The Fed Continues to Wait and See

The Lehmann Letter (SM) Here’s what the Federal Reserve said in yesterday’s summary of its outlook and plans: “…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.” In other words: Wait and see. There’s no reason to change policy now. (To be fully informed visit © 2015 Michael B. Lehmann    

GDP Growth Slows

The Lehmann Letter (SM) GDP fell in 2014’s first quarter and today’s report from the Bureau of Economic Analysis says that GDP grew by a mere 0.2% in 2015’s first quarter: The bulletin began: “Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 0.2 percent in the first quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis.  In the fourth quarter, real GDP increased 2.2 percent…. “The increase in real GDP in the Continue reading

Consumer Confidence Struggles With 100

The Lehmann Letter (SM) Consumer Confidence is fluctuating around the 100 milestone it reached this year. The chart and table inform us that 100 is solid progress. Can we advance from there? This morning the Conference Board reported a setback of 95.2 for April following 101.4 in March: Lynn Franco, Director of Economic Indicators at The Conference Board said “…there is little to suggest that economic momentum will pick up in the months ahead….” Consumer Confidence (Recessions shaded) Here’s the record since the beginning of 2013 (1985 = 100.0): 2013 January        58.4 February       68.0 March           61.9 April              69.0 May              Continue reading

Signs of Glut: An End to the Boom?

The Lehmann Letter (SM) Over the years economists have employed the word “glut” to describe an unsold surplus of goods and services that depresses markets. On April 24 Josh Zumbrun and Carolyn Cui posted this article to The Wall Street Journal: “Glut of Capital and Labor Challenge Policy Makers” Their opening paragraphs describe a classic over-supply condition: “The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor—a glut that presents several challenges as policy makers struggle to stoke demand. ““What we’re looking at is a low-growth, low-inflation, Continue reading

Business Equipment: More Evidence of Spending Slowdown

The Lehmann Letter (SM) Two years ago new orders for nondefense capital goods (excluding aircraft) breached $70 billion. Then upward momentum stalled. This morning the Census Bureau reported $68.2 billion in new orders for March: Have we seen a peak? New Orders for Nondefense Capital Goods Excluding Aircraft (Recessions shaded) 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              70.2 May              69.2 June             72.9 July              Continue reading

New Home Sales Waver

The Lehmann Letter (SM) Yesterday we reported an upward bump in existing-home sales for March. Unfortunately that good news did not extend to new-home sales. This morning the Census Bureau reported 481,000 new homes sold (at a seasonally-adjusted annual rate) in March: That’s a slip from February’s 543,000 and January’s 514,000. Those 500,000+ reports kindled hope for a surge in residential construction. Not yet. As you can see from the chart and table: New-home sales have risen in the past year, but are not yet sufficiently strong to indicate solid recovery from the Great Recession. New Home Sales (Recessions Continue reading

Existing-Home Sales Improve

The Lehmann Letter (SM) This morning the National Association of Realtors reported 5.19 million existing-home sales in March: Your inspection of the chart and table will reward you with two observations: Home sales have been fluctuating around 5 million for a couple of years and were slightly higher in the summer of 2013 than today’s report. More important, however, is the observation that sales remain far below their pre-recession peak of over 7 million. Sales bottomed at around 4 million during the Great Recession. They remain closer to that trough than the earlier peak. Existing Home Sales (Recessions shaded) Continue reading

Europe vs. Greece

The Lehmann Letter (SM) As the date approaches by which Greece and Europe must determine their mutual fate, the financial press has reported many aspects of the negotiations. Yesterday’s letter shared two. Yesterday’s New York Times and Wall Street journal provided two more views of the “end game.” In the Times, Landon Thomas, Jr. posted this on April 19: “Greece Flashes Warning Signals About Its Debt” Mr. Thomas noted that the Greek finance minister”… might still be exploring a restructuring (and that this) underscores just how close Greece is to defaulting on its staggering debt, billions of euros of Continue reading

Germany vs. Greece

The Lehmann Letter (SM) For two very different views of Germany, Greece and Europe see these op-ed pieces in the New York Times and Wall Street Journal. In the Times, Paul Krugman criticizes the austerity argument: “That Old-Time Economics” For a different view in the Journal see Jeremy Buloff’s and Kenneth Rogow’s: “Don’t Blame Germany for Greece’s Profligacy” (To be fully informed visit © 2015 Michael B. Lehmann    

Moderate Inflation: Higher Interest Rates Not Needed

The Lehmann Letter (SM) This morning’s announcement from the Bureau of Labor Statistics – that March prices rose 2.4% (0.2% for the month) at a seasonally adjusted annual rate – confirms inflation’s moderate pace. Higher interest rates are not required now to forestall inflation. (To be fully informed visit © 2015 Michael B. Lehmann