At Last

The Lehmann Letter (SM) Today’s New York Times carries a front-page article on the Obama administration’s latest effort to provide relief for struggling homeowners: http://www.nytimes.com/2010/03/27/business/27modify.html?hp Direct your attention to the following sentence in the article’s second paragraph: “Additionally, the government will encourage lenders to write down the value of loans held by borrowers in modification programs to make their mortgages more affordable.” Mortgage write-downs have been the missing element in the government’s mortgage relief efforts. Thus far assistance has been directed toward interest-rate modification. But interest-rate modification won’t help homeowners who face unemployment or whose loans are underwater. If you Continue reading

Recent Signs

The Lehmann Letter (SM) Today the Census Bureau released February capital-goods and new-home sales data: http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf http://www.census.gov/const/newressales.pdf New orders for nondefense capital goods appeared strong, rising from $55.000 billion in December to $57.402 billion in January and $60.376 billion in February. It appears that we are on a rebound when these numbers are plugged in to the chart below. But they are deceptive because they include highly volatile new orders for aircraft. With these removed the data are $55.212 billion in December, $53.652 billion in January and $53.051 billion in February. What had been an upward trend is now flat Continue reading

Real Estate

The Lehmann Letter (SM) Washington continues its attempts to prop up real estate and residential construction. Yet the federal government still has not squarely confronted the enormity of the real-estate crisis. Foreclosures are high and, by some accounts, rising. An estimated quarter of all homes are underwater (mortgage debt exceeds home value). Last month two reports illustrated the situation’s fragility. January’s new home sales fell to 309,000 and existing home sales shrank to 5.05 million. Homes are not selling well despite low interest rates and subsidized sales. New Home Sales (Click on chart to enlarge.) Recessions shaded Existing Home Sales Continue reading

Another Hopeful Sign

The Lehmann Letter (SM) On Friday the Federal Reserve released its latest data on consumer credit: http://www.federalreserve.gov/releases/g19/Current/ These are loans made to households to finance the purchase of automobiles and other consumer durables. It does not include mortgage borrowing.As you can see from the chart below, during the recent recession consumer credit plunged to its worst low since World War II. Households stopped borrowing and begin repaying their debts at a record pace. Household priorities switched from making expenditures to repairing balance sheets. We might ordinarily think of this as a good sign, but keep in mind that household borrowing Continue reading

Employment

The Lehmann Letter (SM) Take a look at today’s employment numbers from the Bureau of Labor Statistics: http://stats.bls.gov/news.release/empsit.b.htm The top line informs us that the economy lost 36,000 jobs in February. We continue to hope for job gains, but this is much better news than February of last year when the economy shed 726,000 jobs. The chart below shows that we’ll be in positive territory before long if the present trend continues. Job Growth (Click on chart to enlarge.) Recessions shaded The table reveals other bits of good news. The sixth row continues to show that manufacturing has stopped losing Continue reading

Beige Book

The Lehmann Letter (SM) Today the Fed released its Beige Book report on economic conditions: http://www.federalreserve.gov/fomc/beigebook/2010/20100303/default.htm . Here is the lead paragraph: “Reports from the twelve Federal Reserve Districts indicated that economic conditions continued to expand since the last report, although severe snowstorms in early February held back activity in several Districts. Nine Districts reported that economic activity improved, but in most cases the increases were modest. Overall conditions were described as mixed in the Atlanta and St. Louis Districts, though St. Louis noted further signs of improvement in some areas. Richmond reported that economic activity slackened or remained soft Continue reading

March Publication Schedule

The Lehmann Letter (SM) Here’s the publication schedule for some of March 2010’s most important economic indicators. Go to http://www.beyourowneconomist.com/ and click on Seminars, then click on Economic Indicators to navigate the sites that provide the data and click on Charts for a visual presentation that you can update. PUBLICATION SCHEDULE March 2010 Source (* below)…………Series Description…………Day & Date Quarterly Data BLS………………Productivity…………… Thu, 4th BEA………………Int’l Transacs……… Thu, 18th BEA…………………………GDP…………………………Fri, 26th Monthly Data ISM…Purchasing managers’ index………Mon, 1st BLS…………………………Employment………………Fri, 5thFed………Consumer credit…(Approximate).Fri, 5thCensus……………Balance of trade……………… Thu, 11thCensus…………………Retail trade……………………Fri, 12thCensus…………………Inventories……………………Fri, 12thFed………………Industrial production………Mon, 15thFed………………Capacity utilization…………Mon, 15thCensus……………Housing starts………………Tue, 16thBLS………………Producer prices………………Wed, 17thBLS………………………Consumer prices……………Thu, 18thConf Bd…………Leading indicators………Thu, 18th Continue reading