Big Jump in Home Sales

The Lehmann Letter © Today the National Association of Realtors announced a big jump in existing-home sales: Sales were a revised 5.5 million in September and jumped to 6.1 million in October at a seasonally adjusted annual rate. You can see the strength of this gain if you plug October’s 6.1 million into the chart below. It represents a significant upward trend. Existing Home Sales (Click on image to enlarge) Recessions shaded Now for some big questions: Will this surge expire on April 30, 2010 along with the first-time home-buyer tax credit? (Recall that auto sales fell back to Continue reading

Capital Spending

The Lehmann Letter © Everyone wants to know, “When will the economy gain momentum?” Residential construction and motor-vehicle production remain lackluster. So does capital spending. New Orders for Nondefense Capital Goods Click on image to enlarge) Recessions shaded The chart shows that new orders for nondefense capital goods (machinery and equipment) fell sharply in the recent recession. They’re down to where they were at the bottom of the dot-com bust. The latest report – for September – is a low $53.5 billion. You can see from the chart that this is no improvement from the recession’s low. Full employment requires Continue reading

Margins Drive The Market

The Lehmann Letter © Yesterday’s “Wall Street Journal” article by Tom Lauricella on earnings and the stock market ( confirmed our September 17 posting on “Profits & Profit Margins” and our October 30 posting on “10,000 Tops?” Profit-margin improvements, not sales-volume growth, drove the stock market’s recent surge. But how long can earnings continue to climb without a boost from sales? That’s the key question. © 2009 Michael B. Lehmann

From the Chairman

The Lehmann Letter © Here are some excerpts from today’s speech by Federal Reserve Chairman Ben Bernanke to the Economic Club of New York. “I expect moderate economic growth to continue next year. Final demand shows signs of strengthening… the beneficial influence of the inventory cycle on production should continue for somewhat longer. …residential investment should become a small positive for growth next year rather than a significant drag, as has been the case for the past several years. Prospects for nonresidential construction are poor, however, given weak fundamentals and tight financing conditions. “In the business sector…enhanced business confidence…should lead Continue reading

Homes & Autos

The Lehmann Letter © Time for a reality check. Look at these charts. New-Home Sales (Click on chart to enlarge) (Recessions shaded) New-Vehicle Sales (Click on chart to enlarge) (Recessions shaded) New-home sales were 402,000 in September and new-vehicle sales were 10.4 million in October. We’ve barely moved off the bottom of these charts. What kind of recovery is that? (The charts were taken from [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.) © 2009 Michael B. Lehmann

The Dollar

The Lehmann Letter © There’s been much discussion of the dollar’s value lately. Two charts might help put matters in perspective. Exchange Value of the U.S. Dollar (Click on chart to enlarge) (Recessions shaded) U.S. Balance on Current Account (Click on chart to enlarge) (Recessions shaded) You can see both the dollar’s and the balance on current account’s downward trend over the past 25 years. There are interruptions in those trends, and neither series is at its historic low. Nevertheless the trend is clear. We borrow more and more from the rest of the world in order to buy more Continue reading


The Lehmann Letter © Today the Bureau of Labor Statistics announced that the unemployment rate rose to 10.2% and that the economy lost 190,000 jobs in October: But there was some good news: Manufacturing overtime, which had been 2.8 hours per week in the second quarter and 3.0 hours/week in the third quarter, rose to 3.2 hours/week in October. That’s a sign of growing strength in a leading sector and, although manufacturing continues to lose jobs, provides a ray of hope. Yet 10.2% is a big number and it may grow larger. We haven’t had 10+% unemployment since the Continue reading

The Fed Holds Steady

The Lehmann Letter © The Federal Reserve’s Federal Open Market Committee (that sets the rate at which banks lend reserves to each other) met today and said: “….economic activity has continued to pick up….. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability. “With substantial resource slack likely to continue to dampen cost pressures and with Continue reading