Economic Indicators: June Publication Schedule

The Lehmann Letter (SM) ECONOMIC INDICATOR PUBLICATION SCHEDULE June 2013 Source (* below)……Series Description……Day & Date Quarterly Data BLS………Productivity…………..Wed, 5th BEA….US Internat’l Transacs……Fri, 14th BEA……….GDP & Profits..…..…Wed, 26th Monthly Data ISM..Purchasing managers’ index…Mon, 3rd BEA.New-vehicle sales.(Approximate).Wed, 5th BLS………….Employment…….…   Fri, 7th Fed. Consumer credit..(Approximate).Fri, 7th Census………….Inventories…….. Thu, 13th Fed……….Capacity utilization……Fri, 14th BLS…………Producer prices……. Fri, 14th BLS……….Consumer prices.……. Tue, 18th Census………Housing starts…….Tue, 18th NAR………Existing-home sales….Thu, 20th Census……..New-home sales…… Tue, 25th Conf Bd….Consumer confidence.. Tue, 25th Census……….Capital goods…….. Tue, 25th  *BEA = Bureau of Economic Analysis of the U.S. Department of Commerce *BLS = Bureau of Labor Statistics of the U.S. Department of Continue reading

Profits Plateau?

The Lehmann Letter (SM) This morning the Department of Commerce slightly revised earlier figures on GDP’s first-quarter improvement:  http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm  The change from 2.5% to 2.4% is of small consequence.  At the same time, however, Commerce also released its initial estimate of $1,737.6 billion for first-quarter corporate profits. That’s about the same as its estimates for the last two quarters of 2012: http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=53 (See line 45 of table 1.12.) Corporate Profits  Recessions Shaded  This figure bears watching. You can observe profits’ spectacular recovery from the depths of the Great Recession. It will be a drag on the stock market if they Continue reading

Do Rising Home Prices Spur Demand? A New Housing Bubble?

The Lehmann Letter (SM) It would be most unusual for a real-estate bubble to emerge and pop while the economy suffers from less than full employment and continuing weak demand in many areas.  So let’s take the following approach to current events.  Most of us believe that a rise in price will discourage our purchases. If strawberry prices increase, we will buy fewer of them.  But strawberries are perishable. We can’t buy and hold them for resale, hoping to benefit from an increase in the price. There are no capital gains in strawberries.  Not so housing. Homes are not perishable Continue reading

Consumer Confidence Jumps

The Lehmann Letter (SM) The stock market is rallying this morning on a jump in home prices and consumer confidence.  The Conference Board reported today that May consumer confidence rose to 76.2: http://www.conference-board.org/press/pressdetail.cfm?pressid=4827 You can see from the chart that consumer confidence is approaching 80, more than double the recession level. That’s good news and obviously supports investor confidence. Consumer Confidence(Recessions shaded) But be sure to put the latest number in historical context. Consumer confidence must reach 100 before we conclude it’s at a healthy level. You’re historical review of the chart will likewise reveal that consumer confidence recovered to Continue reading

Business Capital Expenditures: Still Struggling

The Lehmann Letter (SM) Today’s advance report from the Census Bureau revealed $76.1 billion in new orders for non-defense capital goods in April:  http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf  There is a lot of statistical noise in these data and much of the improvement was in highly volatile aircraft orders. Nonetheless………… Pin that number on the chart and it doesn’t look bad. New Orders for Nondefense Capital Goods      (Recessions shaded) It’s important, however, to take the historical view. You can see that new orders for capital goods have fluctuated in a range since 2000. They are barely above that year’s peak and have not exceeded Continue reading

New-Home Sales Continue Climbing

The Lehmann Letter (SM) Today the Census Bureau reported 454,000 new-homes sold in April:  http://www.census.gov/construction/nrs/pdf/newressales.pdf New Home Sales (Recessions shaded) Place that number on the chart and two observations seem clear: New-home sales have grown 50% since the depths of the recession and must grow by another 100% before reaching robust conditions. Residential construction fell spectacularly during the Great Recession. It must now grow remarkably to bring the economy back to full health. (To be fully informed visit http://www.beyourowneconomist.com/) © 2013 Michael B. Lehmann  

Existing Home Sales: A Rosy Outlook

The Lehmann Letter (SM) Today Lawrence Yun, chief economist at the National Association of Realtors, provided a rosy assessment of the real-estate market: http://www.realtor.org/news-releases/2013/05/april-existing-home-sales-up-but-constrained Mr. Yun said: “The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing-home sales easily would be well above the 5-million unit pace…Buyer traffic is 31 percent stronger than a year ago, but sales are running only about 10 percent higher. It’s become quite clear that the only way to tame price growth to a manageable, healthy pace is higher levels of new home construction.” Continue reading

Japan Chooses Deficits and Devaluation

The Lehmann Letter (SM) We all know that many of the European economies are suffering and that the US economy is not expanding as rapidly as we would like. Worse yet, the Japanese economy has endured malaise for 20 years.  But now, with new policies inaugurated by a new prime minister – Shinzo Abe – there are glimmers of hope. See, for instance, an article in today’s New York Times:  “Japan’s New Optimism Has Name: Abenomics”  http://www.nytimes.com/2013/05/21/world/asia/hope-in-japan-that-abenomics-may-be-turning-things-around.html?ref=todayspaper&_r=0   The article describes three features of Japan’s new regime: Expansionary monetary policy, expansionary fiscal policy, and deregulation. It also mentions a steep decline Continue reading

Real Estate Bubble?

The Lehmann Letter (SM) This letter has expressed the view that the economy is not destined for another bubble such as the dotcom boom of the late 1990s or the real-estate bubble that popped in 2008.  But, as the last letter made clear, there are contrary points of view.  This is especially true with respect to real estate. See, for instance, a Bloomberg News article that appeared in the May 17 San Francisco Chronicle:  “Is real estate headed for another bubble?”  http://www.sfchronicle.com/realestate/article/Is-real-estate-headed-for-another-bubble-4524036.php  Consider this quote: “…The gains in some areas aren’t sustainable for a healthy market, said Dean Baker, co-director Continue reading

The Fed and the Bubble

The Lehmann Letter (SM) This morning Jesse Eisinger of ProPublica posted an article on The New York Times website in response to criticism of an article he published in yesterday’s New York Times.  The Lehmann Letter has taken the position that we are not in a bubble although we are at risk of a weak and inadequate expansion. Mr. Eisinger has a different view:  “The Problem With the Fed’s Easy Money Policies”  http://dealbook.nytimes.com/2013/05/17/the-problem-with-the-feds-easy-money-policies/  This morning’s article says in part: “…We are four years into the One Percent’s recovery. Now, we are in Round 3 of quantitative easing, the formal term Continue reading