The economic news for the US has been disappointing in recent weeks, although yesterday’s updates on jobless claims and the manufacturing sector offer a brighter view. Nonetheless, it’s easy to assume that the business cycle is faltering, based on weak numbers for housing starts, retail sales, payrolls and personal income in the latest releases. But when you step back and consider the broad trend based primarily on year-over-year changes, there’s still no overt sign that the economy is deteriorating. A diversified set of 14 economic and financial indicators still point toward growth. This view via the data offers yet another reminder that it’s dangerous to draw hard and fast conclusions about the state of macro from a handful of numbers using monthly comparisons.
Continue reading →

The optimists got a break today. This morning’s economic updates brought encouraging news via initial jobless claims and the flash estimate of Markit’s US Manufacturing Purchasing Managers Index (PMI). The PMI report was particularly strong. It’s too soon to write off the weak numbers that have been harassing the macro profile lately, but the data du jour at least breaks the recent run of discouraging reports. In turn, it’s a bit easier to entertain the theory that a thaw in the weather will juice the business cycle in the weeks ahead.
Continue reading →

It’s not a crash, but it sort of smells like one. Housing starts and newly issued residential building permits dropped sharply in January, the Census Bureau reported this morning. The declines, which came in well below expectations, follow a pattern of late: disappointing economic news for the US. But once again there’s also the routine of analysts telling us that the unusually harsh winter weather is temporarily weighing on the data and so better numbers are just around the corner. Perhaps, but for the moment there’s a new dose of ugly numbers to review.
Continue reading →

The sharp drop in confidence among home builders this month adds another disappointing number to the growing list of troubling economic updates. “Unusually severe weather conditions across much of the nation along with continued concerns over the cost and availability of labor and lots caused builder confidence in the market for newly-built, single-family homes to post a 10-point drop to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index,” NAHB reported yesterday.
Continue reading →

Housing starts are expected to total 997,000 in tomorrow’s update for January, based on The Capital Spectator’s median econometric forecast (seasonally adjusted annual rate). The projection represents a slight decline vs. the previously reported 999,000 for December. Meanwhile, the Capital Spectator’s median estimate for January is moderately higher vs. a trio of consensus estimates based on recent surveys of economists.
Continue reading →

The Arab Gulf is hot, and we’re talking more than weather. The leading stocks listed on the western slice of the Persian Gulf (primary the United Arab Emirates, Qatar and Kuwait) are sizzling. The equities in the major markets of Europe are doing quite well too when we slice up the planet’s stock markets by regional definitions.
Continue reading →

The US economic trend has rebounded a bit in February after a soft start in the new year, based on a markets-based profile of macro conditions. The Macro-Markets Risk Index (MMRI) closed at 10.8% on Friday, Feb. 14–a level that suggests that business cycle risk remains low. The current 10.8% value is moderately above last month’s low of roughly 8%. More importantly, MMRI is still well above the 0% danger zone. If MMRI falls under 0%, that would be a sign that recession risk is elevated. By comparison, readings above 0% imply that economic growth will prevail.
Continue reading →

● The Leading Indicators: A Short History of the Numbers That Rule Our World
By Zachary Karabell
Review via Kirkus Review
Our leaders regularly agonize over unemployment figures, the consumer price index, gross national product and the balance of trade. These and other leading indicators are important but also overrated, writes journalist and Reuters “Edgy Optimist” columnist Karabell (Superfusion: How China and America Became One Economy and Why the World’s Prosperity Depends on It, 2009) in this lucid measurement of how the United States is faring.
Continue reading →

Another economic report, another disappointing number. Industrial production in January slumped 0.3% from the previous month, delivering the first negative monthly comparison since last July. This is the fourth major indicator in recent weeks that’s fallen short of expectations (the latest data on personal income, nonfarm payrolls, and retail sales suffered surprisingly weak monthly changes too). The harsh winter may be the cause, in which case we’ll soon see more encouraging updates.
Continue reading →

All forecasts are wrong, but some are useful, the mathematician George E. P. Box famously advised. But how can wrong forecasts be useful? One way is to use our best guesstimates as early warning sign of a major turning point in the trend. This is one of the more compelling reasons to generate forecasts. It’s a subtle point, and one that’s too easily overlooked in the rush to dismiss forecasts as garbage. In truth, you can learn a lot from flawed forecasts. I raise this point now because we’ve seen a run of disappointing economic updates in recent weeks (personal income, payrolls and retail sales). The value of analyzing flawed predictions may be unusually valuable these days.
Continue reading →