October Publication Schedule & Zero T-Bill Rates

The Lehmann Letter (SM) On September 28 the Federal Reserve reported that 3-month Treasury Bills paid no interest in the week ended September 25. Zero interest rates? Can the economy be that weak? We’ll see what the indicators tell us in October. ECONOMIC INDICATOR PUBLICATION SCHEDULE October 2015  Source (* below)……Series Description……Day & Date  Quarterly Data  BEA………….GDP…………..……Thu, 29th Monthly Data ISM..Purchasing managers’ index…Thu, 1st BEA.New-vehicle sales.(Approximate).Mon, 5th BLS………….Employment…………   Fri, 2nd Fed. Consumer credit..(Approximate).Wed, 7th BLS…………Producer prices……. Wed, 14th Census………….Inventories………. Wed, 14th BLS………….Consumer prices.…..Thu, 15th Fed……….Capacity utilization……Fri, 16th Census………Housing starts…….Tue, 20th NAR………Existing-home sales….Thu, 22nd Census……..New-home sales……Mon, 26th Census……….Capital goods…….. Tue, 27th Continue reading

Consumer Confidence Holds

The Lehmann Letter (SM) This morning the Conference Board reported that August’s rebound in Consumer Confidence held through September: https://www.conference-board.org/press/pressdetail.cfm?pressid=5570 Confidence advanced slightly from 101.3 in August to 103.0 in September after a setback to about 90.0 in July. That’s good news. Confidence must remain above 100.0 to claim complete recovery from the Great Recession. Be aware, however, that Confidence has fluctuated between 95.0 and 100.0 all year. Let’s see what the remainder of the year has in store. Consumer Confidence (Recessions shaded) Here’s the record since the beginning of 2013 (1985 = 100.0): 2013 January        58.4 February       68.0 March           Continue reading

Coming Up

The Lehmann Letter (SM) The Conference Board releases Consumer Confidence data tomorrow morning and we’ll publish the October calendar on October 30. The Pope’s visit, President Xi’s visit, the 2016 presidential race, economic uncertainty…………… Exciting times! Questions or comments? Contact Mike Lehmann at lehmannm@usfca.edu. (To be fully informed visit http://www.beyourowneconomist.com/) © 2015 Michael B. Lehmann

Corporate Profits Remain Strong

The Lehmann Letter (SM) This morning the Bureau of Economic Analysis reconfirmed the second quarter’s strong GDP growth at 3.9%: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm The report’s Table 1.12. National Income by Type of Income provides encouraging detail on corporate earnings: http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=53 Line 45 reveals after-tax corporate profits of $1,844.6. The table below shows this is a break-out number. Corporate Profits (Recessions shaded) $Billions: 2013 First Quarter           1,681.7 Second Quarter      1,688.2 Third Quarter          1,687.9 Fourth Quarter        1,713.2 2014 First Quarter           1,613.9 Second Quarter      1,700.2 Third Quarter          1,761.1 Fourth Quarter        1,700.5 2015 First Quarter           1,734.5 Second Quarter      1,844.6 Questions or comments? Contact Mike Lehmann Continue reading

New Home Sales Rebound

The Lehmann Letter (SM) This morning the Census Bureau reported the August sale of 552,999 new homes at a seasonally-adjusted annual rate: http://www.census.gov/construction/nrs/pdf/newressales.pdf As you can see from the table, sales have been over 500,000 in all but two months since the start of the year. That’s a solid improvement, but the chart reveals that sales remain closer to their recent trough than their recent peak. New Home Sales (Recessions Shaded) Here are the seasonally adjusted data at an annual rate: 2013 January        442,000 February       439,000 March           449,000 April              451,000 May              430,000 June             463,000 July              376,000 August          380,000 September    399,000 Continue reading

Trade Deficit Stops Growing

The Lehmann Letter (SM) Here’s a compliment for the Great Recession you rarely hear: The trade deficit stopped growing. The chart is clear. The deficit in our balance on current account bottomed-out at $200 billion almost ten years ago. It halved to about $100 billion during the recession On September 17 the Bureau of Economic Analysis (BEA) announced a second-quarter deficit of $109.7 billion: http://www.bea.gov/newsreleases/international/transactions/transnewsrelease.htm The good news: We are no longer borrowing as heavily from the rest-of-the-world to buy imports. The bad news: That’s a consequence of our less-than-robust expansion. Keep in mind, however, we continue to borrow heavily Continue reading

Private Borrowing Gains Altitude

The Lehmann Letter (SM) Damaged and illiquid balance sheets have impeded private borrowing. And the economy requires borrowing to support aggregate demand’s expansion. On September 18 the Federal Reserve reported that households and businesses borrowed $1,556.6 billion at a seasonally-adjusted annual rate in the second quarter: http://www.federalreserve.gov/releases/z1/Current/accessible/d2.htm That’s a good, strong number and a signal of the private sector’s willingness to borrow after borrowing’s collapse during the Great Recession. We’ll see if borrowing has made the transition to a new and higher plateau. Private Borrowing (Recessions shaded) It’s important because borrowing drives spending, especially residential construction. And troubled balance sheets Continue reading

Existing-Home Sales Remain in Range

The Lehmann Letter (SM) Existing-home sales are maintaining a range between 5.0 and 5.5 million at a seasonally-adjusted annual rate. This is well below their peak of over 7.0 million, reached before the Great Recession, but well above recession’s 4.0 million trough. This morning the National Association of Realtors reported 5.49 million existing-home sales in August: http://www.realtor.org/news-releases/2015/09/existing-home-sales-stall-in-august-prices-moderate 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 2014 January        4.62 February       4.60 March           4.59 April              4.75 May              4.90 June             Continue reading

“…Recent Global Economic and Financial Developments…”

The Lehmann Letter (SM) Yesterday’s bulletin from the Federal Reserve directed our attention overseas: http://www.federalreserve.gov/newsevents/press/monetary/20150917a.htm The Fed mentioned: “…Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term….” In addition: “…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….” And that prompted the Fed to leave interest rates at their current level. Questions or comments? Contact Continue reading

Housing Starts: Solidly in the Millions

The Lehmann Letter (SM) The financial world is waiting for the Federal Reserve’s interest-rate announcement. Will rates rise? We’ll see. Meanwhile, the economy rolls on. This morning the Census Bureau reported that housing starts have been 1.0 million or more for the past five months (see the table below): http://www.census.gov/construction/nrc/pdf/newresconst.pdf But you can see from the table that there have been false dawns in the past. Let’s hope this sunrise progresses to full daylight. 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: Continue reading