May Publication Schedule

The Lehmann Letter (SM)    Many are concerned that the expansion is slowing and may slow further. Here are the economic indicators – together with their publication schedule – that we’ll examine in May. Slowdown? Probably not. Slow expansion? Probably. We’ll try to avoid semantic quibbles. ECONOMIC INDICATOR PUBLICATION SCHEDULE May 2012 Source (* below)……Series Description……Day & Date Quarterly Data BLS………Productivity…………..Thu, 3rd BEA……….GDP & Profits..…..……Thu, 31st Monthly Data ISM..Purchasing managers’ index…Tue, 1st   BEA.New-vehicle sales.(Approximate).Thu, 3rd Fed. Consumer credit..(Approximate).Mon, 7th BLS………….Employment…….…   Fri, 4th BLS…………Producer prices……. Fri, 11th BLS……….Consumer prices.……. Tue, 15th Census………….Inventories…….. Tue, 15th Fed……….Capacity utilization……Wed, 16th Census………Housing starts…….Wed, 16th Continue reading

GDP OK

The Lehmann Letter (SM) Today’s GDP number was OK. The Commerce Department reported that gross domestic product grew by 2.2% in the first quarter: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm That’s not bad. We had smaller numbers for several quarters in 2011, as the chart indicates. There were, however, some components of interest. Household expenditures on durable goods, such as motor vehicles, grew strongly. That’s not surprising since new-vehicle sales have been robust in recent months. Residential construction’s vigorous performance was of greater interest because the housing numbers have not been especially encouraging. Perhaps the first quarter’s good winter weather permitted an unseasonably large amount Continue reading

France’s Next President?

The Lehmann Letter (SM) This morning’s New York Times covered a press conference by Francois Hollande, France’s Socialist candidate for president: http://www.nytimes.com/2012/04/26/world/europe/hollande-says-hell-seek-new-fiscal-treaty-if-elected-in-france.html?_r=1&ref=todayspaper One might think that he would advocate a radical departure from the policies of Nicolas Sarkozy, the incumbent, with respect to European solidarity. But it’s hard to find them in this story. Here’s an extensive excerpt: “In the first news conference of his campaign, Mr. Hollande said that he would propose four modifications to the European Union treaty, favored by Germany and approved in March but not yet ratified. Most significant, perhaps, he called for the creation of Continue reading

Capital Goods: More Bifurcation

The Lehmann Letter (SM) This morning the Census Bureau reported that capital-goods orders were down in March: http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf This letter has always focused on a portion of that report: New orders for nondefense capital goods, a measure of business (not household) investment in new equipment. The chart shows that these orders have popped up strongly since the recession. This provides more evidence of our bifurcated recovery: Everything but housing seems to be doing well. March’s $73 billion was down sharply from February’s $81.6 billion. There is always noise in the data, and this statistic is particularly volatile because of its Continue reading

More Bifurcation: New Home Sales and Consumer Confidence

The Lehmann Letter (SM) This morning’s bulletins provide additional signs of bifurcation. New-home sales remain in the doldrums: http://www.census.gov/construction/nrs/pdf/newressales.pdf  While consumer confidence has moved up and out of recession’s trough: http://www.conference-board.org/data/consumerconfidence.cfm Update the charts with these new numbers. There were 328,000 new homes sold in March, a dip from February’s revised 353,000. The chart reveals that those are not bad numbers. There is no sign of a double dip. At the same time you can see that a true expansion has not yet begun. Consumer confidence was 69.2 in April, about the same as March’s 69.5. That seems, like new-home Continue reading

French Elections

The Lehmann Letter (SM) The stock market is down this morning on renewed fears regarding Europe. There will be a runoff in the French presidential elections and the incumbent did not lead. Will his challenger, if he wins, be as resolute in defense of the euro? Investors appear to have their doubts. This letter has always been optimistic that Europe will muddle through, just as it has done over the past 65 years. Too much is at stake and too much history points to the road forward. This gives hope that France will take no detours and will refuse to Continue reading

Economic Recovery: Recommended Reading

The Lehmann Letter (SM) This letter recommends several articles in this morning’s newspapers. Both The New York Times and The Wall Street Journal carried stories about the weak economic recovery. http://www.nytimes.com/2012/04/20/business/economy/concerns-form-backdrop-for-economic-meetings.html?_r=1&ref=todayspaper http://online.wsj.com/article/SB10001424052702303425504577353550599537484.html?mod=ITP_pageone_0 The New York Times also published a separate story on Europe’s travails. http://www.nytimes.com/2012/04/20/business/global/for-europe-scrutiny-and-diminishing-influence.html?ref=todayspaper All of these focus on the weak recovery both here and abroad: Noting that signs of strong growth are often mitigated by setbacks. But the most interesting story, from this letter’s perspective, appeared in The New York Times and analyzed domestic household debt levels. http://www.nytimes.com/2012/04/20/business/not-exactly-a-miracle-but-us-debt-levels-are-falling.html?ref=todayspaper The article relied heavily on a recent report by the Continue reading

Home Sales and the Bifurcated Economy

The Lehmann Letter (SM) This morning’s report from the National Association of Realtors illustrates a point that this letter has attempted to make for some time: http://www.realtor.org/news-releases/2012/04/existing-home-sales-decline-in-march-but-inventory-down-prices-stabilizing The Realtors reported 4.5 million existing-homes sold in March, down from February’s revised 4.6 million. The news release goes on to say: ““The recovery is happening though not at a breakout pace, but we have seen nine consecutive months of year-over-year sales increases…” That’s true and describes the situation, until you take a look at the chart and put matters in historical perspective. Existing Home Sales(Click on chart to enlarge) (Recessions shaded) Home Continue reading

Europe: Still in the News

The Lehmann Letter (SM) The European debt crisis remains in the news. Today’s New York Times carries a story about renewed concerns whether or not Europe’s peripheral nations, such as Spain, will be able to meet their obligations. http://www.nytimes.com/2012/04/18/world/europe/debate-grows-as-europe-fears-return-of-fiscal-crisis.html?_r=1&ref=todayspaper Some in Europe, including the International Monetary Fund, suggest that increased assistance flow to troubled debtors. Germany resists this, insisting that fiscal discipline will only occur when borrowers confront their obligations. Call it a deterrent policy. This letter has described the “tough medicine” approach as a throwback to the rules-of-the-game of the gold standard from 100 years ago. According to those Continue reading

Two Reports: Two Stories

The Lehmann Letter (SM) Today’s two reports remind us that the long view is a long road and that we should expect many bumps on that road. The recovery is in place, but we are not roaring back. More specifically, industrial production is coming back while housing is going nowhere. The Federal Reserve reported that capacity utilization had fallen back to 77.8% in March from a revised 78.0% in February: http://www.federalreserve.gov/releases/g17/Current/default.htm This report reveals industry’s operating rate: How much of its plant and equipment industry requires to produce the current level of output. It measures the strain on facilities: The Continue reading