Capacity Utilization’s New Normal

The Lehmann Letter (SM) Today the Federal Reserve reported October’s capacity utilization at 75.3%: The manufacturing, mining and public utility operating rate has contracted cyclically for decades. Industry is no longer robust. Welcome to the new normal. Capacity Utilization (Recessions shaded) Here’s capacity utilization’s recent record. 2013 January        77.4 February       77.8 March           78.0 April              77.8 May              77.8 June             77.8 July              77.5 August          77.8 September    78.3 October        78.2 November     78.5 December     78.4 2014 January        78.1 February       78.8 March           79.1 April              79.0 May              79.1 June             79.2 July              79.3 August          79.1 September    79.4 October        79.1 November     79.8 December     79.6 2015 January        79.1 Continue reading

Consumer Credit Maintains Record Pace

The Lehmann Letter (SM) On November 7 the Federal Reserve reported that September consumer credit grew by $231.5 billion at a seasonally-adjusted annual rate: That’s enough to maintain a torrid pace. 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               $190.3 billion 2014 January                  $186.6 billion February                 $181.4 billion March                     $234.2 billion April                        $305.9 billion May                        Continue reading

Autos Stay Strong

The Lehmann Letter (SM) On November 2 the Commerce Department reported 17.9 million new-vehicles sold in October 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].) Sales remain strong. But………… Can they continue upward? New-Vehicle Sales (Recessions shaded) New-vehicle sales in millions at a seasonally-adjusted annual rate. 2013 January        15.4 February       15.6 March           15.4 April              15.4 May              15.4 June             15.7 July              15.7 August          15.6 September    15.3 October        15.3 November     16.1 December     15.5 2014 January        15.3 February       15.6 March           16.7 Continue reading

Hiring Cool Again

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics announced: “Total nonfarm payroll employment rose by 161,000 in October, and the unemployment rate was little changed at 4.9 percent…..” You can find the full report at: The Bureau revised August’s and September’s data upward, but they remained under 200,00. Now there have been three monthly reports under 200,000. That’s apparently strong enough to maintain full employment at 5.0%, but robust employment growth would be above 200,000 monthly. That has eluded us lately. Questions or comments? Contact Mike Lehmann at (To be fully informed visit © Continue reading

New Home Sales Remain Strong

The Lehmann Letter (SM) On October 26 the Census Bureau reported September sales of 593,000 new homes at a seasonally-adjusted annual rate: As the chart and table show, that’s a substantial improvement over earlier-in-the-year data. But – as the chart and table also show – that’s a long way from a complete recovery. 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 October        444,000 November     446,000 December     441,000 2014 January        446,000 February       417,000 March           Continue reading

The Fed Speaks

The Lehmann Letter (SM) Today the Federal Reserve’s Open Market Committee, which sets the federal funds rate, the interest rate at which banks lend reserves to one another, said in part: “…The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further… “…Against this backdrop, the Committee decided to maintain Continue reading

No Manufacturing Growth

The Lehmann Letter (SM) Today the Institute for Supply Management (ISM) reported its Purchasing Managers’ Index (PMI) for October at 51.9: This index provides a barometer of manufacturing activity. Anything below 50 = Contraction; above 50 = Expansion. This letter’s previous observations continue to hold true: As you can see from the chart and table, the index has fallen from its post-recession bump and is hovering around 50. Sometimes it’s a little higher; sometimes it’s a little lower. There has been no substantial manufacturing growth in the past year. Purchasing Managers’ Index (Recessions shaded) 2015             PMI January        53.5 February       Continue reading