Month’s End

The Lehmann Letter SM July concluded on dismal notes. Default talks in Washington are not resolved and the Commerce Department reported that second-quarter GDP grew at a puny 1.3%. Today’s New York Times carried a good article on the slow recovery. It finds that weak household balance sheets have impeded the recovery: We may avoid default in the coming days, but household balance sheets will require more time to repair. © 2011 Michael B. Lehmann

Housing Starts

The Lehmann Letter SM A flurry of excitement accompanied the Census Bureau’s announcement last week that June housing starts had risen to 629,000. The Bureau’s bulletin reported that this was a 14.6% improvement over May’s figure. By now, however, readers of this letter know that they must examine the chart to put recent data in perspective. Housing Starts (Click on chart to enlarge) (Recessions shaded) And the chart clearly shows that housing starts remain in the doldrums. June’s reading remains too small to generate lasting excitement. If it’s the beginning of a trend, housing starts will commence rising toward 1 Continue reading

Production Stalls

The Lehmann Letter SM Go to to view this morning’s Federal Reserve report on June industrial production and capacity utilization. At year’s mid-point industrial production is barely higher than it was at the start of the year. Capacity utilization, which measures current output as a percentage of the maximum, is actually lower. Capacity Utilization (Click on chart to enlarge) (Recessions shaded) The chart reveals a good bounce since recession’s bottom. But capacity utilization has leveled off at about 77% since the beginning of the year. This seems to be further evidence that the economy’s expansion has stalled. The big Continue reading

Auto Sales Slump

The Lehmann Letter SM Readers of this letter are familiar with its focus on residential real estate and its view that the economy won’t be back to full speed until real estate recovers. But new-vehicle sales are also symptomatic of the economy’s ills. Households’ impaired balance sheets limit their ability to buy new cars by borrowing more. Earlier this month the Commerce Department reported June auto sales of 11.4 million at a seasonally-adjusted annual rate. New-Vehicle Sales (Click on chart to enlarge) (Recessions shaded) The chart makes clear that recovery has stalled: 11.4 million is not part of an upward Continue reading