Capacity Utilization Can’t Break Loose

The Lehmann Letter (SM) On May 16 the Federal Reserve reported April’s capacity utilization at 76.7%: The chart reveals that capacity utilization reached 80% before the Great Recession and 85% during the 1980s and 1990s expansions. Now it’s stalled in the high 70s. Why? Partly it’s the oil and gas bust. Partly it’s the deindustrialization of America. 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              Continue reading

The Market’s Recent Rise

The Lehmann Letter (SM) The stock market rose after the November election, buoyed by the prospects of a pro-business regime. The stock market fell this week, disappointed by events in Washington. Examine the table below. It features the stock market (S&P 500), earnings per share at an annual rate (EPS) and the price/earnings ratio (P/E). The S&P and EPS have fluctuated in a range for two years. The P/E has reached 25:1, a substantial ratio. It seems that EPS must break free and rise as a precondition for the S&P’s renewed improvement. Annually                  S&P              EPS              P/E Jan. 1, 2010            Continue reading

Housing Starts No Higher Than Year Ago

The Lehmann Letter (SM) On May 16 the Census Bureau reported 1.2 million April housing starts at a seasonally-adjusted annual rate: Home prices are rising, but the chart and table reveal that residential construction is on a plateau. Housing Starts (Recessions shaded) These figures are presented in thousands of homes started, so that 1.1 million is shown in its raw form of 1,080 for 1,080,000: 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 Continue reading

Autos Peak? Evidence of a Cyclical Peak?

The Lehmann Letter (SM) On May 3 the Commerce Department reported 16.8 million new-vehicles sold in April 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].) There have been press reports of autos’ weakness. But – as you can see from the table below – there has been no drastic downturn. It seems true, however, that new-vehicle sales have peaked. A sign that we’ve reached a cyclical peak? Other indicators would need to confirm that. We’ll see. New-Vehicle Sales Continue reading

More Europe

The Lehmann Letter (SM) Emmanuel Macron’s landslide victory for the presidency of France means more Europe, not less. It will empower other Continental leaders – such as Germany’s Angela Merkel – who also want more Europe. And, most importantly, it will mean that the post-WWII European project, begun by visionaries such as Robert Schuman, Jean Monnet, Paul-Henri Spaak and Conrad Adenauer, will survive and endure. Europe emerged from WWII’s ashes and built an organization founded on unity and cooperation and peace. Tomorrow’s leaders will continue taking Europe forward. Questions or comments? Contact Mike Lehmann at (To be fully informed Continue reading

Full Employment

The Lehmann Letter (SM) This morning the Bureau of Labor Statistics announced that the unemployment rate in April fell to 4.4%. We have full employment. You can find the full report at: Let’s rejoice at this good news. It’s been a long slog since the unemployment rate peaked at about twice that level approximately eight years ago during the worst of the Great Recession. Questions or comments? Contact Mike Lehmann at (To be fully informed visit © 2017 Michael B. Lehmann          

May Publication Schedule

The Lehmann Letter (SM) Is the economy’s momentum waning? We’ll see. ECONOMIC INDICATOR PUBLICATION SCHEDULE  May 2017  Source (* below)……Series Description……Day & Date   Quarterly Data BLS………Productivity & Costs…..Thu, 4th BEA…….…GDP & Profits..……Fri, 26th Monthly Data ISM..Purchasing managers’ index…Mon, 1st BEA.New-vehicle sales.(Approximate).Wed, 3rd BLS………….Employment…….…   Fri, 5th Fed. Consumer credit..(Approximate).Mon, 8th BLS…………Producer prices……. Thu, 11th Census………….Inventories…….. Fri, 12th BLS……….Consumer prices.……. Fri, 12th Fed……….Capacity utilization……Tue, 16th Census………Housing starts…….Tue, 16th Census……..New-home sales…… Tue, 23rd NAR………Existing-home sales….Wed, 24th Census……….Capital goods…….. Fri, 26th Conf Bd….Consumer confidence.. Tue, 30th *BEA = Bureau of Economic Analysis of the U.S. Department of Commerce *BLS = Bureau of Labor Statistics Continue reading