It will go up here at BizzyBlog at noon tomorrow (link won’t work until then) after the blackout expires.
Which is the more important statistic: A 36 percent decline in U.S. median household net worth since 2003, or a 43 percent decline in that same statistic since 2007?
The average person would certainly be more concerned about the latter, which represents an annual drop of about 7 percent compared to the less than 4 percent per year seen in the past decade. But apparently if you’re a reporter or editor at the New York Times, the former statistic is of far more interest, while the latter doesn’t merit a specific numerical mention.
Today’s durable goods report showed that the seasonally adjusted value of June shipments rose 0.1%.
Knowing orders is useful for gauging the future, but what goes into GDP is what is shipped/sold. This quarter’s rundown was +0.1% April, -0.1% May, and +0.1% June — before inflation, which was certainly greater than the 0.1% sum of the three months.
Meanwhile, over in consumer spending land, the markets were spooked by Amazon’s larger than expeted second quarter loss, its much larger forecast loss in the third quarter, and Visa’s weak second quarter.
Meanwhile monthly new-home sales have trailed the same month froma year for four out of the past five months.
So where is this 3 percent GDP growth going to come from?
Prediction: Well, a sort-of prediction — Bloomberg News says that “U.S. economic data today will show new home sales fell in June, while a weekly report on initial claims for unemployment insurance will say applications rose.”
Last week came in with 302,000 seasonally adjusted claims.
Update: Business Insider has a 307K prediction.
Seasonal adjustment factors:
- Week ended July 19, 2014 — 99.2
- Week ended July 20, 2013 — 103.0
- Week ended July 12, 2014 — (before revision)
- Week ended July 20, 2013 — 340,457
It looks as if this week’s seasonal factor will make today’s result look better than it should by about 11,000 or 12,000 claims. Both weeks above were full five-day, mid-July business weeks, and there doesn’t seem to be a good reason for the differential between the years’ seasonal factors, and last year’s seasonally adjusted results were consistent with other weeks in July.
For a repeat of or improvement upon last week’s performance, raw claims will need to be 311,000 or lower (311K divided by 1.03 is 302K, rounded).
But, consisted with what was just noted above, raw claims really need to come in at or below 300K.
We’ll see here at 8:30.
HERE IT IS:
SEASONALLY ADJUSTED DATA
In the week ending July 19, the advance figure for seasonally adjusted initial claims was 284,000, a decrease of 19,000 from the previous week’s revised level. This is the lowest level for initial claims since February 18, 2006 when they were 283,000. The previous week’s level was revised up by 1,000 from 302,000 to 303,000. The 4-week moving average was 302,000, a decrease of 7,250 from the previous week’s revised average. This is the lowest level for this average since May 19, 2007 when it was 302,000. The previous week’s average was revised up by 250 from 309,000 to 309,250.
The advance number of actual initial claims under state programs, unadjusted, totaled 292,344 in the week ending July 19, a decrease of 78,215 (or -21.1 percent) from the previous week. The seasonal factors had expected a decrease of 58,477 (or -15.8 percent) from the previous week. There were 340,457 initial claims in the comparable week in 2013.
This is a good result — just not as good as the reported seasonally adjusted 284K number would indicate. It’s really the equivalent of about 295K.
UPDATE: Regarding the seasonal factors —
“Initial jobless claims probably remained near the 300,000 mark as seasonal factors likely continued to misestimate actual claims activity during the July auto factory shutdown season,” said Citi’s Peter D’Antonio.
“We posit that filing have been artificially low, relative to the May-June average, reflecting in part the inability of the seasonal factors to account for two post-crisis trends in the auto sector: (1) the auto sector is much smaller, resulting in fewer hourly worker claims than before; and (2) many factories stay open in order to accommodate stronger demand. Separately, beneficiaries and the insured rate likely also remained low due to factory retooling period seasonal factor idiosyncrasies.”
Mr. D’Antonio’s argument would support this year’s seasonal factor being lower than last year. Instead, this week’s factor, as noted above, was higher than last year’s comparable week.
There were two pieces of significant economy-related news today. The first was that the Conference Board’s index of leading economic indicators increased for the fifth straight month, this time by 0.3 percent, while May’s increase was revised up to 0.7 percent. The second was that the University of Michigan’s preliminary June reading on consumer confidence came in at 81.3, a decline from May. Both results trailed expectations.
Predictably, the Associated Press’s Martin Crutsinger put a smiley face on the news, believing it shows that “that economic growth should accelerate in the second half of this year,” while Bloomberg News’s Nina Glinski was more sanguine, interpreting the confidence report as an indication that “Americans’ outlook for the economy dimmed.” Excerpts from both efforts follow the jump.
It will go up here at BizzyBlog on Sunday morning (link won’t work until then) after the blackout expires.
June’s Regional and State Employment and Unemployment News release tells us that Ohio’s unemployment rate remained at 5.5 percent, that the state picked up 13,000 payroll jobs, and that its workforce shrunk by 4,800.
And once again, the state’s “honor roll” performance in “significantly” adding jobs, supposedly 29th in the nation in adding jobs during the past 12 months, really isn’t:
“Ohio: We’re number 34!”
As to the workforce and payroll employment growth:
While the nation’s civilian labor force has increased a bit during the past 3-1/2 years — but by nowhere near enough to absorb all new potential workers, thereby causing millions of discouraged Americans to go to the sidelines — Ohio’s has shrunk.
In the three years ended in May (latest stats available), Metro Columbus’s labor force has grown, meaning the shrinkage in the rest of the Buckeye State has been even more severe than statewide stats would otherwise indicate.
The state’s payroll employment growth during the past 3-1/2 years trails the rest of the nation, while Metro Columbus’s beats it.
Take away Metro Columbus, and payroll employment growth in the rest of Ohio is less than two-thirds of that seen in the rest of the nation — and volumes have been written about how job growth since the recession ended has been completely unacceptable.
Late this afternoon, I went to the Top Business Headlines page at the Associated Press’s national web site to get today’s new home construction news. Because the AP didn’t have a story there (saved here for future reference), I knew it had to be bad, especially because to ignore it, the wire service made room in its Top 10 stories for an item on Toyota experimenting with fuel cells and aircraft orders at an air show in England.
The Census Bureau reported that seasonally adjusted housing starts fell by 9.3 percent in June after declining 7.3 percent in May. Seasonally adjusted applications for new building permits declined by 4.2 percent after a 5.1 percent revised May drop. Reporter Martin Crutsinger, doing his utmost to earn the “Worst Economics Writer” tag the National Review’s Kevin Williamson conferred on him last year, blamed the weather, blamed “the South” without telling readers how the Census Bureau defines it, and ignored how, even after a very bad month, that region is still outperforming other regions in new homebuilding. Excerpts follow the jump (bolds and numbered tags are mine):
The report will be here at 8:30.
HERE IT IS (permanent link):
SEASONALLY ADJUSTED DATA
In the week ending July 12, the advance figure for seasonally adjusted initial claims was 302,000, a decrease of 3,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 304,000 to 305,000. The 4-week moving average was 309,000, a decrease of 3,000 from the previous week’s revised average. This is the lowest level for this average since June 2, 2007 when it was 307,500. The previous week’s average was revised up by 500 from 311,500 to 312,000.
The advance number of actual initial claims under state programs, unadjusted, totaled 369,591 in the week ending July 12, an increase of 47,079 (or 14.6 percent) from the previous week. The seasonal factors had expected an increase of 49,945 (or 15.5 percent) from the previous week. There were 410,974 initial claims in the comparable week in 2013.
The seasonal adjustment factors took care of what is apparently a normal uptick in raw claims during the first full week after the July 4 holiday.
Whether it was just a one-time uptick is something we’ll have to see next week.
Producer prices went up a seasonally adjusted 0.8 percent during the quarter (+0.6 in April, -0.2 in May). If we see a similar result with consumer prices, it would seem to imply that the GDP inflator in the second quarter’s GDP calculation needs to be in the neighborhood of an annualized 3.0 percent — far higher than what we’ve seen in previous quarters.
Update, 10:00 a.m.: Given that much of what may have been bought or consumed in the second quarter would have been produced in prior quarters, there’s justification for a lower GDP deflator than just indicated. But it seems like it should be higher than the 1.3 percent or so we’ve typically seen in previous quarters.
If anyone can tell me why the Fed is correct when it says that industrial production “advanced at an annual rate of 5.5 percent for the second quarter of 2014,” let me know. I think it’s a typo, and that the increase is really 2.5 percent. No change in April, +0.5 in May, and +0.2 in June could lead to a 2.5 percent result; it can’t possibly lead to +5.5 percent.
That quarterly increase of 0.7 percent (0.5 plus 0.2) is less than half of the 1.6 percent revised increase seen during the first quarter, and we know (at least until the July 30 revision) that the far better number occurred during a quarter of GDP contraction.
Manufacturing output increased by only 0.1 percent.
Zero Hedge logically asks:
Does this look like a Q2 recovery bounce that is strong and supportive of 3% GDP growth?
No it doesn’t. Not at all.
Paul Krugman at the New York Times and other fever-swamp leftists who, incredibly, are operating under the assumption that the economy has experienced an acceptable if uneven “recovery” during the five years since the recession ended are celebrating what they believe was an epic live “embarrassment” of Rick Santelli at the hands of Steve Liesman at CNBC on Monday.
A Google search shows that Mediaite (“CNBC Reporter Torches Rick Santelli”), New Republic (“CNBC’s Rick Santelli Was Embarrassed on Live TV”), Talking Points Memo (“Watch CNBC’s Tea Partier Get Told How Wrong He’s Been”), Business Insider (“Steve Liesman Issued A Devastating Line To Rick Santelli”), and of course Vox (“Watch Steve Liesman demolish Rick Santelli’s inflation fearmongering”) are all piling on. Following the jump, I will show that Santelli only claimed to have been right about the direction of the economy for the past five years, after which Liesman changed the subject and hogged the microphone:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $439.9 billion, an increase of 0.2 percent (±0.5)* from the previous month, and 4.3 percent (±0.9) above June 2013. Total sales for the April through June 2014 period were up 4.5 percent (±0.7) from the same period a year ago. The April to May 2014 percent change was revised from +0.3 percent (±0.5)* to +0.5 percent (±0.2).
Before rounding, the increase was 0.245 percent, if that makes anyone feel better.
Expectations were for a 0.6 percent gain. The May upward revision provides some solace, but not much.
The raw (undadjusted) May-June decrease was 5.59 perent. The May-June decrease in 2013 was 5.07 percent. Perhaps that can be explained away by noting that June 2013 had 10 weekend days and June 2014 had nine. I don’t the GDP calculations care about that.
It looks like if second-quarter GDP is going to be decent, significant contributors are going to have to come from somewhere besides personal consumption expenditures.
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