- by New Deal democrat Industrial production, one of the premier series the NBER has historically used to declare recessions vs. expansions, has faded in importance since China was admitted to regular trading status in 1999. As you can see in the first graph below, both total and manufacturing production peaked in 2007. Further, manufacturing has continued to fade, as its post-pandemic peak has not equaled its 2010’s peak either: In March, total production increased 0.4% from an upwardly revised, by 0.2%, February; but it is still down -0.6% from its September 2022 post-pande ..read more

   - by New Deal democrat There was a big decline in housing starts last month, and a smaller but significant decline in permits. Whether that signifies a change in trend or just noise is the issue. I lean towards the latter. To wit, in reaction to both January and Feburary’s housing construction report I wrote, “To signify a likely recession, units under construction would have to decline at least -10%, and needless to say, we’re not there. With permits having increased off their bottom, I am not expecting such a 10% decline in construction to materialize.” I also indicated that I ..read more

   - by New Deal democrat As per usual, real retail sales is one of my favorite indicators, because it gives so much information about the consumer, and since consumption leads employment, it helps forecast the trend in the latter as well. And the news this morning was good, as nominally retail sales increased 0.7% in March, while February’s number was revised higher by 0.3% to 0.9%. After accounting for 0.4% inflation in March, real retail sales increased 0.3%, and February was revised up to 0.5%. To the extent there was bad news, it was that January’s -1.2% decline has still not ..read more

   - by New Deal democrat My “Weekly Indicators” post is up at Seeking Alpha. There has been a lot o churn in both the short leading and coincident indicators in the past few weeks, but the overall tone is towards a more positive economic environment. As usual, clicking over and reading will bring you up to the virtual moment on the data, and reward me just a little bit for my efforts ..read more

   - by New Deal democrat The one advantage of not reporting on the March CPI results for two days is I’ve had the opportunity to look at more data in depth and mull things over. And I’ve decided that there really wasn’t much change from the pattern we’ve seen for about the past 9 months. Basically the month to month variation in inflation is a function of the interplay between shelter and gas prices. During late 2022 and early 2023, the latter were still accelerating or steady at a high rate of inflation, while the latter were falling. Beginning in late 2023, the dynamic reversed ..read more

   - by New Deal democrat On Wednesday I was traveling so I didn’t get around to writing about the important CPI release. Let me start my delayed response by updating real wages and payrolls for non-supervisory employees. Historically, as I have pointed out a number of times, real aggregate payrolls (red in the graph below) have a flawless record over the past 50+ years of peaking in the months ahead of a recession (Note: I show the last 30 years below. From the late 1960s through early 1990s, real wages declined almost relentlessly as the combination of the huge Baby Boom generati ..read more

   - by New Deal democrat [NOTE: After traveling all day yesterday, I decided to put off any comments on the CPI upside surprise until later today. Short version is that shelter continues its slow decent, gasoline picked up, and services are accelerating as one might expect in a strong economy with the supply chain tailwind having dissipated.] Initial claims continued to be rangebound this week, declining -11,000 to 211,000. The four week moving average declined -250 to 214,250. With the usual one week delay, continuing claims increased 28,000 to 1.817 million: On the YoY% basi ..read more

   - by New Deal democrat I neglected to post this over the weekend, so I will post it now…. My “Weekly Indicators” update is over at Seeking Alpha. There was lots of churn under the surface last week, but it continues to point towards general improvement. As usual, clicking over and reading will bring you up to date through last Friday, and reward me with a little lunch money as well. Also, tomorrow morning the CPI for March will be reported. I’ll be on the road, so I won’t be able to do any in dept post, but I’ll try to give you a quick paragraph or two covering the high (or low ..read more

   - by New Deal democrat In the past few months, my focus has been on whether jobs gains are most consistent with a “soft landing,” i.e., no further deterioration, or whether deceleration is ongoing; and more specifically:  Whether there is further deceleration in jobs gains compared with the last 6 month average, vs. a “soft landing” stabilization. Whether the unemployment rate is neutral or decreasing; or whether there is further weakness. The recent excellent reports in initial claims suggested this rate would decline. After a contra-trend jump last month, this mon ..read more

   - by New Deal democrat Initial claims in the last week rose 9,000 to 221,000, while the four week moving average increased 2,750 to 214,250. With the usual one week lag, continuing claims declined 19,000 to 1.791 million: On the more important YoY% basis for forecasting purposes, initial claims are up 2.3%, while the four week average is down -4.5%. Continuing claims are still up, by 5.1%: The important takeaways are that the four week average is still giving a positive signal, while the YoY% change in continuing claims is the lowest increase since the beginning of March ..read more