Consumer Confidence Holds Steady

The Lehmann Letter (SM) The chart and table show a dramatic improvement in consumer confidence from roughly 60.0 to approximately 90.0 over the past two years. Last year brought a gain from about 75.0 to around 90.0. That’s an upward trend. But the index has hovered in the region of 90.0 over the past half year. You can see from the chart that consumer confidence has hovered in the neighborhood of 100.0 during previous expansions. The index maintained its plateau this morning when The Conference Board reported consumer confidence of 92.6 in December: https://www.conference-board.org/press/pressdetail.cfm?pressid=5353 Consumer Confidence Recessions shaded Here’s the Continue reading

Federal Bailouts as Balance-Sheet Transfers

The Lehmann Letter (SM) This letter has drawn attention to the damage inflicted on private-sector – especially household – balance sheets during the Great Recession. Banks and auto companies required bailouts from the federal government and received them. So did households, who did not receive a bailout. Now the banks and auto companies have substantially repaid the federal government. On December 20 The New York Times published this story by Jonathan Weisman, posted on December 19: “U.S. Declares Bank and Auto Bailouts Over, and Profitable” http://www.nytimes.com/2014/12/20/business/us-signals-end-of-bailouts-of-automakers-and-wall-street.html?_r=0 Mr. Weisman said: “Six years after President George W. Bush began the auto bailout, Continue reading

Business Equipment’s Upward Struggle

The Lehmann Letter (SM) In September this letter commented on slow improvement in business orders for new equipment. Can the current cycle break through past peaks? Recent improvement has been gradual. New Orders for Nondefense Capital Goods Excluding Aircraft  (Recessions shaded) You can find the latest data in the Census Bureau’s advance report on durable goods: http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf New Orders for Nondefense Capital Goods Excluding Aircraft in $Billions: 2013 January        70.1 February       66.3 March           65.8 April              67.5 May              68.0 June             69.1 July              67.1 August          68.1 September    66.8 October        65.8 November     69.7 December     69.1 2014 January        67.8 February       67.8 March           71.0 April              Continue reading

New Home Sales: A New Normal?

The Lehmann Letter (SM) New-home sales fluctuated around 600,000 annually for decades. Now they are having difficulty rising over 450,000. Yesterday the Census Bureau informed us of 438,000 new-home sales in November at a seasonally-adjusted annual rate: http://www.census.gov/construction/nrs/pdf/newressales.pdf The chart and table inform us that new-home sales have been flat for almost a year. New Home Sales Recessions Shaded Here are the seasonally adjusted data at an annual rate: 2013 January        453,000 February       448,000 March           440,000 April              452,000 May              431,000 June             459,000 July              367,000 August          379,000 September    399,000 October        450,000 November     445,000 December     442,000 2014 January        457,000 February       432,000 March           Continue reading

GDP Gain Revised Upward

The Lehmann Letter (SM) This morning the Bureau of Economic Analysis revised upward its estimated third-quarter GDP increase to 5.0%: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm That follows a 4.6% gain in the second quarter. The stock market rose on the news. (To be fully informed visit http://www.beyourowneconomist.com/) © 2014 Michael B. Lehmann      

Existing-Home Sales Stumble

The Lehmann Letter (SM) Last month we noted an uptick in existing home sales and wondered if that was the start of an upward trend. Not yet…… No upward trend has emerged. This morning the National Association of Realtors reported 4.93 million existing-home sales for November at a seasonally-adjusted annual rate: http://www.realtor.org/news-releases/2014/12/existing-home-sales-lose-momentum-in-november-as-inventory-slightly-tightens As you can see in the chart and table: This indicator remains at approximately 5.0 million. Existing Home Sales (Recessions shaded) Existing home sales in millions: 2013 March           4.96 April              4.99 May              5.15 June             5.16 July              5.38 August          5.33 September    5.26 October        5.13 November     4.83 December     4.87 Continue reading

China’s Housing Market: Early Warning Sign?

The Lehmann Letter (SM) We all recall the 2007 real-estate slump that heralded the Great Recession of 2008/2009. Could the same be happening in China today? See Keith Bradsher’s article in today’s New York Times, posted yesterday, for an update: “China’s Housing Resists Efforts to Spur Market” http://www.nytimes.com/2014/12/19/business/international/in-china-housing-market-pressure-to-sell-hesitation-to-buy.html?ref=todayspaper&_r=0 The article contains these observations: “….Weak real estate prices are a major challenge for Beijing as it tries to manage an economic slowdown. The Chinese economy, which a few years ago was increasing at an annual 10 percent to 12 percent pace, is now growing at about 7 percent — a rate Continue reading

Housing Starts Remain at One Million

The Lehmann Letter (SM) On December 16 the Census Bureau reported 1.0 million November housing starts at a seasonally adjusted annual rate: http://www.census.gov/construction/nrc/pdf/newresconst.pdf Compare that with the chart and the monthly figures below the chart. Housing starts remain at one million. They need to be much higher before we can say this sector has recovered. Housing Starts Recessions shaded These figures are presented in thousands of homes started, so that 0.9 is shown in its raw form of 896 for 896,000: 2013 January        896 February       951 March           994 April              848 May              915 June             831 July              898 August          885 September    863 Continue reading

Monetary Policy to Remain Expansionary for Foreseeable Future

The Lehmann Letter (SM) Today the Federal Reserve’s Open Market Committee – which controls monetary policy – said: http://www.federalreserve.gov/newsevents/press/monetary/20141217a.htm “…When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run….” Note the Committee’s strong bias to expansion. Don’t expect the Fed to raise interest Continue reading