Consumer Confidence: The Historical Context

The Lehmann Letter (SM) Today’s consumer confidence report from The Conference Board illustrates the importance of placing recent data in historical context: Consumer Confidence (Click on chart to enlarge) (Recessions shaded) Update the chart in your mind’s eye with January’s 61.1 reading and December’s 64.8 figure. Both reports bring the index back to about 60 and offset last fall’s brief downturn. But you can see the clear upward trend from recession lows. And you can also see that 100 or more, such as we enjoyed in 2005, is a prosperous reading. These observations put matters in perspective. The important Continue reading

February Publication Schedule

The Lehmann Letter (SM) Here are the February indicators we will follow. As always, housing, auto sales and consumer confidence are of particular importance. But production – purchasing managers’ index and capacity utilization – as well as business investment in capital goods are also of concern. ECONOMIC INDICATOR PUBLICATION SCHEDULE February 2012 Source (* below)……Series Description……Day & Date Quarterly Data BLS…….….Productivity…….……Thu, 2ndBEA……….GDP & Profits…..……Wed, 29th Monthly Data ISM..Purchasing managers’ index…Wed, 1st BEA.New-vehicle sales.(Approximate).Fri, 3rdBLS………….Employment………… Fri, 3rdFed. Consumer credit..(Approximate).Tue, 7thCensus………….Inventories………. Tue, 14thFed……….Capacity utilization……Wed, 15thBLS…………Producer prices……. Thu, 16th Census………Housing starts…….Thu, 16thConf Bd…….Leading indicators….Fri, 17th BLS……….Consumer prices.….. Fri, 17thNAR………Existing-home sales….Wed, 22nd Census……..New-home sales…… Continue reading


The Lehmann Letter (SM) The gross domestic product rose by 2.8% in 2011’s fourth-quarter according to this morning’s Commerce Department bulletin: That’s the best performance of any 2011 quarter, a year in which GDP growth accelerated. Households purchased more durable goods, such as autos, and homebuilding accelerated. Businesses added to their inventories, but plant and equipment expenditures sagged. A noteworthy disappointment: Government expenditures lagged. At this point in a weak recovery, government spending should accelerate in order to make up for the slack in private expenditures. Later in the expansion, when private spending recovers, government spending can taper off. Continue reading

The Fed Speaks

The Lehmann Letter (SM) Today the Federal Reserve released its latest statement from the Federal Open Market Committee (FOMC). This is the Fed’s key policy-setting body. The FOMC said: “… the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable. “Consistent with its statutory mandate, the Committee Continue reading

Full Steam Ahead?

The Lehmann Letter (SM) Some observers are moving from deep gloom to a sunnier prognosis for the economy. This letter has long believed that expansion will be slow, tenuous and a struggle. Let’s examine two charts to see where we are. Purchasing Managers’ Index (Click on chart to enlarge) (Recessions shaded) Capacity Utilization (Click on chart to enlarge) (Recessions shaded) The purchasing managers’ index provides purchasing managers’ view of the industrial scene, and capacity utilization informs us of how heavily industry is using its plant and equipment. You can see that the former is below 55 and the latter is Continue reading

Home Sales: No True Recovery Yet

The Lehmann Letter (SM) Take a look at today’s bulletin on existing-home sales from the National Association of Realtors: It begins: “Existing-home sales continued on an uptrend in December, rising for three consecutive months and remaining above a year ago, according to the National Association of Realtors®. “The latest monthly data shows total existing-home sales1 rose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates are based on completed transactions from multiple Continue reading

Housing: Frame of Reference Important

The Lehmann Letter (SM) This morning the Census Bureau issued this report on new residential construction ( “Privately-owned housing starts in December were at a seasonally adjusted annual rate of 657,000. This is 4.1 percent (±11.6%)* below the revised November estimate of 685,000, but is 24.9 percent (±18.3%) above the December 2010 rate of 526,000.” Although there was a decline from November to December, starts are up by one-fourth from a year ago. Looks good until you examine the chart. Housing Starts (Click on chart to enlarge) (Recessions shaded) Housing starts have hovered around 600,000 for so long that a Continue reading

Good News!

The Lehmann Letter (SM) Today the Federal Reserve reported that consumer credit rose by $244.8 billion at a seasonally adjusted annual rate in November: You can see from the chart that this is a healthy jump, much stronger than any recent month and historically stronger than most months. Be cautious, however, because you can also see that there is a great deal of noise in the data. Monthly readings vary greatly. Consumer Credit (Click on chart to enlarge) (Recessions shaded) Consumer credit outstanding remains lower than it was in 2008 at the economy’s peak just before recession. You can Continue reading

200,000 and 8.5%

The Lehmann Letter (SM) This morning’s Bureau of Labor Statistics report on December employment began with great news. The unemployment rate fell to 8.5% and the economy created 200,000 new jobs: Some details in the report were especially pleasing. The private sector created 212,000 jobs and construction employment increased for the first time in months. Government, unfortunately, continued to shed workers. This is an unfortunate irony of current conditions. Government usually adds workers during slack times as a matter of policy priority. The current political climate has prevented that. Job Growth (Click on chart to enlarge) (Recessions shaded) The Continue reading

2012 Outlook

The Lehmann Letter (SM) The economy will improve gradually in 2012, much as it did in 2011. Even employment will make slow gains, and the unemployment rate will gradually decline. The economy won’t rebound sharply, as it did following the 1981-82 recession and earlier recessions, because the recent recession, unlike those earlier recessions, followed on the heels of an asset bubble and bust. Those earlier recessions followed a simple course: The economy expanded rapidly due to easy-credit conditions and then lurched into recession as the Fed boosted interest rates to restrain inflation. Then, as soon as higher rates dampened inflation, Continue reading