May 6, 2016

Gingrich: Hillary’s Talk of Putting Coal Miners Out of Work Shows ‘Ruthlessness’ of ‘Totalitarians’

The press is protecting Democratic frontrunner Hillary Clinton from wide exposure of the blowback over her expressed desire to see coal miners lose their jobs and her bogus attempt to “apologize” for what she said.

Former House Speaker Newt Gingrich, appearing on Fox & Friends Thursday morning, identified a larger truth about Mrs. Clinton’s callous disregard for workers and their families — people about whose well-being her party claims to be concerned:


April 2016 Employment Situation Summary (050616): 160K SA Payroll Jobs Added; Unemployment Rate Stays at 5.0 Pct.; Labor Force Participation Down; Civilian Labor Force Shrinks; Some Improvement in Wages

Filed under: Economy,Taxes & Government — Tom @ 8:26 am


Not seasonally adjusted benchmarks (will post graphic later):

  • Total nonfarm — 1.25 million
  • Private sector — 1.225 million

These benchmarks would barely exceed what was seen in 2011, so the bar isn’t unrealistically high.

What else to watch for:

  • Revisions to payroll jobs added in prior months
  • Changes in average hours worked
  • Full/part-time workers changes
  • Average hourly and weekly pay increases (first quarter was very flat here)

The report will be here at 8:30 a.m.


HERE IT IS (full HTML permanent link): Pending a look at the seasonal conversions, it looks like ADP was a pretty good predictor this time —

Total nonfarm payroll employment increased by 160,000 in April, and the unemployment rate was unchanged at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, and financial activities. Job losses continued in mining.

Household Survey Data

In April, the unemployment rate held at 5.0 percent, and the number of unemployed persons was little changed at 7.9 million. Both measures have shown little movement since August.

Among the major worker groups, the unemployment rate for Hispanics increased to 6.1 percent in April, while the rates for adult men (4.6 percent), adult women (4.5 percent), teenagers (16.0 percent), Whites (4.3 percent), Blacks (8.8 percent), and Asians (3.8 percent) showed little or no change.

The number of long-term unemployed (those jobless for 27 weeks or more) declined by 150,000 to 2.1 million in April. These individuals accounted for 25.7 percent of the unemployed.

In April, the labor force participation rate decreased to 62.8 percent, and the employment-population ratio edged down to 59.7 percent.

Establishment Survey Data

Total nonfarm payroll employment increased by 160,000 in April. Over the prior 12 months, employment growth had averaged 232,000 per month. In April, employment gains occurred in professional and business services, health care, and financial activities, while mining continued to lose jobs.

Professional and business services added 65,000 jobs in April. The industry added an average of 51,000 jobs per month over the prior 12 months. In April, job gains occurred in management and technical consulting services (+21,000) and in computer systems design and related services (+7,000).

In April, health care employment rose by 44,000, with most of the increase occurring in hospitals (+23,000) and ambulatory health care services (+19,000). Over the year, health care employment has increased by 502,000.

Employment in financial activities rose by 20,000 in April, with credit intermediation and related activities (+8,000) contributing to the gain. Financial activities has added 160,000 jobs over the past 12 months.

Mining employment continued to decline in April (-7,000). Since reaching a peak in September 2014, employment in mining has decreased by 191,000, with more than three-quarters of the loss in support activities for mining.

Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, showed little or no change over the month.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in April. The manufacturing workweek and overtime remained unchanged at 40.7 hours and 3.3 hours, respectively. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was up by 0.1 hour to 33.7 hours.

In April, average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $25.53, following an increase of 6 cents in March. Over the year, average hourly earnings have risen by 2.5 percent. In April, average hourly earnings of private-sector production and nonsupervisory employees increased by 5 cents to $21.45.

The change in total nonfarm payroll employment for February was revised from +245,000 to +233,000, and the change for March was revised from +215,000 to +208,000. With these revisions, employment gains in February and March combined were 19,000 less than previously reported. Over the past 3 months, job gains have averaged 200,000 per month.

So the overall result is that (seasonally adjusted) an estimated 141,000 more Americans (160K minus 19K in downard revisions to prior months) were working in April than were working in March.

Not seasonally adjusteed benchmark results:

  • Total nonfarm — 1.057 million vs. 1.25 million benchmark
  • Private sector — 1.051 million vs. 1.225 million benchmark

A first back-of-envelope glance, the seasonal conversions seem okay.

Here’s the graphic:


April’s numbers are a pullback from the previous two years. Those who cite the low unemployment rate to say “that’s okay” need to reminded that the participation metrics stink, and that as long as they do, the official unemployment rate doesn’t truly reflect the slack in the labor force and its ability to expand under the right economic policies.

More later.


UPDATE (reference is to seasonally adjusted data unless otherwise indicated):

  • The malaise indicators got worse with a vengeance: Civilian labor force down 362K, Employment (per Household Survey) down 316K, Labor force participation rate and Employment-population ratio both drop 0.2 percentage points, not in labor force up by 562K to over 94 million.
  • The Black/AA unemployment rate for men shot up from 8.7 percent to 9.5 percent, while the rate for Black/AA women plunged to 6.9 percent from 8.0 percent.
  • Full-time employment dropped by 253K (Household Survey), and is only 53K higher than January; part-timers dropped by 21K.
  • Goods-producing employment changes were all in single digits: Construction, +1K; Manufacturing, following 45K in losses the previous two months, +4K; Mining, -8K.
  • The overwhelming sense here is that health care employment is shooting up (+502K in past 12 months, up 910K since December 2013 before Obamacare took effect) because of an increase in bureaucracy, not an increase in value of services provided.
  • Temp employment, which dove in January, has added 19K in the past two months.
  • Average hourly and average weekly pay metrics improved, but in a slightly longer context, average weekly pay of $870.79 is only $2.64 greater than January — a 0.3 percent increase in three months. This metric’s trajectory is one to watch closely in the coming months, because the April uptick needs to be sustained.

Overall, the report is discouraging, but not disheartening. The question, to which we don’t know the answer, is whether it’s a decelerating blip or a downward trend. Six months of weak GDP growth would seem to point to the former.


UPDATE: Zero Hedge breaks down the Household Survey employment decline (they all have separate seasonal calculations, so they don’t add up to the over -316K employment change) —

  • 16-19 years old, +3K
  • 20-24, -155K
  • 25-54, -284K
  • 55 and older, +166K

Per ZH, “This means that while total workers aged between 16 and 54 are still some 3.5 million below where they were in December of 2007. During the same period workers aged 55 and over have grown by a whopping 8.1 million to a new all time high of 34.4 million,”

May 5, 2016

Initial Unemployment Claims: 274K SA; Raw Claims (243K) UP 3 Percent of Same Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 8:57 am

From the Department of Labor:


In the week ending April 30, the advance figure for seasonally adjusted initial claims was 274,000, an increase of 17,000 from the previous week’s unrevised level of 257,000. The 4-week moving average was 258,000, an increase of 2,000 from the previous week’s unrevised average of 256,000.

There were no special factors impacting this week’s initial claims. This marks 61 consecutive weeks of initial claims below 300,000, the longest streak since 1973.


The advance number of actual initial claims under state programs, unadjusted, totaled 243,365 in the week ending April 30, a decrease of 1,675 (or -0.7 percent) from the previous week. The seasonal factors had expected a decrease of 16,970 (or -6.9 percent) from the previous week. There were 236,421 initial claims in the comparable week in 2015.

The seasonal adjustment factors were virtually identical this week and for the ssame week last year (88.7 and 88.4).

Raw claims coming in ahead of the previous year is a rarity, though to be clear, after so many weeks under 300K seasonally adjusted, we may be at a virtual claims trough with minor fluctuations above and below comparable year-ago weeks.

But today’s rise, in tandem with ADP’s weak private-sector jobs number yesterday, may mean that the job market and employment might be heading in the wrong direction.

Expectations for tomorrow’s jobs report, according to Yahoo’s Economic Calendar, are for a 207-215K in crease in payroll jobs and for the unemployment rate to stay at 5.0 percent. Yesterday, max Hillary Clinton for President contributor Mark Zandi of Moody’s predicted on the ADP conference call that it will be more like 170,000 or so.

May 4, 2016

April 2016 ISM Non-Manufacturing: 55.7 Percent, Up From 54.5 Percent in March

Filed under: Economy — Tom @ 6:27 pm

From the Institute for Supply Management earlier today (bolds are mine; most paragraph breaks added by me):

Economic activity in the non-manufacturing sector grew in April for the 75th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

… The NMI® registered 55.7 percent in April, 1.2 percentage points higher than the March reading of 54.5 percent. This represents continued growth in the non-manufacturing sector at a slightly faster rate.

The Non-Manufacturing Business Activity Index decreased to 58.8 percent, 1 percentage point lower than the March reading of 59.8 percent, reflecting growth for the 81st consecutive month, at a slower rate in April. The New Orders Index registered 59.9 percent, 3.2 percentage points higher than the reading of 56.7 percent in March.

The Employment Index increased 2.7 percentage points to 53 percent from the March reading of 50.3 percent and indicates growth for the second consecutive month. The Prices Index increased 4.3 percentage points from the March reading of 49.1 percent to 53.4 percent, indicating prices increased in April for the first time in three months.

According to the NMI®, 13 non-manufacturing industries reported growth in April. The majority of the respondents’ comments reflect optimism about the business climate and the direction of the economy.


The 13 non-manufacturing industries reporting growth in April — listed in order — are: Information; Management of Companies & Support Services; Accommodation & Food Services; Wholesale Trade; Health Care & Social Assistance; Utilities; Finance & Insurance; Real Estate, Rental & Leasing; Construction; Agriculture, Forestry, Fishing & Hunting; Public Administration; Professional, Scientific & Technical Services; and Retail Trade. The four industries reporting contraction in April are: Other Services; Mining; Transportation & Warehousing; and Educational Services.

The obvious question is how ISM is so positive when non-manufacturing growth per the latest GDP report is probably about an annualized 1 percent (based on a MarkIt estimate that manufacturing has been contracting at 3 percent).


UPDATE, 7:30 p.m.: Zero Hedge refers to MarkIt’s report on services, which tells us that recent news is “consistent with economic growth picking up from the 0.5% seen in the first quarter to a mere 1.0% at the start of the second quarter, suggesting the bounce-back from the weak start to the year is far from impressive.”

March 2016 Factory Orders: Up 1.1 Pct., Beating +0.5 Pct. Expectations; Inventories Up, Unfilled Orders Down

Filed under: Economy,Taxes & Government — Tom @ 10:21 am

Predictions are for a 0.5 percent pickup following a 1.7 percent drop last month.

Since this is all orders, petroleum products will be in the mix, and instead of influencing declines, as was the case until early this year, they’ll be influencing increases.

HERE is the report: A better than expected March, following a downwardly revised February —


New orders for manufactured goods in March, up two of the last three months, increased $5.0 billion or 1.1 percent to $458.4 billion, the U.S. Census Bureau reported today. This followed a 1.9 percent February decrease.

Shipments, up following eight consecutive monthly decreases, increased $2.2 billion or 0.5 percent to $464.7 billion. This followed a 0.8 percent February decrease.

Unfilled orders, down three of the last four months, decreased $1.2 billion or 0.1 percent to $1,182.6 billion. This followed a 0.4 percent February decrease. The unfilled orders-to-shipments ratio was 7.01, down from 7.02 in February.

Inventories, up following eight consecutive monthly decreases, increased $1.1 billion or 0.2 percent to $635.1 billion. This followed a 0.5 percent February decrease. The inventories-to-shipments ratio was 1.37, unchanged from February.

Orders and shipments are still down year-over year, and are STILL below levels seen four years ago.

The combination of inventories going up and unfilled orders coming down is not a good sign of strong prospects ahead.


UPDATE: Zero Hedge — “Not only did Core Durable Goods Orders drop 1.4% YoY – the most since Dec 2015 – but the overall level fell to its lowest since Dec 2013.”

UPDATE 2, 5:45 p.m.: Zero Hedge, at a separate post

In 60 years, the US economy has never suffered a 17-month continuous YoY drop in Factory orders without being in recession. Which begs the question: are we in one now. Moments ago the Department of Commerce confirmed that in March, US factory orders – despite rising 1.1% sequentially and above the 0.6% expected – declined for 17th consecutive month on an annual basis, dropping 4.2% from a year ago.

ADP April 2016 Employment Report: 156,000 Private-Sector Jobs Added (See Conference Call Notes)

Filed under: Economy — Tom @ 8:32 am

Can’t get to the ADP site right now, but an email from ADP tells me that 156,000 seasonally adjusted private-sector jobs were added in April, a disappointing result.

More details later.

Update: HERE IT IS (direct link):

Private-sector employment increased by 156,000 from March to April, on a seasonally adjusted basis.

From the press release:

Payrolls for businesses with 49 or fewer employees increased by 93,000 jobs in April, about the same number as March. Employment at companies with 50-499 employees increased by 39,000 jobs, well off from last month’s 66,000. Employment at large companies – those with 500 or more employees – dropped off to 24,000 from March’s 35,000. Companies with 500-999 employees added 15,000 and companies with over 1,000 employees added just 9,000 this month.

… “Despite the softest overall monthly jobs added in three years, small businesses remained an engine for job growth in April,” said Ahu Yildirmaz, VP and head of the ADP Research Institute. “Smaller businesses are less susceptible to global conditions, such as low commodity prices and the strong dollar, that may have caused larger businesses to ease up on hiring.”
Mark Zandi, chief economist of Moody’s Analytics, said, “The job market appears to have stumbled in April. Job growth noticeably slowed, with some weakness across most sectors. One month does not make a trend, but this bears close watching as the financial market turmoil earlier in the year may have done some damage to business hiring.”

Revisions to prior months:
- March — from 200K to 194K
- February — from 205K to 207K (originally 214K)

Expectations were for a gain of 196K-205K.


UPDATE: Wish I would have seen the report online earlier, because the report shows 13K jobs lost in manufacturing. Combined with the government’s reported -47K in combined February and March losses, that totals 60K in seasonally adjusted losses in three months. If we see that in the government’s report on Friday, I believe that’s going to that would represent by far the worst three-month streak since the jobs recession ended in February 2010.

UPDATE 2: Zero Hedge notes that today’s topline number is the worst in three years.



Mark Zandi, Moody’s —

Topline number was soft. Taken at face value, that would suggest some weakening in job growth after 5 years of 200K/mo.

Doesn’t think anything fundamental has changed, though, because other data doesn’t indicate trouble (e.g., initial unemployment claims). Also, this month the company-company correlation wasn’t as strong (?), matching wasn’t normal.

It does bear watching. GDP growth has slowed, and historically it has led employment a bit.

Turmoil in financial markets may be a factor. Down 15% earlier this year but came back.

I don’t think anything fundamental is happening here, but bears close watching. We’ll have to see. Yellow flare, not red flare.

Even at face value +170K for BLS on Friday would still be a very strong number. Econ only needs to create 80-90K/mo. to absorb people looking for wark and keep unemployment rate down. Still closing in on full employment, April didn’t stop progress in getting there. Slowed down, but not stopped. Full employment will be genuinely achieved by late summer.

ADP-based wage-growth numbers are pretty strong, indicating wage pressures. Year-over-year individual wage growth for those who are staying in their jobs has been pretty strong and is accelerating (+4.8 percent), and the pace of that wage growth has accelerated (it was 3.8 percent a year ago). Pickup in wage growth (ADP-based) broad-based across every demographic (region, industry except energy, millennials are doing well, big cos are paying better). Improvement in wage growth is evident across the board. This is independent of mix, though. BLS influenced by mix of workers (well, yeah).

What you see “under the hood” is quite positive/encouraging. Labor market is still very strong. Labor market will continue to tighten. 1-2 years from now, biggest problem will be a lack of labor and finding workers, augurs well for continued wage growth.


Chris Rugaber of Associated Press — Productivity numbers are out and apparently negative. Lower productivity means hiring numbers. Is this sustainable? Will it affect hiring?

Answer: Low productivity growth hasn’t been a big problem up to this point because of labor market slack. Job growth will slow if it doesn’t pick up, so productivity growth needs to improve. Enormous implications if it doesn’t improve. Needs to come back to life or there will be problems a year from now.

But why is it so depressed? One theory is that GDP really is higher and so is productivity. Another theory is that secular stagnation has set in (Robert Gordon). Another is that temporary forces will let up.

Me: Average Weekly Hours and GDP 1Q revisions.

Answer: Hours not a material change.

GDP is tracking higher (0.7% now). Construction better. Retailing stronger than thought. Vehicles strong.

May 2, 2016

April 2016 ISM Manufacturing: 50.8 Percent, Down from 51.8 Percent in March

Filed under: Economy — Tom @ 10:40 pm

Conveniently just dodging contraction, I see — from the Institute for Supply Management (most paragraph breaks added by me; bolds are mine):

Economic activity in the manufacturing sector expanded in April for the second consecutive month, while the overall economy grew for the 83rd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “The April PMI® registered 50.8 percent, a decrease of 1 percentage point from the March reading of 51.8 percent.

The New Orders Index registered 55.8 percent, a decrease of 2.5 percentage points from the March reading of 58.3 percent. The Production Index registered 54.2 percent, 1.1 percentage points lower than the March reading of 55.3 percent.

The Employment Index registered 49.2 percent, 1.1 percentage points above the March reading of 48.1 percent. Inventories of raw materials registered 45.5 percent, a decrease of 1.5 percentage points from the March reading of 47 percent.

The Prices Index registered 59 percent, an increase of 7.5 percentage points from the March reading of 51.5 percent, indicating higher raw materials prices for the second consecutive month. Manufacturing registered growth in April for the second consecutive month, as 15 of our 18 industries reported an increase in new orders in April (up from 13 in March), and 15 of our 18 industries reported an increase in production in April (up from 12 in March).”

Of the 18 manufacturing industries, 11 are reporting growth in April in the following order: Wood Products; Printing & Related Support Activities; Paper Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Chemical Products; Machinery; Computer & Electronic Products; Nonmetallic Mineral Products; and Food, Beverage & Tobacco Products. The four industries reporting contraction in April are: Petroleum & Coal Products; Transportation Equipment; Miscellaneous Manufacturing; and Furniture & Related Products.

Related, especially in that it indicates that ISM is overly optimistic in characterizing the current situation as expansion: “Markit’s final manufacturing PMI dipped to 50.8 during the fourth month of the year, compared to the 51.5 seen in March. That’s the weakest performance since September 2009.”

Here’s a quote from the report cited at the link:

“The April PMI data suggest there’s no end in sight to the current downturn in manufacturing activity. The survey indicates that factory output is dropping at an annualized rate of approximately 3%, and factory headcounts are being culled at a rate of around 10,000 per month,” Chris Williamson, chief economist at Markit, commented in a release.

If the GDP of mananufacturing, about one-eighth of the economy, is contracting at a 3 percent rate, the rest of the economy has to be growing at a 1 percent annual rate. Who believes that it really is, especially given that the separate mining and utilities sectors included in industrial production are also declining?

April 30, 2016

Media Fail: Bloomberg News Goes After Contrarian Blog, Beclowns Itself

Filed under: Economy,Taxes & Government — Tom @ 10:52 pm

That the establishment press despises New Media isn’t exactly breaking news, but a lesser-known subset of that tension has just become more visible. As usual, an Old Media outlet is the smear merchant, and the New Media site has the upper hand on the truth.

Mainstream business journalists really despise the financial and economics blogs which puncture the insufferable “the economy is just fine” meme the financial wires have relentlessly foisted on us during the past seven years. When leading contrarian blog Zero Hedge had a recent fallout among its top authors, Bloomberg News sensed a chance to vilify a site it has had to grudgingly recognize as a genuine competitor. Instead, the wire service committed the types of journalistic errors which explain why only six percent of Americans “say they have a lot of confidence in the media.”


April 29, 2016

Now He Tells Us: MarketWatch Writer Discovers That Presidential Candidates’ Political Posturing Affects the Economy

On Thursday, shortly after the government estimated that the economy only grew at an annual rate of 0.5 percent in this year’s first quarter, Jeffry Bartash at commented on the especially weak performance in nonresidential business investment.

That category subtracted 0.76 points from GDP, the worst result since the second quarter of 2009, during the recession. Bartash, presumably based on real discussions he’s had with real economists wrote: “Many economists doubt business investment will show much strength in 2016. A tepid global economic scene and a tumultuous U.S. presidential election marked by heavy anti-corporate rhetoric appears to have made business executives more cautious.” What? “Anti-corporate rhetoric” affects the decisions of entrepreneurs, investors and businesspeople? Who knew? I don’t recall anyone in the press blaming “anti-corporate rhetoric” for the economy’s struggles in 2008, when the criticism and actual threats to the corporate sector were going full-tilt.


Broke Socialist Paradise Venezuela Can’t Pay to Have Its Money Printed

Venezuela’s hyperinflationary economic crisis has gotten worse in one very important and apparently unprecedented sense than even the one seen in Weimar Germany in the 1920s. Yet the Associated Press and the New York Times apparently have no interest in telling their readers, listeners or viewers about it.

In the post-World War I German Weimar Republic, the situation became so out of control that people needed wheelbarrows to carry around the money they needed to pay for basic everyday purchases. A Bloomberg News story published early Wednesday morning, i.e., in plenty of time for the rest of the world’s press to notice the story by now, has a similar “wheelbarrows” reference to Venezuela’s crisis. But there’s more. Venezuela doesn’t even the money to pay to keep those wheelbarrows stocked with ever more worthless cash.


April 28, 2016

Not News: Study Shows $4 Trillion in Annual GDP Growth Lost to Post-1980 Regs

The editorialists at Investor’s Business Daily have reported on the results of an important study by several George Mason University Mercatus Center economists showing what regulations have cost the economy in economic growth since 1980. The establishment press, which has been singularly uninterested in reporting anything that has to potential to slow the regulatory leviathan down — y’know, because its causes are so noble and righteous — is virtually ignoring the Mercatus study.

IBD tied the study’s findings into the “new normal” nonsense the “mainstream” economics community and most of the business press has been foisting on us since it became obvious about 6-1/2 years ago that the U.S. economy’s post-recession performance would likely be singularly underwhelming. What we’ve seen is the worst growth post-downturn economy by far since World War II.


1Q16 Gross Domestic Product, Advance Estimate (042816): Annual Rate of +0.5 Percent

Filed under: Economy,Taxes & Government — Tom @ 8:34 am


  • Yahoo’s Economic Calendar has +0.6 percent for and +0.9 percent for “Markets.”
  • The Atlanta Fed moved up to +0.6 percent at the last minute yesterday, supposedly justified on the flash international trade report.
  • Moody’s high frequency model moved up to +0.5 percent at the last minute yesterday, with the same argument. (Moody’s spent 11 days at -0.1 without narrative explanation from April 15 to April 25.

I could not find a prediction at the Associated Press.

The release is here (full text report):

Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 0.5 percent in the first quarter of 2016, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 1.4 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and “Comparisons of Revisions to GDP” on page 4). The “second” estimate for the first quarter, based on more complete data, will be released on May 27, 2016.

The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, exports, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the first quarter reflected a larger decrease in nonresidential fixed investment, a deceleration in PCE, a downturn in federal government spending, an upturn in imports, and larger decreases in private inventory investment and in exports that were partly offset by an upturn in state and local government spending and an acceleration in residential fixed investment.

I’ll have components posted shortly.

UPDATE: Here’s the components breakdown —



  • Consumer spending on goods hit a wall.
  • The contribution to GDP of “Housing and Utilities” services (+0.26 points, part of “other” above) is hard to square with the mild winter and the Fed’s reported 1.5 percent combined first quarter decline in utilities production. The offset would be that rents went up substantially, which wouldn’t point to increasing living standards.
  • The fixed nonresidential investment decrement of -0.76 points is awful, and is likely about the worst we’ve seen since the recession officially ended in mid-2009. Update: Yep, it IS the worst figure since 2Q09, i.e., during the recession. Also, the positive 0.05-point contribution in computers and peripheral equipment is hard to square with the steep first-quarter PC sales declines reported elsehwhere.
  • The residential fixed investment contribution of +0.49 is hard to take, given the mediocre first-quarter results in starts, new-home sales and existing-home sales.
  • The net exports/imports decrement of -0.33 points is less negative than the -0.45 points the Atlanta Fed predicted it would be.
  • The inventory change decrement of -0.33 points is less negative than the 0.5 points Moody’s had been touting in previous narratives, though the actual annualized increase the government reported of $60.9 billion is very close to the $57 billion Moody’s predicted yesterday. But there have been plenty of reports telling us that inventories have been declining, so it’s hard to make sense of the inventory decrement being so low.

Overall, the points above argue for a gradual takedown on GDP in subsequent revisions to near zero. But we had similar situations in last quarter’s advance releases, and subsequent revisions went up, so who know any more?

April 27, 2016

Bloomberg Editor, As ‘Microscopic’ GDP Growth Looms: Lower Your Expectations

Just in time for tomorrow’s first-quarter economic growth announcement from the government, Bloomberg Businessweek’s Economics Editor is telling readers: “Don’t Sweat America’s Upcoming Microscopic GDP Growth.”

Besides, Peter Coy writes, people need to get used to the supposedly inescapable fact that “Normal growth for the U.S. economy is just a lot lower than it used to be.” Americans shouldn’t worry, even if tomorrow’s GDP figure shows a small contraction (perhaps indicating that Mr. Coy has been tipped to the fact that it will be). The key, the glib Mr. Coy contends, is to understand that “Happiness is all a matter of lowering expectations.”


April 26, 2016

AP Treats Awful Durable Goods News As a ‘Rebound’

Today’s stories at the business wires covering this morning’s disastrous durable goods report from the Census Bureau ranged from good to absolutely horrid. March orders only increased by a seasonally adjusted 0.8 percent, less than half of the 1.7 percent to 2.0 percent increase that was expected. Additionally, February’s originally reported decline of 2.8 percent was revised down to -3.1 percent.

Victoria Stilwell’s dispatch at Bloomberg News earned a B-minus. Lucia Mutikani’s writeup at Reuters rated a C-minus. As usual, the coverage at the Associated Press, aka the Administration’s Press, delivered by Martin Crutsinger, the nation’s unofficial “Worst Economics Writer,” brought up the rear and earned an “F.”


March 2016 Durable Goods: Up 0.8 Pct. vs. Expectations of More Than Double; Feb. Goes from -2.8 Pct. to -3.1 Pct.

Filed under: Economy,Taxes & Government — Tom @ 8:29 am

If there’s a reason why the 1Q16 might stay out of the red, it would be better then expected news in this report.

Predictions are for a 1.7 percent – 2.0 percent rise after a 2.8 decline in February, which of course may itself get revised.

The report will be accessible here at 8:30.

HERE IT IS (link) — this is going to hurt the first quarter, and not save it:

New Orders

New orders for manufactured durable goods in March increased $1.8 billion or 0.8 percent to $230.7 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.1 percent February decrease. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders decreased 1.0 percent.

Transportation equipment, also up two of the last three months, drove the increase, $2.2 billion or 2.9 percent to $76.0 billion.


Shipments of manufactured durable goods in March, down three of the last four months, decreased $1.1 billion or 0.5 percent to $237.0 billion. This followed a 1.0 percent February decrease.

Transportation equipment, also down three of the last four months, drove the decrease, $1.4 billion or 1.8 percent to $77.5 billion.


Inventories of manufactured durable goods in March, up following two consecutive monthly decreases, increased less than $0.1 billion or virtually unchanged to $394.1 billion. This followed a 0.3 percent February decrease.

Ex-transportation orders, expected to come in at between +0.5 percent and 0.7 percent, instead fell by 0.2 percent.

There’s virtually nothing to like here. Orders are down; sales are down. Inventories aren’t falling to match the declines. These are durable goods, so gas prices don’t come into play when excusing the declines.


UPDATE: Zero Hedge

Core Durables Goods Orders fell YoY for the 14th consecutive month – a streak never seen in 60 years outside of a broad US recession.

… Most notably, New Orders for defense aircraft and parts surged 65.7% to $6.1 billion – So not even war can keep the US economy afloat any more!!

… nondefense capital goods ex aircraft was unchanged for the month, and printed a 2.4% decline from a year ago. This too represents 14 consecutive months of (year over year) core capex declines, something else that has never happened outside of a recession.

Perhaps these streaks mean that we’re already in a “broad US recession” — whether or not the government statisticians admit it on Thursday.