The Fed Builds Running Room

The Lehmann Letter (SM) One problem that rock-bottom rates presented to the Federal Reserve: No platform from which to reduce rates should the need arise. And that need may arise sooner rather than later. There is some weakness in the economy. If the Fed doesn’t raise rates now, how can it reduce rates later? Yesterday the Federal Reserve said it would raise interest rates slightly: http://www.federalreserve.gov/newsevents/press/monetary/20151216a.htm The Fed boosted the Federal Funds rate from 0-1/4% to ¼ – ½% because it sees improvement in the economy:  “…The Committee judges that there has been considerable improvement in labor market conditions this Continue reading

Much Ado About Nothing: Housing Starts Improve

The Lehmann Letter (SM) This morning’s announcement from the Census Bureau that November housing starts rose to 1.2 million at a seasonally-adjusted annual rate requires historical perspective: http://www.census.gov/construction/nrc/pdf/newresconst.pdf Starts have improved slightly, but the chart and table reveal that they remain depressed. 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        888 February       970 March           994 April              826 May              920 June             852 July              891 August          898 September    860 October        921 November     1,104 December     1,010 2014 January        888 February       951 March           Continue reading

No Change in CPI

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics reported no change in the Consumer Price Index (CPI) for November: http://stats.bls.gov/news.release/cpi.nr0.htm Tomorrow the Federal Reserve decides on interest rates. Will today’s CPI report forestall an increase? Most observers would say “No.” Questions or comments? Contact Mike Lehmann at lehmannm@usfca.edu. (To be fully informed visit http://www.beyourowneconomist.com/) © 2015 Michael B. Lehmann    

Sales and Inventories Fall

The Lehmann Letter (SM) Manufacturers’, wholesalers’ and retailers’ October sales and inventories fell according to a December 11 report from the Census Bureau: http://www.census.gov/mtis/www/data/pdf/mtis_current.pdf More noise in the data? Maybe. Likely to deter the Federal Reserve from raising interest rates? Probably not. Questions or comments? Contact Mike Lehmann at lehmannm@usfca.edu. (To be fully informed visit http://www.beyourowneconomist.com/) © 2015 Michael B. Lehmann    

Producer Prices Rise 3.6% Annually

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics reported a 3.6% November rise in producer (wholesale) prices at a seasonally-adjusted annual rate: http://stats.bls.gov/news.release/ppi.nr0.htm This jump follows a decline since last spring. Noise in the data? We’ll see. Grist for the interest-rate-increase mill? Probably. Questions or comments? Contact Mike Lehmann at lehmannm@usfca.edu. (To be fully informed visit http://www.beyourowneconomist.com/) © 2015 Michael B. Lehmann    

Business Equipment Stalls

The Lehmann Letter (SM) Yesterday’s letter featured new-vehicle sales strength. But the Census Bureau’s November 25 report on new orders for nondefense capital goods has gloomy news: http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf New orders remain stuck at around $70.0. The chart and table reveal little progress. Business equipment orders are not growing. 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             68.5 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           Continue reading

No Stopping Auto Sales

The Lehmann Letter (SM) On December 2 the Commerce Department reported November new-vehicle sales of 18.1 million at a seasonally-adjusted annual rate: http://www.bea.gov/national/index.htm#gdp (Find motor vehicles under supplemental estimates, then open spreadsheet and click on Table 6 at bottom – Column I [scroll down for latest data].) That’s the third month in a row of 18.1 million sales. If new-vehicle sales retain this pace, they will be higher than the records set before the Great Recession of 2008. New-Vehicle Sales (Recessions shaded) New-vehicle sales in millions at a seasonally-adjusted annual rate. 2013 January        15.4 February       15.5 March           15.4 April              15.4 Continue reading

Consumer Credit Growing $200 Billion Monthly

The Lehmann Letter (SM) Yesterday the Federal Reserve reported that consumer credit grew by $191.8 billion in October at a seasonally-adjusted annual rate: http://www.federalreserve.gov/releases/g19/current/ It appears that consumer credit will advance at an average $200 billion monthly pace in 2015. You can see from the historical record how strong this is. Consumer Credit (Change) (Recessions shaded) Monthly changes in consumer credit, seasonally adjusted at an annual rate: 2013 January                  $188.8 billion February                 $231.4 billion March                     $116.9 billion April                        $151.4 billion May                        $195.4 billion June                       $141.8 billion July                        $193.0 billion August                    $178.1 billion September              $200.6 billion October                  $204.2 billion November               $199.8 Continue reading

Another Strong Employment Report

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics reported the creation of 211,000 jobs in November: http://stats.bls.gov/news.release/empsit.nr0.htm And the unemployment rate remained at 5.0%. That’s another strong employment report and provides ample opportunity for the Federal Reserve to raise interest rates in December. Questions or comments? Contact Mike Lehmann at lehmannm@usfca.edu. (To be fully informed visit http://www.beyourowneconomist.com/) © 2015 Michael B. Lehmann