July Publication Schedule

The Lehmann Letter (SM) The economy has sent mixed signals: GDP down in the first quarter while employment up. We’ll examine the evidence as the month goes by. ECONOMIC INDICATOR PUBLICATION SCHEDULE  July 2014  Source (* below)……Series Description……Day & Date  Quarterly Data BEA……..….GDP ..……..…Wed, 30th Monthly Data ISM..Purchasing managers’ index…Tue, 1st BEA.New-vehicle sales.(Approximate).Thu, 3rd BLS………….Employment…….…   Thu, 3rd Fed. Consumer credit..(Approximate).Tue, 8th Census………….Inventories…….. Tue, 15th BLS…………Producer prices……. Wed, 16th Fed……….Capacity utilization……Wed, 16th Census………Housing starts…….Thu, 17th BLS……….Consumer prices.……. Tue, 22nd NAR………Existing-home sales….Tue, 22nd Census……..New-home sales…… Thu, 24th Census……….Capital goods…….. Fri, 25th Conf Bd….Consumer confidence.. Tue, 29th *BEA = Bureau of Economic Analysis Continue reading

Consumer Sentiment: Lingering Problem

The Lehmann Letter (SM) Households remain battered and bruised by the recession’s assault on their balance sheets. Yesterday’s letter dealt with the uptick in June Consumer Confidence as reported by the Conference Board. But Consumer Conference has not made a full recovery. This morning’s Wall Street Journal has an article by Spencer Jakab on a closely related measure of consumer sentiment: “The Patient Is Improving but Still Sickly” http://online.wsj.com/articles/the-patient-is-improving-but-still-sickly-ahead-of-the-tape-1403809051 The University of Michigan’s Survey of Consumer Sentiment is similar to the Conference Board’s measure. At the end of his article Mr. Jakab makes this crucial observation: “…This month marks the Continue reading

Consumer Confidence: Upward Trend Resumed?

The Lehmann Letter (SM) The May 27 letter speculated that consumer confidence’s climb out of recession’s ditch might be over. But June 24’s announcement from the Conference Board was upbeat: https://www.conference-board.org/press/pressdetail.cfm?pressid=5224 Consumer Confidence Recessions shaded The Conference Board reported consumer confidence of 85.2 for June. Use that number to update the record below: 2013 March           61.9 April              69.0 May              74.3 June             82.1 July              81.0 August          81.8 September    80.2 October        72.4 November     72.0 December     77.5 2014 January        79.4 February       78.3 March           83.9 April              81.7 May              82.2 June             85.2 Let’s see whether or not this re-starts the upward climb. (To be fully Continue reading

New Home Sales: Big Jump

The Lehmann Letter (SM) The latest home-sales data are positive. And this morning’s New York Times carries an article by Neil Irwin on the beneficial effect of the slowing increase in home prices: “Rise in Home Prices Is Slowing, and That’s a Good Thing” http://www.nytimes.com/2014/06/25/upshot/rise-in-home-prices-is-slowing-and-thats-a-good-thing.html?ref=business&_r=0 Mr. Irwin begins by explaining the importance of the slowdown: “The latest readings on United States home prices are the latest confirmation of a slowdown in that area: Prices are still rising in most cities, but much more slowly than they were a few months ago. And that’s news we should cheer….. “…In a world Continue reading

Are Existing-Home Sales Trending Upward?

The Lehmann Letter (SM) Yesterday the National Association of Realtors headlined its existing-home sales release: “Existing-Home Sales Heat Up in May, Inventory Levels Continue to Improve” http://www.realtor.org/news-releases/2014/06/existing-home-sales-heat-up-in-may-inventory-levels-continue-to-improve The first paragraph said: “Existing-home sales rose strongly in May and inventory gains continued to help moderate price growth, according to the National Association of Realtors®. All four regions of the country experienced sales gains compared to a month earlier…..” That looks good, and we welcome sales gains. When placed in historical context, however, the improvement seems less than dramatic. Existing Home Sales (Recessions shaded) Existing home sales in millions: 2013 March           4.96 Continue reading

The Inflation Outlook

The Lehmann Letter (SM) This letter has consistently maintained that there is little prospect for severe and rapidly rising inflation. This includes the Federal Reserve’s drastic efforts to provide ample liquidity and depress interest rates. Surging inflation requires a robust and sustained gain in aggregate demand, and that has not happened and is not likely to happen. Recall the late 1990s dot.com boom. Inflation remained moderate despite a hot economy and full employment. The 2003 – 2007 real-estate boom also did not generate worrisome inflation. Rapidly rising prices did not become a problem in either period despite strong aggregate demand Continue reading


The Lehmann Letter (SM) Yesterday’s letter reported on the Federal Reserve’s June 18 upbeat assessment of the economy. The Fed made a point of noting improved labor-market conditions. Here is a key excerpt: “Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months. Labor market indicators generally showed further improvement…. “The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions…..”  But a June 14 New York Times article by Alicia Parlapiano, Shaila Dewan and Nelson D. Continue reading

In the Fed’s Own Words…What Do You Think?

The Lehmann Letter (SM) There’s a tendency to think of the Federal Reserve’s statements on the economy as difficult or obscure. But they aren’t. Yesterday’s release from the Fed’s Open Market Committee was clear and straightforward and sufficiently optimistic to send the stock market into record territory. See for yourself by going to the following link. (The Fed’s statement is only seven paragraphs.) http://www.federalreserve.gov/newsevents/press/monetary/20140618a.htm Here are some key sentences. First, the Fed’s optimistic assessment of the economy. “Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months. Labor Continue reading

Diminishing Returns from Technological Progress?

The Lehmann Letter (SM) In 1996 John Horgan published “The End of Science: Facing the Limits of Knowledge in the Twilight of the Scientific Age.” Mister Horgan’s book ignited debate about the future of science. Was progress limitless, as most of us had been trained to believe? Or was the Scientific Age more like the Age of Discovery, destined to end with the successful completion of the major voyages? If that was true, then the Scientific Age – 1500 to 2100 – was coming to a close much like the Age of Discovery – 1500 to 1800 – before it. Continue reading

Housing: One Million Starts

The Lehmann Letter (SM) Take a look at the chart and you can see how high housing starts surged during the 2003 – 2007 boom. Now housing starts are fluctuating at about half that level. That’s disappointing because full employment had become dependent on the higher level of building activity. If homebuilding remains half of its 2007 peak, that’s a significant structural challenge for the economy. How does the economy return to full employment at half the level of building activity it once enjoyed? Will there be sufficient high-paying jobs in other sectors of the economy? Housing Starts Recessions shaded Continue reading