April Publication Schedule

The Lehmann Letter (SM) Here are some of the economic indicators we’ll examine in April, together with their release dates. Will everything except housing look rosy? Or will weak housing restrain the other indicators? Better yet, will housing break out of its slump? We’ll see. ECONOMIC INDICATOR PUBLICATION SCHEDULE April 2012 Source (* below)……Series Description……Day & Date Quarterly Data BEA……….GDP ……..…..……Fri, 27th Monthly Data ISM..Purchasing managers’ index…Mon, 2nd BEA.New-vehicle sales.(Approximate).Wed, 4th Fed.Consumer credit..(Approximate).Fri, 6th BLS………….Employment…….… Fri, 6th BLS…………Producer prices……. Thu, 12th BLS……….Consumer prices.……. Fri, 13th Census………….Inventories……..Mon, 16th Fed……….Capacity utilization……Tue, 17th Census………Housing starts…….Tue, 17th NAR………Existing-home sales….Thu, 19th Conf Bd…….Leading indicators….Thu, 19th Continue reading

Profits: Strong Growth May Be Over

The Lehmann Letter (SM) The headline economic news this morning is GDP’s strong 3.0% growth in 2011’s final quarter. http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm Of greater interest to this letter is the estimate of last quarter’s after-tax corporate profits. They were $1,493.9 billion, down slightly from the previous quarter. Let’s discuss this in light of yesterday’s report that manufacturing profits and profit margins have fallen slightly. Place the most recent number on the chart and it seems that profits for all businesses may have reached a plateau of about $1,500 billion. That’s bad for the stock market. Corporate Profits(Click on chart to enlarge)(Recessions shaded) Continue reading

Business Investment: Tough Row to Hoe

The Lehmann Letter (SM) A robust economic expansion requires strong household and business expenditures. That’s why this letter has followed consumer auto purchases and homebuilding so closely. But business investment in new plant and equipment is also important. Each month the Census Bureau issues a report on new orders for all durable goods, and within that report the Census Bureau also informs us of business orders for these goods. For instance, the Census Bureau breaks out business orders for new cars from all such orders. Lately new orders for nondefense capital goods have fluctuated around $80 billion a month: http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf Continue reading

Consumer Confidence and the Presidential Election

The Lehmann Letter (SM) Today the Conference Board announced that its index of consumer confidence “…now stands at 70.2 (1985=100), down from 71.6 in February.” http://www.conference-board.org/press/pressdetail.cfm?pressid=4441 The chart places these readings in perspective. The index hit an all-time low in the recession and is erratically climbing out of the trough. We hope it continues northward and pulls the economy up with it. But what will that mean for the presidential election this fall? Consumer Confidence(Click on chart to enlarge)(Recessions shaded) A little history is in order. When Ronald Reagan first ran for the presidency in 1980 he asked the electorate, Continue reading

Manufacturers’ Profits: Stock-Market Trouble?

The Lehmann Letter (SM) Manufacturers’ profits are not closely followed in the news media, but today’s Census Bureau report is worth noting: http://www2.census.gov/econ/qfr/current/qfr_mg.pdf As you can see from the charts, manufacturers’ profits and profit margins recovered strongly from the recession and are now at record highs. You can also see the strong growth trend over the past 20 years. This is especially striking for profit margins because margins exclude all sales-volume growth. For decades manufacturers earned six cents on each dollar of sales. Lately their profit margin has grown to almost ten cents. That’s a remarkable gain. Manufacturers’ Profits (Click Continue reading

Housing: Three Strikes and You’re Out

The Lehmann Letter (SM) Here is today’s Census Bureau announcement on February new-home sales: “Sales of new single-family houses in February 2012 were at a seasonally adjusted annual rate of 313,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 1.6 percent (±23.9%) below the revised January rate of 318,000, but is 11.4 percent (±17.8%) above the February 2011 estimate of 281,000.” You can find the release at: http://www.census.gov/construction/nrs/pdf/newressales.pdf Notice that sales were 11.4% above last year’s level. That may be cause for cheer until you look at Continue reading

Europe’s Progress

The Lehmann Letter (SM) Take a look at today’s New York Times article on Europe’s progress since the depths of its fiscal and financial crisis: http://www.nytimes.com/2012/03/22/business/economy/us-finance-leaders-see-much-reduced-risk-from-europe.html?_r=1&ref=todayspaper This letter has commented that Europe’s recent concerted action toward Greece had similarities to Europe’s actions a century ago toward recalcitrant debtor nations. Back then it was known as gunboat diplomacy. Using the threat of force European nations, on behalf of their bondholders, would seize the customs revenues of debtor nations. Then, over a number of years, they would skim off what was needed to satisfy the claims of these bondholders. There are no Continue reading

Existing-Home Sales: Still Depressed

The Lehmann Letter (SM) This morning the National Association of Realtors announced there were 4.59 million existing homes sold in February, at a seasonally adjusted annual rate, down from an upwardly revised 4.63 million in January: http://www.realtor.org/press_room/news_releases/2012/03/ehs_feb Once again the chart puts matters in perspective. These are weak numbers that may remain weak for quite some time. Existing-Home Sales(Click on chart to enlarge)(Recessions shaded) The Realtors’ announcement speaks optimistically about consumer buying power, job gains and renewed household formation. But, as this letter has stated on many occasions, households compromised their balance sheets – too much debt, too little liquidity Continue reading

Housing Starts: No Good News

The Lehmann Letter (SM) Housing Starts: No Good News The Census Bureau had a little difficulty posting its full PDF release on housing starts this morning. This month’s report had not replaced last month’s. When it’s up you should be able to find it at: http://www.census.gov/construction/nrc/pdf/newresconst.pdf Nonetheless a capsule summary disclosed 698,000 starts in February. Take a look at the chart and you’ll see that anything around 700,000 is better than the 600,000 level that has prevailed for over a year. Then take a look at where we are, where we were and where we need to go and you’ll Continue reading

Real-Estate Releases

The Lehmann Letter (SM) Look for three real-estate releases this week, listed below with the links to last month’s releases: Housing Starts – Tuesday, March 20, 8:30 EDT from the Census Bureau http://www.census.gov/construction/nrc/pdf/newresconst.pdf Sales of existing homes – Wednesday, March 21, 10:00am EDT from the National Association of Realtors – http://www.realtor.org/press_room/news_releases/2012/02/ehs_jan Sales of new homes – Friday, March 23, 10:00am EDT from the Census Bureau – http://www.census.gov/construction/nrs/pdf/newressales.pdf This letter has consistently observed that the expansion won’t be robust until real estate wakes up. Problem is: Residential real estate is a balance-sheet item, an asset. It’s not a perishable, like strawberries. Continue reading