GDP vs. Final Sales


 

With this week’s release of the second pass on Q2 GDP, it appears as though the U.S. economy has successfully bounced back from a dismal first quarter.  The second quarter of GDP was revised up 0.2% to 4.2%.  Digging deeper into the release, you can uncover a much better metric for the underlying health of the U.S. economy.  If you look at “Final Sales of Domestic Product,” which strips out changes in private inventory, you have a much better proxy Read More »

FacebookTwitterLinkedInShare

Spending and Incomes Flatline in July


Real disposable incomes increased by 0.1% in July after being revised up for the month of June.  The most weakness occurred in wages and salaries. Rental incomes increased, which is keeping investors in the housing market, particularly in the Midwest where foreclosures are still around for investors to flip to rent. Real expenditures were slightly weaker, falling 0.2% in July with a loss in motor vehicle sales accounting for the bulk of the weakness. Services were also off slightly. Nondurable goods, which include clothing and food, declined Read More »

FacebookTwitterLinkedInShare

GDP Q2 Revised to Upside


Real GDP was revised up 0.2% to 4.2% in the second quarter, a pleasant surprise as many had expected a downward revision. Increases were across the board but overall gains were still heavily dependent on a rise in inventories following a sharp drain Read More »

FacebookTwitterLinkedInShare

Surge in Aircraft Mask Underlying Weakness in Orders


Durable goods orders surged more than 20% in July to the highest level since 1992. Much of that rise, however, was due to a surge in new aircraft orders for Boeing; those have long lag times (up to five years to completion) and can be cancelled if economic conditions change. The remainder of the increases could be attributed to a surge in vehicle orders, which have been trending up with sales this year. Orders excluding the volatile transportation component actually dropped by nearly 1% Read More »

FacebookTwitterLinkedInShare

Broad-Based Losses in New Home Sales


New home sales fell from a 422,000 unit pace in June to a 412,000 unit pace in July; the data for June was revised up slightly, but the sales remain above levels hit a year ago. Losses in the month of July were broad-based with the exception of the South; the South is by far the largest mover in the housing market, as it has more inexpensive, undeveloped land than other regions of the country. Read More »

FacebookTwitterLinkedInShare

Global Economy: Five Themes of the Week


Europeans like myself traditionally spend the third week of August vacationing at the beach. Even here in Chicago, one week ahead of the reopening of schools, the atmosphere has been decidedly relaxed. For those of us on the economic desk, though, the past few days were not without interesting developments:

•    Monetary policy became much more interesting in the United Kingdom, Read More »

FacebookTwitterLinkedInShare

Existing Home Sales Rose Last Month


I am traveling but did a quick read on existing home sales  figures released this morning by the National Association of Realtors.

  • The increase in existing sales in July is welcome but also suspect, given the downward revision to June.
  • We are still playing catch-up Read More »
FacebookTwitterLinkedInShare

Housing Starts Increase


Housing starts moved back above the one-million-unit mark again in July, and were revised up for the month of June. This is a highly volatile and unreliable series, but we will take what we can get when it comes to housing; the gains are also corroborated by the survey of home builder confidence, Read More »

FacebookTwitterLinkedInShare

CPI Treads Water in July


The Consumer Price Index (CPI) edged up 0.1% in July from June, with widespread declines in energy prices offsetting a larger-than-expected uptick in food prices. Grocers and restaurants raised prices, attempting to tap into the discretionary spending that lower prices at the pump will hopefully bring. So far, however, increases in food prices have proven short-lived, Read More »

FacebookTwitterLinkedInShare

Autos Drive Gains in IP


Industrial production rose 0.4% in July, supported by outsize gains in vehicle production.  Many plants were running in July when retooling typically occurs to either catch up on losses from interruptions during the winter months or ramp up for an expanded number of new model introductions. Unusually harsh winter weather also accelerated the pace at which cars were scrapped Read More »

FacebookTwitterLinkedInShare