March Publication Schedule

The Lehmann Letter (SM) White we await the latest installment of the Fiscal Cliff, here are the indicators we’ll follow next month:  ECONOMIC INDICATOR PUBLICATION SCHEDULE  March 2013  Source (* below)……Series Description……Day & Date  Quarterly Data  BLS…….….Productivity…….……Thu, 7th  BEA..International Transactions..Thu, 14th  BEA……….GDP  & Profits…..……Thurs, 28th  Monthly Data  ISM..Purchasing managers’ index…Fri, 1st  BEA.New-vehicle sales.(Approximate).Tue, 5th  Fed. Consumer credit..(Approximate).Fri, 8th  BLS………….Employment…………   Fri, 8th Census………….Inventories………. Wed, 13th BLS…………Producer prices……. Thu, 14th BLS……….Consumer prices.….. Fri, 15th Fed……….Capacity utilization……Fri, 15th Census………Housing starts…….Tue, 19th NAR………Existing-home sales….Thu, 21st Conf Bd…….Leading indicators….TBA   Census……..New-home sales…… Tue, 26th Conf Bd….Consumer confidence.. TBA  Census……….Capital goods…….. Tue, 26th  *BEA = Bureau of Continue reading

Household Debt: What Role Will It Play?

The Lehmann Letter (SM) Households’ balance sheet is key to the economy’s satisfactory expansion. Insufficient liquidity, excessive debt, eroded asset values and shrunken net worth have restrained household consumption.  David Wessel’s February 7 Wall Street Journal column dealt with this issue: “Borrowing: Key to Recession and Recovery”  http://online.wsj.com/article/SB10001424127887324906004578287810277763042.html  Here are some key passages:  “…One dominant story is the “deleveraging” one. The 2000s were marked by a sharp increase in borrowing—particularly by U.S. households and financial institutions. That couldn’t last, and it didn’t.  “…Borrowers and lenders got carried away in the 2000s with subprime mortgages and all that. Now the debt-to-income Continue reading

Europe’s Household Debt: Stifling Recovery

The Lehmann Letter (SM)  American households’ balance sheets – with too little liquidity, too much debt and shrunken net worth – have impeded our recovery. Consumers can’t borrow and spend when they are paying off their debts.  But as bad as we have it, it’s worse in Europe. Over there homeowners can’t walk away from their mortgage debts. European consumers must repay their mortgage debts even after they lose their homes. One can imagine how that impedes economic recovery.  The Wall Street Journal wrote about it on February 1: “Lingering Bad Debts Stifle Europe Recovery” http://online.wsj.com/article/SB10001424127887323783704578249673291622116.html?KEYWORDS=lingering+bad+debts+stifle+europe+recovery The article said, in Continue reading

The Fed and Asset Inflation

The Lehmann Letter (SM) The Fed and the stock market were in the news last week.  In a February 7 Wall Street Journal op-ed piece, George Melloan warned about the overall effect of an expansionary Federal Reserve policy upon assets. He cautioned about the Fed’s role in the last bubble expansion and worried about whether or not we were about to embark on another: “The Fed’s Asset-Inflation Machine” http://online.wsj.com/article/SB10001424127887324880504578300180510398580.html?KEYWORDS=george+melloan He began his article with these words: “In a 1996 speech to the American Enterprise Institute, Federal Reserve Chairman Alan Greenspan famously warned about the dangers when “irrational exuberance” fueled asset Continue reading

The Fiscal Cliff: A Plague on Both Their Houses

The Lehmann Letter (SM) As sequestration and the Fiscal Cliff approach on March 1, the nation is reminded of John Wayne’s words: “Life is hard, but it’s a lot harder when you’re stupid.”  Who knows how we’ll emerge from the impending crisis?  Meanwhile David Brooks said this in his op-ed in the February 22 New York Times:  “The D.C. Dubstep”  http://www.nytimes.com/2013/02/22/opinion/brooks-the-dc-dubstep.html?_r=0  “…. politicians in both parties are secretly discovering that they love sequestration now. It allows them to do the dance moves they enjoy the most. “Democrats get to do the P.C. Shimmy. Traditional presidents go through a normal set Continue reading

What the Fed Said

The Lehmann Letter (SM) The stock market fell yesterday when the Fed published the minutes from its most recent meeting. Investors believed the minutes revealed the Fed’s intent to curtail its expansionary policy sooner than had been expected.  But an examination of these minutes is open to more than one interpretation.  Take a look at the paragraph in question and decide for yourself:  “Minutes of the Federal Open Market Committee”  “January 29-30, 2013”  http://www.federalreserve.gov/monetarypolicy/fomcminutes20130130.htm  This is the key paragraph:  “Several participants emphasized that the Committee should be prepared to vary the pace of asset purchases, either in response to changes Continue reading

Good News Today: Construction Recovering & Inflation Moderate

The Lehmann Letter (SM) There were a nice pair of reports this morning from the Census Bureau and the Bureau of Labor Statistics: Housing starts have clearly moved into higher gear while inflation at the wholesale level remains moderate.  There were 890,000 homes started last month and a revised 973,000 a month before:  http://www.census.gov/construction/nrc/pdf/newresconst.pdf  That’s pushing closer to the magic-million marker. We haven’t seen 1 million housing starts since the recession. We need to break through that marker and continue north before we can claim solid expansion. Let’s hope we now have a small step on that long road.  Meanwhile Continue reading

Europe’s Budget

The Lehmann Letter (SM) As we hurtle, once again, toward the Fiscal Cliff it is worthwhile to reflect on the fact that Europe recently agreed to its budget. Europe’s document may not be as hefty as ours: Only slightly more than $1 trillion. Recall, however, that these expenses and revenues are over and above whatever happens nation-by-nation.  In any event they did it and, moreover, they did it unanimously because they must have unanimous agreement in order to enact their budget. How did all those countries do that while we – at least not yet – can’t?  An article that Continue reading

Capacity Utilization: Can’t Crack 80%

The Lehmann Letter (SM)  The Federal Reserve’s report on capacity utilization answers this question: What is the current level of industrial output (mining, manufacturing and public utilities) measured as a percentage of the maximum?  Capacity Utilization   (Recessions shaded) The chart shows the devastation from the last recession. Capacity utilization plunged to less than 70%.  Then capacity utilization began a strong rebound. Problem is: Capacity utilization can’t seem to break through 80%. It was almost 80% a year ago and remains at that level today. This morning’s report from the Fed revealed January’s level at 79.1%:  http://www.federalreserve.gov/releases/g17/Current/default.htm  Industry has not shifted Continue reading