September Publication Schedule

The Lehmann Letter (SM) The August Publication Schedule appeared in the July 31 letter together with a link to a Wall Street Journal article that forecast gloomy earnings for US firms. But our August 29 letter reported robust profits according to a release from the Commerce Department. We’ll track the indicators below and hope for another burst of good news. ECONOMIC INDICATOR PUBLICATION SCHEDULE September 2012 Source (* below)……Series Description……Day & Date Quarterly Data BLS…Productivity & Costs ….Wed, 5th BEA…International transacs…Tue, 18th BEA……..….GDP ..……..…Thu, 27th BEA……..….Profits ..……..…Thu, 27th Monthly Data  ISM..Purchasing managers’ index…Tue, 4th   BEA.New-vehicle sales.(Approximate).Thu, 6th BLS………….Employment…….…   Fri, Continue reading

Federal Reserve Report: Economy Mending

The Lehmann Letter (SM)  Yesterday the Federal Reserve published its Beige Book summary of economic activity around the nation:  This is not a statistical report; it’s a compendium of impressions from business leaders and bankers regarding economic conditions in each of the 12 Federal Reserve districts. It shows an economy mending slowly and not sinking back into recession. Most activity gained strength although some, such as manufacturing, did not. There may be no cause for glee, but there is no reason for gloom either.  Here are some key sentences taken from the report:  “Reports from the twelve Federal Reserve Continue reading

Good Earnings Report!

The Lehmann Letter (SM) Today the Commerce Department confirmed that profits have broken through to new high ground: (Click on Section 1, then click on Table 1.12 and then scroll down to line 45 making sure that you scroll all the way to the right.) Profits (Recessions shaded) The chart shows that after-tax corporate profits had recovered to around $1,500 billion. Today’s report says that second-quarter profits were $1,648.3 billion, buttressing the revised first-quarter report of $1,670.9 billion. That’s a solid gain.  It is also another illustration of a bifurcated economy. Many economic indicators show weakness. But corporate profit Continue reading

Consumer Confidence: Still Stuck in Neutral

The Lehmann Letter (SM)  The June 26 letter lamented that consumer confidence had stalled.  This morning’s report from the Conference Board does not change that assessment:  August’s figure was 60.6.  Consumer Confidence (Recessions shaded)  If you can read a chart you can see the problem. The rebound from recession must break through 80, on its way to 100, before we can say that a robust expansion is under way.  (To be fully informed visit (Summer season: The Lehmann Letter will be in summer-vacation mode during July and August.)  © 2012 Michael B. Lehmann

What Euro Crisis?

The Lehmann Letter (SM)  This letter has taken the position that European leaders would weigh political unity more heavily than financial difficulty, and therefore do what is necessary to prevent the euro-crisis from derailing the drive toward a European federation.  But events have not always buttressed this view.  Over the last several days, however, the outlook has been sunnier.  See, for instance, this article that appeared in the August 25 New York Times:  “Merkel Vows to Help Greeks Stay in Euro Zone”  Then follow it with this piece from the August 26 Times:  “French Leader Hails Greeks for ‘Painful Continue reading

No Good News

The Lehmann Letter (SM) The August 14 edition of this letter alerted readers to a slowdown in American business sales and the consequent unintended inventory increase. The logic is simple: If businesses can’t sell the goods that they produce, those unsold goods pile up on businesses’ shelves. This morning’s New York Times carries a report that similar conditions have developed in China this summer:  “China Confronts Mounting Piles of Unsold Goods” There are several alarming features to this story. (1) China is a growth engine. If its economy contracts, which economy will replace that growth? (2) Chinese exports have Continue reading

Why Housing Remains Flat

The Lehmann Letter (SM) Housing led us out of past slumps. Why can’t housing do that today? Because the last recession was very different from earlier recessions. Past recessions occurred when inflation threatened and the Fed pursued a restrictive monetary policy. Housing slumped as interest rates rose, dragging the rest of the economy down. As soon as recession cooled inflation, the Fed let interest rates plunge. This enabled housing and the rest of the economy to snap back sharply. Here is a metaphor. Think of the economy as a frisky horse and the Fed as its rider. The Fed pulled Continue reading

Existing-Home Sales: What’s Optimal?

The Lehmann Letter (SM) This letter believes that existing-home sales must exceed 6.0 million for housing to once again lead the way to full employment. This morning the National Association of Realtors announced July existing-home sales of 4.47 million: You can form your own opinion regarding the strength of this number by referring to the chart. Existing Home Sales (Click on chart to enlarge) (Recessions shaded) The Association believes that tight lending standards and shrinking inventory are restraining sales. If all conditions were optimal the Association said that sales could be in the 5.0 to 5.5 million range, but Continue reading

Europe: Left-Wing Project?

The Lehmann Letter SM There is a widespread misunderstanding in the United States that saving the euro and the European project is a left-wing effort. That misunderstanding has arisen because many U.S. right-wing commentators are suspicious of internationalism and therefore suspicious of the euro and a united Europe. But center-right statesmen launched the European project shortly after the end of World War II. They wanted to build a united Europe in order to avoid repeating the wartime tragedies of the first half of the 20th century. The euro culminated half a century of efforts in this direction. That’s why Angela Continue reading

The Housing Slump and the Blame Game

The Lehmann Letter SM  Readers know this letter’s view that weak household balance sheets are responsible for the anemic recovery, and that housing lies at the core of the balance-sheet problem. Consumers confront too much debt and too little liquidity and net worth.  This letter also believes it was a mistake to treat the housing deflation as if it was a commodity deflation. Homes are an asset and they are not perishable. Therefore declining prices can keep prospective buyers out of the market rather than entice them into the market. For that reason prices can fall considerably before reaching a Continue reading