April Publication Schedule

The Lehmann Letter © Here’s the publication schedule for some of April 2009’s most important economic indicators. PUBLICATION SCHEDULE April 2009 Source (* below)…………Series Description…………Day & Date Quarterly Data BEA…………………………GDP……………………………Wed, 29th Monthly Data ISM………………….Purchasing managers’ index……….Wed, 1stFed…………………..Consumer credit….(Approximate).Tue, 7thBLS…………….…………….Employment………………… Fri, 3rdCensus………………………Balance of trade………………Thu, 9thBLS………………………….Producer prices……………….Tue, 14thCensus………………………Retail trade…………………….Tue, 14thCensus………………………Inventories……………………..Tue, 14thFed………………………..Industrial production………….Wed, 15thFed………………………….Capacity utilization…………….Wed, 15thBLS………………………….Consumer prices………………Wed, 15thCensus……………………..Housing starts………………….Thu, 16thConf Bd…………………….Leading indicators…………….Mon, 20thNAR…………………………Existing-home sales…….…….Thu, 23rdCensus……………………..New-home sales……………….Fri, 24thCensus…………………….Capital goods……………….…..Fri, 24thConf Bd…………………….Consumer confidence…………Tue, 28thBEA………….….Personal Income & Consumption……….Thu, 30th * BEA = Bureau of Economic Analysis of the U.S. Department of Commerce* BLS = Bureau of Labor Statistics of the U.S. Department of Labor* Census = Continue reading

Earnings Collapse

The Lehmann Letter © The Commerce Department and the Census Bureau recently reported fourth-quarter after-tax profits for all-corporations and manufacturers. Begin with the chart below. You can see that after-tax earnings for all corporations recently rose to slightly more than $1.4 trillion at an annual rate. They were $1.3 trillion in the third quarter of 2008 before dropping to $931.2 billion in the fourth quarter. Connect those dots and you can see how steeply profits have fallen. Another drop like that and profits will be back to where they were during the 2001 recession. All Corporations After-tax Profits (Click on Continue reading

More Glimmers

The Lehmann Letter ® Today the Census Bureau released two more glimmers of hope that buttressed recent upbeat data on housing starts and existing-home sales. New orders for nondefense capital goods (i.e. business machinery and equipment, including transportation equipment) improved in February:http://www.census.gov/indicator/www/m3/adv/pdf/durgd.pdf . Business ordered $52.7 billion in February, an improvement on January’s $49.2 billion. If you update the following chart with these figures, however, you can see how far the numbers have fallen. Moreover, February’s reading remains below December’s $54.0 billion pace. Does the recent uptick signal a turnaround? You can see from the chart that there’s a lot Continue reading

The President’s Long View

The Lehmann Letter ® In this evening’s press conference President Obama gave his long view of the federal deficit. 1. The current recession will be responsible for a substantial portion of the projected deficit over the coming decade because a depressed economy reduces federal tax revenues and requires additional expenditures. 2. One way to reduce the long-run deficit is to reduce federal expenditures by reforming health care, Medicare and Medicaid and other programs that swell federal outlays. 3. Another way to reduce the long-run deficit is to boost revenues by enhancing economic growth through education reform and energy-conservation programs. Faster Continue reading

Mr. Geithner’s Plan

The Lehmann Letter ® Today the stock market reacted with enthusiasm when Treasury Secretary Timothy Geithner revealed his plan to relieve the nation’s banks of their heavily-depreciated mortgage-backed securities. Many feared that some of the biggest banks were insolvent (their liabilities exceeded their assets, so that they had negative net worth) because they could not sell the mortgage-related securities in their portfolios (and this reduced the value of their assets). The securities had become worthless without a market on which to dispose of them. That market had vanished when home prices plunged and homeowners began to default on their mortgages. Continue reading

The CBO Forecast

The Lehmann Letter ® You can view the Congressional Budget Office’s (CBO) latest forecast for the federal deficit at http://www.cbo.gov/ftpdocs/100xx/doc10014/03-20-PresidentBudget.pdf . The CBO’s earlier estimates of the 2009 and 2010 deficits were $1.3 trillion and $700 billion respectively. Now, without taking President Obama’s budget proposals into account, the CBO has revised its projections to $1.7 trillion and $1.1 trillion. That’s a $400 billion increase for both years. If, in addition, the President’s budget proposals are taken into account, the CBO’s projections rise to $1.8 trillion and $1.4 trillion. You can see that the CBO believes the deficit will rise substantially, Continue reading

A Glimmer Of Hope

The Lehmann Letter ® Today the Census Bureau announced a big jump in February housing starts: http://www.census.gov/const/newresconst.pdf The Bureau said: “Privately-owned housing starts in February were at a seasonally adjusted annual rate of 583,000. This is 22.2 percent (±13.8%) above the revised January estimate of 477,000, but is 47.3 percent (±5.3%) below the revised February 2008 rate of 1,107,000. “Single-family housing starts in February were at a rate of 357,000; this is 1.1 percent (±11.0%)* above the January figure of 353,000. The February rate for units in buildings with five units or more was 212,000.” A 22.2 percent increase is Continue reading

Industrial Destruction Continued

The Lehmann Letter © Today the Federal Reserve reported (http://www.federalreserve.gov/releases/g17/Current/default.htm ) that capacity utilization had fallen to 70.9 percent in February. (Capacity utilization answers this question: What is the current rate of industrial production expressed as a percentage of the maximum? Industrial = Mining, manufacturing and public utilities.) Connect that dot to the chart below and you can see we’re headed for the basement. We’ve also tied the all-time low of 70.9 percent to which this statistic fell in December 1982. Capacity Utilization (Click on chart to enlarge) (Recessions shaded) If capacity utilization continues to deteriorate, which seems likely, we Continue reading

The Big Rally

The Lehmann Letter © The stock market enjoyed a huge rally this week. Have we bounced off true bottom and is the bear market over? Or is this just another bear rally that’s about to send us to new bottoms? The S&P is now 750. If you update the chart below (blue line – left scale) with that figure, you’ll notice the S&P has fallen beneath the 2002 trough that followed the cot-com bust. Whether or not it rises from its current trough depends upon earnings per share and the P/E ratio. S&P, P/E Ratio & Earnings Per Share (Click Continue reading

This Time Is Different

The Lehmann Letter © We’ve suffered through ten recessions since WWII, and are now in the eleventh. Over the past four decades, except for the 1990-91 recession, rapidly rebounding residential construction pulled us out of every slump. Moreover, those were V-shaped recessions with sharp downturns and equally sharp recoveries. During the booms that preceded each of these recessions, escalating inflation prompted the Fed to raise interest rates and constrict residential construction. That depressed the economy. Once recession hit and shrinking demand snuffed out inflation, the Fed let rates fall. Building immediately recovered, resuscitating the rest of the economy. The 1990-91 Continue reading