February Publication Schedule

The Lehmann Letter (SM) The last report for last year was upbeat: GDP made a good gain. This year’s key questions: Can construction pave the way? Will home building’s pace accelerate and carry the economy with it? February will have the first reports for this year’s first month. ECONOMIC INDICATOR PUBLICATION SCHEDULE  February 2014  Source (* below)……Series Description……Day & Date  Quarterly Data BLS…….….Productivity…….……Thu, 6th BEA………….GDP …….……Fri, 28th Monthly Data ISM..Purchasing managers’ index…Mon, 3rd BEA.New-vehicle sales.(Approximate).Wed, 5th BLS………….Employment…………   Fri, 7th Fed…….. Consumer credit………Fri, 7th Census………….Inventories………. Thu, 13th Fed……….Capacity utilization……Fri, 14th BLS…………Producer prices……. Wed, 19th Census………Housing starts…….Wed, 19th BLS……….Consumer prices.….. Thu, 20th Continue reading

GDP: Good Increase

The Lehmann Letter (SM) This morning the Bureau of Economic Analysis announced that GDP grew by 3.2% in last year’s fourth quarter: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm That’s on top of a 4.1% gain in the previous quarter. Household consumption expenditures did well, while residential construction expenditures fell. Business equipment expenditures grew, but plant expenditures did not. Exports gained more than imports, although the latter are still larger than the former. That summary appears mixed, but the gainers grew more than the shrinkers contracted. All in all it was a good report, especially after the big increase in the previous quarter. It remains ironic, Continue reading

Can China’s Debt Avoid Market Failure?

The Lehmann Letter (SM) An old proverb says that there is nothing new under the sun. Does that mean that China’s government-directed credit markets will end you the same fate as our market-driven credit institutions? Will China suffer from the business cycle as we did, with an impact on the world economy? We all recall what happened here in 2008 when our markets became burdened with excessive debt. Credit markets collapsed, failed and eventually required a massive bailout from the federal government. Federal intervention prevented market failure from developing into a worldwide depression. China’s massive bank lending has helped drive Continue reading

Consumer Confidence Index: Will It Climb to 100?

The Lehmann Letter (SM) This morning the Conference Board announced that its Consumer Confidence Index began the year strongly. Consumer confidence reached 80.7 in January: http://www.conference-board.org/press/pressdetail.cfm?pressid=5078 The chart tells you two things: 1. Consumer confidence has more than doubled since its recession low. 2. Consumer confidence usually maintains levels of 100 or more during periods of strong prosperity such as the late 1990s. Consumer Confidence Recessions shaded Households are acutely sensitive to their economic environment. Employment opportunities, wage gains and inflation have a direct and immediate impact. The index will continue to climb if households are confident of their economic Continue reading

New-Home Sales Disappoint

The Lehmann Letter (SM) Last month this letter was upbeat about new-home sales. Now……… Not so sure. This morning’s report from the Census Bureau is not rosy: http://www.census.gov/construction/nrs/pdf/newressales.pdf December’s new-home sales were 414,000. Moreover the year finished flat without a breakthrough above 500,000. New home sales have hovered between 400,000 and 500,000 for the past 12 months. New Home Sales Recessions Shaded There had been hope that – after a big increase in home prices – sales and construction would surge. The thinking went like this: The sharp increase in home prices was a signal that housing had finally come Continue reading

Europe’s Economic and Ideological Struggle

The Lehmann Letter (SM) Recently this letter has discussed the problem of poverty and inequality in a US economy confronted with weak economic expansion. The left and right of the political spectrum have very different views on the best way to deal with the problem. These issues are even more pronounced in Europe. The European economy is weaker and, in the face of this weakness, drastic austerity programs have been implemented. Greece, Portugal, Spain, Ireland and Britain have all instituted austerity in the face of economic weakness. The political right supports these programs, but the left has attacked them bitterly. Continue reading

Home Sales No Better Than Year Ago

The Lehmann Letter (SM) Today’s National Association of Realtors press release on existing-home sales said, in part: “….Total existing-home sales … increased 1.0 percent to a seasonally adjusted annual rate of 4.87 million in December from a downwardly revised 4.82 million in November, but are 0.6 percent below the 4.90 million-unit level in December 2012….” http://www.realtor.org/news-releases/2014/01/december-existing-home-sales-rise-2013-strongest-in-seven-years Existing Home Sales (Recessions shaded) You can see that home sales surged before stalling in 2013. The economy is in trouble if sales settle at around 5.0 million, their 2013 level. Sales of existing and new homes must continue rising to provide an incentive Continue reading

The Recession and Well-Being

The Lehmann Letter (SM) The recent recession adds another dimension to the income-inequality debate. The loss in income and overall well-being compounds whatever problems were there already. Whatever we may think about the income-inequality debate, there is no doubt that the recession has had a long-run impact on working Americans and especially on those Americans who have trouble finding work That’s why this letter continually focuses on full employment as the best measure of welfare. A rapid return to full employment assures a healthy climate for wage growth. Lingering problems, especially in residential construction, impede the return to full production Continue reading

Unemployment and Low Wages

The Lehmann Letter (SM) The January 14 edition of this letter featured two articles on Lyndon Johnson’s War on Poverty. In his Wall Street Journal piece, Robert Rector said: “…The root “causes” of poverty have not shrunk but expanded as family structure disintegrated and labor-force participation among men dropped…” But Paul Krugman wrote the following in the New York Times: “…if progress against poverty has nonetheless been disappointingly slow — which it has — blame rests not with the poor but with a changing labor market, one that no longer offers good wages to ordinary workers…” These remarks set out Continue reading

Housing Starts Plateau?

The Lehmann Letter (SM) On December 18 this letter observed that housing starts seemed ready to push past the million milestone. Now matters don’t seem so clear. This morning the Census Bureau announced that there were 999,000 housing starts in December: http://www.census.gov/construction/nrc/pdf/newresconst.pdf That’s okay. But the accompanying text said that December starts were barely higher than those of a year ago. Housing starts grew solidly in 2012, but leveled off in 2013. Housing Starts Recessions shaded We should be concerned that there has been a boom in housing prices without a corresponding boom in homebuilding. As you can see from Continue reading