GDP: Still Looking Good

The Lehmann Letter (SM) This morning’s revision of the GDP (total output) numbers is more welcome news. The Commerce Department now estimates that GDP grew by 3.0% in 2011’s last quarter, a slight upward revision from its earlier estimate of 2.8%: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm As this letter reported last month when the initial figure was released: That’s the best performance of any 2011 quarter, a year in which GDP growth accelerated. The Commerce Department will publish another revision of the data on March 29. That announcement will contain the first release of corporate-earnings data for 2011’s fourth quarter. This figure should interest Continue reading

Consumer Confidence Climbing

The Lehmann Letter (SM) More good news: This morning The Conference Board, a New York business organization, announced that its index of consumer confidence had improved to 70.8 in February from 61.5 in January: http://www.conference-board.org/data/consumerconfidence.cfm Lynn Franco, Director of The Conference Board’s Consumer Research Center, commented: “Consumers are considerably less pessimistic about current business and labor market conditions than they were in January. And, despite further increases in gas prices, they are more optimistic about the short-term outlook for the economy, job prospects, and their financial situation. ” Consumer Confidence(Click on chart to enlarge) (Recessions shaded) The chart shows that Continue reading

March Publication Schedule: Housing Remains Key

The Lehmann Letter (SM) The economy has gathered strength. Housing remains the big concern. It’s been a dragging anchor. We’ll see what March has in store. ECONOMIC INDICATOR PUBLICATION SCHEDULE March 2012 Source (* below)……Series Description……Day & Date Quarterly Data BLS…….….Productivity…….……Wed, 7thBEA..International Transactions..Wed, 14thBEA……….GDP & Profits…..……Thurs, 29th Monthly Data ISM..Purchasing managers’ index…Thurs, 1stBEA.New-vehicle sales.(Approximate).Mon, 5thFed. Consumer credit..(Approximate).Wed, 7thBLS………….Employment………… Fri, 9thCensus………….Inventories………. Tue, 13thBLS…………Producer prices……. Thu, 15thBLS……….Consumer prices.….. Fri, 16thFed……….Capacity utilization……Fri, 16thCensus………Housing starts…….Tue, 20thNAR………Existing-home sales….Wed, 21stConf Bd…….Leading indicators….Thu, 22nd Census……..New-home sales…… Fri, 23rdConf Bd….Consumer confidence.. Tue, 27thCensus……….Capital goods…….. Wed, 28th *BEA = Bureau of Economic Analysis of the U.S. Department of Commerce*BLS Continue reading

New-Home Sales Flat

The Lehmann Letter (SM) Just when folks were beginning to say, “Full steam ahead!” We get a report like this. The Census Bureau announced 321,000 new-homes sold in January at a seasonally adjusted rate: http://www.census.gov/construction/nrs/pdf/newressales.pdf Look at the chart, insert that number, and you can see for yourself that new-home sales remain flat. As this letter has consistently said, residential building must recover for the economy to become robust. And if builders can’t sell homes, they won’t build them. New Home Sales(Click on chart to enlarge) (Recessions shaded) A picture is worth a thousand words. (To be fully informed visit Continue reading

Europe and the Rules of the Game

The Lehmann Letter (SM) Readers know that this letter believes that Europe will work through its debt crisis and emerge stronger and more united in the long run. That would be consistent with Europe’s record since the end of World War II. A historian could go back even further, to the days before World War I, to find a precedent for current events. A century ago Europe was on the gold standard. Each nation pegged the value of its currency to gold. A British pound was worth a certain amount of gold, a German mark a different amount, and so Continue reading

Existing-Home Sales: Still a Drag

The Lehmann Letter (SM) The economy is gaining strength, but real estate continues to impede its progress. That’s not surprising because real estate was ground zero for the boom as well as the bust. Households compromised their balance sheets – too much debt, too little liquidity and not enough net worth – in order to acquire homes. Liquidity and net worth eroded further during the collapse as home-prices fell and households desperately attempted to repay their debts. Household balance sheets remain impaired today despite households’ best efforts to retire debt, improve liquidity and boost net worth. Consequently real estate remains Continue reading

Gunboat Diplomacy: The Greek Debt Deal

The Lehmann Letter (SM) A century ago it was referred to as gunboat diplomacy: European, and sometimes American, warships visited a small, weak nation to ensure that it repaid its debts to European and American bondholders. On occasion gunboat diplomacy involved North Africa or the eastern Mediterranean. Sometimes it was the Caribbean and Central America. The Europeans and Americans established a protectorate in the target country and seized the customs authority for a number of years. The European and American authorities could then skim the customs revenue in order to repay the bondholders. There were times when the occupiers left Continue reading

Iran And Sanctions

The Lehmann Letter (SM) There is a great deal of concern regarding rising oil prices. Much of that concern centers on Iran and its nuclear program and our – and Europe’s – fear of a nuclear weapon in Iran’s hand. Military options exist, but other options are having an effect. Sanctions are tightening and applying pressure on Iran to come to the table. For instance, did you see this article in Saturday’s, February 18, New York Times? http://www.nytimes.com/2012/02/18/world/middleeast/swift-network-moves-closer-to-expulsion-of-iran.html?_r=1&scp=2&sq=steven%20lee%20myers&st=cse Here’s an excerpt: “Yet another potentially crippling sanction against Iran moved a step closer on Friday when the Belgium-based Society for Worldwide Continue reading

Inflation: Still Not A Threat

The Lehmann Letter (SM) Critics of the Federal Reserve have expressed concern that the Fed’s expansionary policy will generate rising inflation. But it hasn’t, and this morning’s report from the Bureau of Labor Statistics should cause no concern: http://stats.bls.gov/news.release/pdf/cpi.pdf The BLS reported that consumer prices grew at a 2.4% seasonally adjusted annual rate in January (multiply the 0.2% monthly figure by 12). Take a look at the chart and you will see that prices have been rising on average by this amount for two decades. There is no current evidence for surging inflation. Change in Consumer Prices(Click on chart to Continue reading

Residential Construction: Still Dragging

The Lehmann Letter (SM) It’s not that this morning’s news was bad. The Census Bureau reported an improvement in January housing starts: http://www.census.gov/construction/nrc/pdf/newresconst.pdf But it’s not hard to see the problem when you post January’s 699,000 on the chart. We’re breaking out of the 600,000 range, but not by much. Housing Starts(Click on chart to enlarge)(Recessions shaded) Contrast this with our earlier report of 14.1 million new-vehicle sales in January. Place that on the chart and you can see the positive trend. New-Vehicle Sales(Click on chart to enlarge)(Recessions shaded) What’s wrong with housing? Why can’t it break loose like so Continue reading