Consumer Confidence Hits Ceiling?

The Lehmann Letter (SM) On April 26 The Conference Board reported April Consumer Confidence fell to 94.2 from 96.1 in March: Consumer confidence has fluctuated around 100.0 for over a year. Does that mean consumer confidence has peaked for this cycle? Could be. And that would not be a good omen. 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              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              Continue reading

The Fed and GDP

The Lehmann Letter (SM) Yesterday the Federal Reserve’s Open Market Committee, which sets the interest rate at which banks lend reserves to one another, said: “Information received since the Federal Open Market Committee met in March indicates that labor market conditions have improved further even as growth in economic activity appears to have slowed….” This morning the Commerce Department reported a slowing to 0.5% in first-quarter output growth: Concerns about inflationary pressure don’t seem warranted. The economy appears to be cooling, no warming. Questions or comments? Contact Mike Lehmann at (To be fully informed visit © Continue reading

Existing-Home Sales Remain in Range

The Lehmann Letter (SM) The February 26 letter said: 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. Yesterday the National Association of Realtors reported 5.33 million existing-home sales in January: Existing-home sales remain in the range. 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 Continue reading

Earnings And The Stock Market

The Lehmann Letter (SM) Examine these figures for the stock market (S&P 500), earnings per share at an annual rate (EPS) and the price/earnings ratio (P/E). Earnings per share peaked two years ago. Now they are falling, but the stock market isn’t. Consequently the price/earnings ratio is rising. The stock market can’t maintain its current level if earnings continue to decline and the price/earnings ratio continues to rise. The market will fall with earnings. Annually                  S&P              EPS              P/E Jan. 1, 2010            1169.43        60.93            19.19 Jan. 1, 2011            1325.83        81.31            16.31 Jan. 1, 2012            1408.47        88.54  Continue reading

Housing Starts Remain On Plateau

The Lehmann Letter (SM) This morning the Census Bureau reported 1.1 million housing starts in January: Housing starts are on a plateau that is only half the level of their previous peak. 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           963 April              1,039 May              986 June             927 July              1,095 August          Continue reading

Inventory/Sales Ratio Continues To Rise

The Lehmann Letter (SM) This morning the Commerce Department said that the inventory/sales ratio rose to 1.41 in February: Place the latest data on the chart. Inventories rise when sales fall (goods not sold accumulate on the shelf), driving the inventory/sales ratio swiftly north. That’s happened lately. Businesses cut production when the ratio climbs too high. As you can see, a rising ratio is often an omen of recession. Inventory/Sales Ratio (Recessions shaded) The table shows business sales peaked in the summer of 2014 and have fallen ever since. Inventories continued to grow and the inventory/sales ratio climbed. Inventories              Continue reading

Consumer Credit Remains Strong

The Lehmann Letter (SM) Yesterday, April 7, the Federal Reserve reported that consumer credit grew by $206.6 billion in February at a seasonally-adjusted annual rate: Other indicators may be under stress, but not this one. Households are borrowing heavily to make their purchases. That’s a sign of optimism. 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 billion December               Continue reading

Autos Stall?

The Lehmann Letter (SM) Yesterday, April 4, the Commerce Department reported 16.5 million new-vehicle sold in March at a seasonally-adjusted annual rate: (Find motor vehicles under supplemental estimates, then open spreadsheet and click on Table 6 at bottom – Column I [scroll down for latest data].) As the table below indicates, that’s a step down from the recent plateau. Trouble brewing or a minor data glitch? We’ll see. 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 May              15.4 June             15.7 July              15.7 August          15.7 September    Continue reading

April Publication Schedule

The Lehmann Letter (SM) The contrary signals make economic forecasting difficult. Here are some key indicators. ECONOMIC INDICATOR PUBLICATION SCHEDULE  April 2016  Source (* below)……Series Description……Day & Date  Quarterly Data BEA……….GDP  ……..…..……Thu, 28th Monthly Data ISM..Purchasing managers’ index…Fri, 1st BLS………….Employment…….…   Fri, 1st BEA.New-vehicle sales.(Approximate).Tue, 4th Fed… Consumer credit.(Approx)…Thu, 7th BLS…………Producer prices……. Wed, 13th Census………….Inventories…….. Wed, 13th BLS……….Consumer prices.……. Thu, 14th Fed……….Capacity utilization……Fri, 15th Census………Housing starts…….Tue, 19th NAR………Existing-home sales….Wed, 20th Census……..New-home sales…… Mon, 25th Census……….Capital goods…….. Tue, 26th Conf Bd….Consumer confidence.. Tue, 26th *BEA = Bureau of Economic Analysis of the U.S. Department of Commerce *BLS = Bureau of Labor Statistics Continue reading

Job Growth Remains Strong

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics reported the creation of 215,000 jobs and a 5.0% unemployment rate in March: Today’s report was good. Questions or comments? Contact Mike Lehmann at (To be fully informed visit © 2016 Michael B. Lehmann