TLV Economy: May 5, 2017«Back

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TLV Economy: May 5, 2017

A smooth sea never made a skilled mariner.”
English proverb

EMPLOYMENT
 
Department of Labor Unemployment Insurance Weekly Claims
Weekly unemployment insurance claims rising off February low
(April 27, 2017) In the week ending April 22, the advance figure for seasonally adjusted initial claims was 257,000, an increase of 14,000 from the previous week. The 4-week moving average was 242,250. Claims have risen since February 2017 when they hit, 223,000, the lowest level for initial claims since March 31, 1973.
 
Conference Board Help Wanted Online Index
Online job ads declined 26,100 in April
(May 3, 2017) Online advertised vacancies decreased to 4,613,600 in April. Supply/Demand rate stands at 1.55 unemployed for each advertised vacancy, with a total of 2.6 million more unemployed workers than the number of advertised vacancies. The number of unemployed was approximately 7.2 million in March.

INDUSTRY
 
Commerce Department on Construction
Construction increase over 2016
(May 1, 2017) Total construction spending during March 2017 was estimated at a seasonally adjusted annual rate of $1,218.3 billion, 0.2% below the revised February estimate of $1,220.7 billion. The March 2017 figure is 3.6% above the March 2016 estimate. Construction spending for Q1 of 2017 amounted to $259B, a 4.9% increase from Q1 of 2016.
 
JD Power Auto Sales
April auto sales sag despite spiffs and SUV demand
(May 2, 2017) U.S. new vehicle sales continued to cool, even with an infusion of incentives and sturdy demand for trucks, especially SUVs. Total new car and light-truck deliveries (retail and fleet) slipped 4.7% from April 2016 to 1.43 million units. Sales continue to slip from late 2016 when dealers offered large incentives that seemed to steal sales from 2017.
 
HUD/Census Bureau on New Home Sales
Tightening new home supply market
(April 25, 2017) Sales of new single-family houses in March 2017 were at a seasonally adjusted annual rate of 621,000. This is 5.8% above the revised February rate of 587,000 and is 15.6% above the March 2016 estimate of 537,000. The seasonally adjusted estimate of new houses for sale at the end of March was 268,000, representing a 5.2-month supply at current sales rate compared to a 5.7-month supply in December 2016.
 
U.S. Census Bureau on Durable Goods
Steady increases in durable goods
(April 27, 2017) New orders for manufactured durable goods in March increased $1.6B or 0.7% to $238.7B. The increase, up three consecutive months, followed a 2.3% increase in February. Transportation equipment, also up three consecutive months, drove the increase, $2B or 2.4% to a total of $83.3B.
 
CONSUMER
 
Personal Income and Outlays from the BEA
Income growth faster than expenditures
(May 1, 2017) Personal income increased $40 billion (0.2%) in March. Disposable personal income (DPI) increased $35 billion (0.2%) and personal consumption expenditures (PCE) increased $5.7 billion (less than 0.1%). Both personal income and consumption expenditures were revised down for January and February.
 
Consumer Credit from the Federal Reserve
Consumer debt still growing faster than income
(April 7, 2017) In February, consumer credit increased at a seasonally adjusted annual rate of 4.75%. Revolving credit increased at an annual rate of 3.5%, while nonrevolving credit increased at an annual rate of 5.25%. Total outstanding consumer debt at the end of February amounted to $3.756 trillion, in contrast to consumer debt of $2.92 trillion and the end of 2012.
 
St. Louis Fed on Savings
Savings rate grew the last three months, but still below recent peak
(May 1, 2017) The personal savings rate for March 2017 rose to 5.9% of disposable income from 5.7% in February. The most recent peak in savings came in at 6.2% in March 2016. The more recent bottom of 2.6% was achieved in August 2007. Personal savings rates averaged above 10% between 1960 and 1980. The personal savings rate was at 12.7% of disposable income in November 1981. Since then, ever-cheaper credit seems to have resulted in ever-smaller savings.
 
ECONOMIC SENTIMENT
 
NIFB Small Business Sentiment
Small business sentiment slumps after post election peak, but still historically high
(March 2017) The Index slipped 0.6 points in March to 104.7, still a very strong reading. Actual earnings, capital expenditure plans, and job-creation plans posted gains in March. Sales expectations, which have been flying high for months, dropped by 8 points, a sign that the Optimism Index could be moderating after a strong run.

“By historical standards, this is an excellent performance, with most of the components of the Index holding their gains,” said NFIB Chief Economist Bill Dunkelberg. “The increases in capital expenditure plans and actual earnings are signs of a healthier economy, and we expect job creation to pick up in future months.”

Institute for Supply Management PMI
Purchasing Manager’s Index also slumping from post election peak, but still solid
(May 1, 2017) The April Purchasing Manager’s Index (PMI) registered 54.8%, a decrease of 2.4 percentage points from the March reading of 57.2%. The New Orders Index registered 57.5%, a decrease of 7 percentage points from the March reading of 64.5%. New orders decreased 7% suggesting future declines in manufacturing activity. Of the 18 manufacturing industries followed by the ISM, 16 reported growth in April. Follow the link to insightful quotes from survey participants on various impressions of their industry’s activity.
 
Consumer Confidence
Consumer Confidence declines
(April 25, 2017) The Conference Board Consumer Confidence Index, which had increased in March, declined in April. The Index now stands at 120.3 (1985=100), down from 124.9 in March. The Present Situation Index decreased from 143.9 to 140.6 and the Expectations Index declined from 112.3 last month to 106.7.
 
Consumer confidence declined in April after increasing sharply over the past two months, but still remains at strong levels,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers assessed current business conditions and, to a lesser extent, the labor market less favorably than in March. Looking ahead, consumers were somewhat less optimistic about the short-term outlook for business conditions, employment and income prospects. Despite April’s decline, consumers remain confident that the economy will continue to expand in the months ahead.”  
 
Conference Board Leading Economic Index (LEI)
Bucking other sentiment declines, LEI growth steady since beginning of the year
(April 20, 2017) The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.4% in March to 126.7 (2010 = 100), following a 0.5% increase in February, and a 0.6% increase in January.
 
“The March increase and upward trend in the U.S. LEI point to continued economic growth in 2017, with perhaps an acceleration later in the year if consumer spending and investment pick up,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research.
 
Institute for Supply Management Non-Manufacturing Survey
Service sector keeps on ticking
(May 3, 2017) The Non-Manufacturing Survey registered 57.5%, a 2.3 percentage point increase over the March reading of 55.2 percent. This represents continued growth in the non-manufacturing sector at a faster rate. Follow the link to insightful quotes from survey participants on various impressions of their industry’s activity.
 
THE BIG PICTURE
 
GDP from the Bureau of Economic Analysis
Very soft first quarter
(April 28, 2017) Real gross domestic product (GDP) increased at an annual rate of 0.7% in the first quarter of 2017. In the fourth quarter of 2016, real GDP increased 2.1%. The Bureau emphasized that this first-quarter advance estimate is based on source data that are incomplete or subject to further revision by the source. The "second" estimate for the first quarter, based on more complete data, will be released on May 26, 2017. 

The deceleration in real GDP in the first quarter reflected a deceleration in Personal Consumption Expenditures and downturns in private inventory investment and in state and local government spending that were partly offset by an upturn in exports and accelerations in both nonresidential and residential fixed investment.

Bureau of Labor Statistics on Consumer Prices
A little deflation anyone?
(April 14, 2017) The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.3% in March on a seasonally adjusted basis. A decline in the gasoline index was the largest factor, with a decrease in the index for wireless telephone services also contributing. Over the last 12 months, the all items index rose 2.4% before seasonal adjustment, a smaller increase than the 2.7% rise for the 12-month period ending in February.  

Federal Reserve on Interest Rates
Waiting for economic improvement before next rate rise
(May 3, 2017) “The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2% over the medium term. In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 3/4 to 1%.”
 
LEYENDECKER ECONOMIC VIEW
 
After Trump’s election, a few well respected CEOs and investors suggested the country’s animal spirits could be ignited. This was reflected in euphoric post election economic sentiment surveys. But since little actual policy was changed in Trump’s first 100 days, we are seeing a decline in those animal spirits until more tangible and productive change surfaces.
 
So far President Trump’s administration hasn’t been able to get any economic policy changes through Congress. The swamp is not an easy slog. As Trump recently said, “This is more work than my previous life. I thought it would be easier.”
 
Maybe the potential deal on new health care policy can start to move the needle.
 
Weak GDP from the first quarter should not be a surprise, as almost all newly elected presidents experience early economic malaise.
 
Conspiracy theorists might suggest that an outgoing president will grease the skids for his chosen successor. By juicing economic activity in an election year, voters have fewer reasons to make a dramatic change. Our federal budget deficit went from $398B in 2015 to $551B in 2016, which might raise some eyebrows. Did this extra “fiscal juice” pull some economic activity likely set for 2017 into 2016? It seems the case for recent auto sales.
 
The economic recovery since our last recession has been anemic, yet growth continues. At some point we will experience a recession. A smart Republican strategist might even want a recession to surface soon. A little economic pain may go a long way to getting Congress on board with making productive economic policy changes.
 
NEWS YOU CAN USE
 
Visualizing America’s changing energy mix: 1970 - 2030
What’s powered America since 1970 and how has it changed? Click for some visuals.
 
Here's the most important exported good from every state
Fuel oil from Texas: expected. Diamonds from New York? Steroid hormones from Minnesota?
 
AND JUST FOR FUN

How a 1901 flood gave Louisiana its oil industry
And a fortuitous flood, at that. Follow the link for this and more Louisiana oil industry trivia.
 
IN CASE YOU MISSED IT
 
TLV Industry: April 17, 2017
 
TLV Deep Dive: Losing and Finding a Sense of Wonder
 
 

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