresidential spending fell 0.7 percent, with declines in transportation, manufacturing, and commercial. An offset is public nonresidential, up sharply after 2 prior months of declines with the gain centered in education, up 5.1 percent, as roads fell 0.9 percent for a second straight dip.

Public spending in May aside, the slowing in construction spending is not a positive signal for the housing sector nor for second-quarter GDP. The housing sector moved higher at the beginning of the year but has stumbled since.

Manufacturing surveys showing modest growth, as previously discussed:

If this report tracked better with government data, expectations would be building for a second-half surge in the factory sector. But this report like other private data, with the notable exclusion of the PMI manufacturing report the latest edition of which was released earlier this morning, have been pointing to unusually strong levels of activity all year long, acceleration that has yet to appear in actual data from the government.

First, let’s look at total bank credit. On this chart you can see that the cumulative growth of bank credit is more than $400 billion less than it would have been if it hadn’t slowed down.

That is, last year’s economy was supported by that much more growth of bank credit than this year’s economy as the annual rate of growth has slowed from over 8% to about 4%:

We’ve most recently had a few weeks of increase. A hopeful sign but the annual growth rate is still way down from last year:

In line with the recent drop in consumer spending:

In line with the drop in new automobile sales:

Vehicle Sales Forecast: “Sixth Consecutive Decline in June”

The automakers will report June vehicle sales on Monday, July 3rd.

From Reuters: U.S. auto sales seen down 2 percent in June: JD Power and LMC

The seasonally adjusted annualized rate for the month will be 16.5 million vehicles, down nearly 2 percent from 16.8 million units in the same month in 2016.

On q1 GDP revisions:

Healthcare is Boosting GDP Growth

Summary and Commentary

This revision boosts the headline growth about a quarter percent to +1.42% — better but still tepid. The notable takeaways from this report are:
The largest upward revision was in consumer spending for healthcare and insurance.
The growth rate for consumer spending on goods remains anemic.
The inventory contraction worsened, possibly in anticipation of softer future consumer spending.
Foreign trade remained a bright spot and is not a drag on the headline number.
The US consumer may be spending more, but that increased spending is not on discretionary “life-style” goods.

And as per usual, the Fed is once again projecting a return to “normalcy” in the form of 3% growth in future quarters — with consumer spending leading the way. But if this past quarter’s pattern persists those consumers may continue to face a toxic mix of stagnant disposable income, rising insurance costs and shrinking savings — not exactly a formula for happy campers.

Slowing revenues indicates economic weakness:

CBO Update to the Budget and Economic Outlook: 2017 to 2027

“The deficit estimated for 2017 is $693 billion, $134 billion more than CBO projected in January. Surprisingly weak tax collections since then have led the agency to lower its projection of revenues by $89 billion. At the same time, CBO raised its estimate of outlays by $45 billion, mainly because agencies have increased the estimated subsidy costs of past loans and loan guarantees, particularly for education and housing.”

“One reason for the sharp rise in the deficit in 2017 is the slow growth in revenue collections through May and the slow growth expected for the rest of the year: Revenues in 2017 are projected to rise only by about 1 percent as a result. That modest rate is below CBO’s estimate of growth in the economy, and thus revenues are expected to fall relative to GDP, from 17.8 percent in fiscal year 2016 to 17.3 percent this year”

‘It has to be something, but it could be infinity’: Trump ponders space in strange ceremony

“This is going to launch a whole new chapter for our great country,” Trump said near the end of his speech.

Then he sat down at a table and opened the executive order.

“I know what this is,” he said. “Space!”

Beside him, Aldrin chimed in with a quote from the astronaut character Buzz Lightyear from the movie “Toy Story.”

“Infinity and beyond!” Aldrin said.

Everyone laughed.

Then Trump added some lines of his own.

“This is infinity here,” he said. “It could be infinity. We don’t really don’t know. But it could be. It has to be something — but it could be infinity, right?”

Trump then signed the order and revived the National Space Council, leaving his final words on the subject a mystery.

Worse than expected and prior month revised lower, but otherwise muddling through at modest rates of annual growth:

Highlights

Aircraft had been the strength but is now the weakness for durable goods which, pulled down by a second straight downswing for commercial aircraft, fell 1.1 percent in May. When excluding transportation, a reading that excludes aircraft, orders actually rose, but not very much at only 0.1 percent which falls 4 tenths shy of Econoday’s consensus. An unquestionable negative in the report is an unexpected 0.2 percent decline for core capital goods orders (nondefense excluding aircraft).

Orders for commercial aircraft fell a rounded 12 percent for a second straight month with orders for defense aircraft, which are always volatile, also hurting May, down 31 percent. Shipments of core capital goods, like orders for this category, are another weakness in the report, down 0.2 percent and when combined with April’s tiny 0.1 percent gain, don’t point to any punch at all for business investment in second-quarter GDP.

But there are positives in the report including a solid 0.6 percent jump in machinery orders, a category that helped limit the monthly dip in capital goods. Vehicles are also a positive with a strong 1.2 percent gain that follows a 0.5 percent rise in the prior month. Shipments of vehicles are on a similar climb.

Other readings include a 0.8 percent gain in total shipments that follows, however, two prior declines and an unwanted 0.2 percent decline in total unfilled orders which is once again back in the contraction column. Inventories rose 0.2 percent which is about in line with the rate of general activity.

This report isn’t all bad but the capital goods readings are a tangible disappointment for the second-quarter outlook, pointing to lack of confidence in business prospects. The data contrast sharply with the ongoing strength in regional surveys. But in actual government data, the factory sector isn’t having a breakout year as some had hoped.

Also worse than expected:

Highlights

A decline in manufacturing production and weakness in employment combined to pull down the national activity index to minus 0.26 in May from a revised plus 0.57 in April. The production component fell to minus 0.16 from April’s 0.53 reflecting May’s 0.4 percent decline in manufacturing production. The employment component fell to minus 0.02 from 0.12 on a sharp drop in civilian employment in the household sample of the employment report and a modest slowing in payroll growth. The consumer & housing component is also a negative, at minus 0.09 from minus 0.07 and once again the result of weakness in housing permits. This report underscores how soft May really was for a second-quarter that looks increasingly at risk.

Also down a bit:

Highlights

In an understandable slowing from unusual acceleration, the Dallas Fed’s general activity index slipped to 15.0 in June vs 17.2 in May. New orders have slowed to 9.6 from May’s 18.1 with unfilled orders moving to 1.3 from 8.1. The report underscores production as an important reading and here the story is the same, slowing to 12.3 from 23.3 in May.

Price data are steady with inputs continuing to show pressure, at 15.6, but selling prices lagging significantly, at 3.6. Employment data show continued pressure for wages & benefits, at 21.1 vs 24.3, with hiring positive at a 1.3 point gain to 9.6.

Though the general activity index is at its lowest level since November last year, cooling in this report is welcome given the unsustainable rates of growth in prior months. But with the price of oil on a severe downswing right now and testing the $40 area, future acceleration for this report may be limited.

The credit collapse continues:

Trumped up expectations continue to revert:

Highlights

The economy is solid, at least the service sector, but on the whole is losing momentum, based on Markit’s flash data for June. The composite PMI slowed to 53.0 vs Econoday’s consensus for 53.8 with services also at 53.0 and manufacturing at 52.1, both short of expectations.

Services offer the best news with new orders and employment solid and optimism on the outlook particularly positive. In a special sign of strength, service companies in the sample are reporting the best gains in selling prices so far this year.

Manufacturing, however, moved to its slowest rate since September last year with both new orders and output down, offsetting gains in hiring and also inventories. Input costs slowed with selling prices here still weak.

The service strength in this report keeps it from being downbeat, though the weakness in manufacturing, which has been struggling this quarter, is not welcome.

Composite of manufacturing and services:

A bit better than expected, but no homes are built without permits, and permits are down.

Also, as per the charts, which are not population adjusted, sales have flattened recently and remain historically depressed:

Going nowhere, and with mortgage lending decelerating not much hope this will add to growth vs last year:

Highlights

Housing has been sliding which adds importance to May’s very solid 1.1 percent rebound in existing home sales to a higher-than-expected 5.620 million annualized rate. Today’s report is mostly solid throughout and includes gains for single-family homes, up 1.0 percent to a 4.980 million rate, and also condos, up 1.6 percent to a 640,000 rate.

The sales gains did not come at the expense of price concessions as the median price rose 3.2 percent to $252,800. Year-on-year, the median is up 5.8 percent and shows seller strength relative to a 2.7 percent gain for on-year sales.

Another positive is supply which, aided by strength in prices, is moving into the market, to 1.960 million vs 1.920 million in April and 1.800 million in March. Relative to sales, supply is at 4.2 months vs 4.1 and 3.8 in the prior two months.

The South is the leading and by far the largest region for sales, up 2.2 percent on the month for a 4.5 percent on-year gain to a 2.340 million rate. The West is next, up a monthly 3.4 percent to 1.220 million and a 3.4 percent gain from last year. The Northeast, which had been lagging, is showing life, up 6.8 percent on the month with the year-on-year rate up 2.6 percent at 780,000. Sales in the Midwest are May’s only negative, down 5.9 percent and down 0.8 percent on the year at 1.280 million.

The housing sector opened the year strongly but mostly fizzled during the Spring selling season. Yet this report limits that weakness and should confirm expectations for a bounce back in Friday’s new home sales report. Watch next week for pending home sales which will offer an advance indication on existing home sales in June.

This is not population adjusted. Sales remain seriously depressed:

Saudi output holding steady at reasonable levels. The set price and let quantity adjust:

Seems they’ve been reducing discounts more than increasing them lately?

Word getting around about the lending slowdown as per this chart I recently saw: