March Economic Indicators: Tracking the Recovery

The Lehmann Letter (SM) There’s no doubt the economy is recovering. But some measures are recovering more rapidly than others. Earnings are back to where they were before the recession and the stock market is chugging along. Consumer confidence and consumer credit are rising and firms are rebuilding inventories. Examine the March indicators below, however, and you’ll see that most indicators have not returned to pre-recession levels. They are improving, but they’re not where they were. Employment is the most notorious. Yet housing, autos, industrial production, capacity utilization and capital expenditures also remain far from their earlier tops. This letter Continue reading

Consumer Confidence: Strong Finish for Month

The Lehmann Letter (SM) All eyes this week have been on Libya and the price of oil. But that should not distract our attention from a strong report that appeared a few days ago. The Conference Board announced that its index of consumer confidence had popped up to 70.4 in February: http://www.conference-board.org/data/consumerconfidence.cfm If you examine the chart you will see that consumer confidence plunged to the high 20s in the depths of the recession and has struggled to recover more normal levels. The reading of 70.4 is a solid advance and tells us that households are markedly more upbeat than Continue reading

$100 Oil: Inflationary Omen?

The Lehmann Letter (SM) With oil at $100 a barrel, can inflation be far behind? We hope not. No one wants another inflationary surge. But are there credible grounds for optimism? And, after all, didn’t a spike in oil prices send inflation surging twice in the 1970s? Once, when OPEC pushed oil from $3 a barrel to $10 a barrel in 1973, and again when OPEC raised its price from $10 a barrel to $30 a barrel in 1979. The CPI climbed by 12% after the first episode and by 16% after the second. Is that an omen for today? Continue reading

Is Good News Cause for Concern?

The Lehmann Letter (SM) There was more good economic news today. The Conference Board reported that its Leading Economic Indicators rose again in January: http://www.conference-board.org/press/pressdetail.cfm?pressid=4131 Although January’s gain was small, it follows upon strong increases in November and December. Taken together these improvements are part of a continuing pattern of economic expansion. A growing economy always raises the question: Will rising demand generate inflation? That is especially relevant because of recent commodity-price increases. Yesterday the Bureau of Labor Statistics (BLS) reported that wholesale prices grew by 9.6% annually in January: http://stats.bls.gov/news.release/pdf/ppi.pdf And today the BLS reported that January consumer prices Continue reading

Households Borrow More: A Good Beginning

The Lehmann Letter (SM) Residential real estate was ground zero for the recent recession. When the housing bubble burst, everything else imploded with it. But the implosion affected more than housing. It also hobbled household balance sheets: Liquid assets were down, home values plunged, debt was up and net worth fell. These reversals motivated households to limit borrowing and buying order to conserve cash and repay debt. That inhibited household spending which, in turn, delayed economic recovery and expansion. That’s why this letter has focused on consumer credit. Although consumer credit excludes mortgages, consumer credit is an important measure of Continue reading

No Happy Face: Anemic Job Growth

The Lehmann Letter (SM) There’s no way to paint a happy face on the January employment report released this morning by the Bureau of Labor Statistics: http://stats.bls.gov/news.release/pdf/empsit.pdf Job growth, at 36,000, was essentially flat. The unemployment rate fell to 9.0% from 9.4%, repeating December’s large drop. Yet that begs the unanswered question: Is the decline in the unemployment rate due to an improvement in the employment picture, or is it due to discouraged workers dropping out of the labor force? Since these numbers are based on surveys that are subject to large subsequent revisions, we will have to wait for Continue reading