August Publication Schedule

The Lehmann Letter (SM) Yesterday’s letter provided a gloomy update of current economic conditions. Yesterday’s Wall Street Journal carried a gloomy prognosis for profits:  “U.S. Profit Streak Hit by Global Weakness”  Here’s the August publication schedule for some of the indicators we’ll track. Let’s see if they turn north.  ECONOMIC INDICATOR PUBLICATION SCHEDULE  August 2012  Source (* below)……Series Description……Day & Date  Quarterly Data  BEA……..….GDP ..……..…Wed, 29th BEA……..….Profits ..……..…Wed, 29th  BLS…Productivity & Costs ….Wed, 8th  Monthly Data ISM..Purchasing managers’ index…Wed, 1st  BEA.New-vehicle sales.(Approximate).Fri, 3rd  BLS………….Employment…….…   Fri, 3rd Fed. Consumer credit..(Approximate).Tue, 7th BLS…………Producer prices……. Tue, 14th Census………….Inventories…….. Tue, 14th BLS……….Consumer prices.……. Continue reading


The Lehmann Letter (SM)  We find ourselves in a unique situation. No economic recovery since World War II has been so anemic with such dim prospects going forward. The reasons are clear: Households’ efforts to repair their damaged balance sheets run counter to what is needed to stimulate the economy. We need more borrowing and more spending to boost the economy, but households need to reduce their debt and build their liquidity in order to strengthen their balance sheets. Both can’t happen at the same time.  Meanwhile there is little that government policy can do. An expansionary fiscal policy involves Continue reading

Pushing on a String

The Lehmann Letter (SM) This morning the Commerce Department reported that GDP rose 1.5% in the second quarter:  That’s weak, but it’s not surprising. We have had a bifurcated economy for some time. Some indicators, such as retail activity, continue to grow. Others, such as residential construction, autos and business investment, do not.  Many have called for the Federal Reserve to fill the breach: Stimulate the economy with expansionary monetary policy. And the Fed may very well do that.  See for instance this article in the July 26 New York Times:  “Fed Sees Both Benefits and Risks in New Continue reading

Business Investment Disappoints

The Lehmann Letter (SM) Take a look at the chart and plug in $72 billion of new orders for nondefense capital goods.  Reason to cheer?  New Orders for Nondefense Capital Goods   (Recessions shaded)  Not at all.  But that’s what the Census Bureau reported this morning:  This is our best early measure of business capital expenditures, and it’s going in the wrong direction. (Summer season: The Lehmann Letter will be in summer-vacation mode during July and August.)  (To be fully informed visit  © 2012 Michael B. Lehmann

Real-Estate Rebound?

The Lehmann Letter (SM) Yesterday’s Letter mentioned a recent report that home prices had bottomed and edged up a little. Real-estate rebound? It wasn’t confirmed in this morning’s new-home sales report: The Census Bureau announced 350,000 sales in June, a drop from May’s revised 382,000 rate. The chart puts these numbers in perspective. We’ve barely moved off the bottom. New Home Sales (Recessions shaded) The number of homes for sale and the number of months they’re on the market waiting to be sold continue to fall. All that is good. But we’re still waiting for real strength to emerge Continue reading

Looking for a Silver Lining

The Lehmann Letter (SM) At last! There was an upbeat real-estate report in this morning’s CNN online news. Home values are finally beginning to rise.  The headline:  “Home values rise for first time in 5 years” Throughout the remainder of the economy, however, the news is still mixed at best. Under these circumstances there are two traditional recommendations: Fiscal and monetary policy. Fiscal policy refers to the federal government increasing its expenditures and/or reducing taxes, thereby putting more into the spending spring. Monetary policy refers to the Federal Reserve’s efforts to reduce interest rates in order to stimulate borrowing Continue reading

Greece’s Grinding Deflation: A Precedent for Spain and Italy?

The Lehmann Letter (SM) Will Spain go the way of Greece? This article serves as an excellent case study of the cost-dilemma facing Europe’s southern periphery: Spain, Italy and Greece. Here are some key excerpts, beginning with Greece’s entry into the euro zone and the inflationary process that boosted wages to uncompetitive levels. “In Spain, Portugal and Ireland, the private sector went on a borrowing spree. In Greece, a public sector rife with waste and patronage was the main conduit of the credit bubble. The effect was similar: Inflated demand for goods and services sucked in imports while pushing Continue reading

Business Sales Stall

The Lehmann Letter (SM) Manufacturing and trade sales have stalled according to a recent Census Bureau report: They had been recovering well from the recession, but then they declined in April and May (the latest available data). Sometimes there’s a hiccup in the data, and that could be the case here. But it’s not the only evidence of manufacturing weakness. The Purchasing Manager’s Index contracted in June after a couple of years of expansion and this week the Federal Reserve’s measure of industrial capacity utilization remained flat: We have a bifurcated economy. There has been recovery from Continue reading

Existing Home Sales Remain Weak

The Lehmann Letter (SM) The National Association of Realtors continues to speak optimistically of a housing recovery because of improved affordability, shrinking inventories and firmer prices: But June existing home sales fell to 4.37 million. Place that number on the chart and decide for yourself. Existing Home Sales (Click on chart to enlarge) (Recessions shaded) What do you think? A recovery may be imminent. Some of the housing data is up. (Yesterday’s Letter reported a jump in housing starts.) But consistent evidence of strength remains elusive. (To be fully informed visit © 2012 Michael B. Lehmann

Housing Starts: Big Jump

The Lehmann Letter (SM) Housing starts enjoyed a big jump in June to 760,000 the Census Bureau reported today: Let’s hope that’s the sign of recovery that many optimists have said we would soon see. Now take a look at the chart and update it with that 760,000 figure (the chart’s scale is in thousands, so just use 760). Then ask yourself how far we have to go before housing starts are anywhere near normal.  Housing Starts (Click on chart to enlarge) (Recessions shaded) It will be a while, won’t it? (Summer season: The Lehmann Letter will be in Continue reading