Consumers Better but Durable Goods not So Good

Durable goods orders finally bounced back in October and rose 0.4% from September after two months of declines. Moreover, September losses are now smaller than initially reported. Gains were concentrated in defense aircraft and parts, reflecting the need to ramp up to deal with escalating tensions in the Middle East including the bombing of ISIS. We also saw gains in the motor vehicle industry Read More »


Pleasant Upside Surprise for Third Quarter GDP

Real GDP in the third quarter was revised up to 3.9% from an initial estimate of 3.5%, a welcome upward surprise in growth. Moreover, most of the rise was due to positive factors, such as stronger-than-initially-estimated consumer spending and business investment. Exports were revised down, reflecting weakness abroad Read More »


Existing Home Sales Highest Since September 2013

Existing home sales handily beat expectations in October, coming in at a 5.26 million-unit annualized rate. September data were also revised to the upside. Regionally, strength was broad-based as three of the four regions showed month-to-month increases mostly concentrated in the Midwest and the South. In the Midwest, investors continue to scoop up properties to take advantage of rising rental rates and a low median home price of $164,100 while in the South, the increase in sales continues to reflect the shift in population. Buyers in the South can take advantage of the second-lowest median existing home price at $178,000 and, in most cases, stronger job markets and more favorable tax environments. Read More »


There Is More to a Flat CPI than Flat Prices

The index for consumer prices (CPI) was flat in October but 1.7% higher compared to one year ago. On the surface, today’s data suggest that inflationary pressures remain contained. Prices seem to have found a bottom, which may ease some of the worries about deflationary trends that have circulated in recent months; at the very same time, the current level of inflation still falls short of the Federal Reserve’s preferred target rate of 2%; this suggests that central bankers will feel inclined to take their time along the path toward a normalization in interest rates.

Looking at the composition of the index and the different categories that compose it, we notice a more nuanced picture of price trends. Read More »


Single-family Starts Move Higher

Single-family housing starts accounted for 696,000 starts, up 28,000 from September. That, coupled with the fact that the revision brought September’s total into the black by 27,000 bodes well for the economy; single-family homes stimulate much more economic activity than multifamily rental units. On the flipside, multifamily starts came in at 313,000 for October, 57,000 below September. The losses in multifamily starts were concentrated in the Northeast and the West, while the South was the only region to move higher. The South continues to outperform across the board; that region has been the outright leader in housing starts, both single- & multifamily, since the trough, which occurred during the second half of 2009. This is due to builders taking advantage of relatively cheaper land as well as building for the shifting population trends towards the South.

Total housing starts, including single-family and multifamily units, backtracked in October, coming in at 1.009 million units; this figure is 29,000 less than the upwardly revised number for September. The drop is in line with the weakness seen in the National Association of Home Builders (NAHB) housing market index, which showed weakness across the board for October.

Housing permits remain a positive sign for housing starts, along with the builders’ index. Permits for October came in 49,000 higher than September’s level. Granted, all permits do not necessarily translate into completed homes; still, this back-to-back increase shows that expectations remain positive.

Bottom Line: There were several positives to draw from this release. Single-family starts were revised up for September and then increased an additional 28,000 in October. Also, permits rose 49,000 in October, which leaves many projects still in the pipeline in the coming months. The NAHB index also showed a rebound in both September & November figures. But in the face of these positive signs, the recent cold snap could dampen November’s starts data because this bitter cold has hit many parts of the nation quite early; that could negatively impact the seasonal adjustments.


Small Decline in Industrial Production Does not Derail Recovery

Industrial production slipped by 0.1% in October, mostly because of declines in mining and utilities output. After the strong gains in September, today’s decline does not come as a complete surprise because many expected a temporary payback; it is a partial disappointment. Compared to one year ago, manufacturing output grew by a solid 3.7%, a sign that the industrial sector is still contributing to the slow, but steady, improvement of the U.S. economy. Read More »


Consumers Deliver for Halloween

Retail sales rose 0.3% in October, slightly more than expected. U.S. consumers are spending some of the increased income that they are gaining from recent job growth, increased working hours and lower prices at the pump. Indeed, core retail sales, which exclude vehicle and gasoline sales, jumped 0.6% during the month with broad-based gains in discretionary spending Read More »


Falling Oil Pushes Down Import Prices

Imports fell 1.3%, due mostly due to a sharp downdraft in energy prices. Energy prices alone fell 6.9% during the month. More worrisome is that import prices excluding oil were also down slightly and have been falling for several months. That reflects the disinflationary effect that a strong dollar is beginning to have on import prices and will raise the ante on price competition during the holiday season. Read More »


Jobs Data Better than Headline Suggests

Payroll employment increased 214,000 in October with upward revisions for the previous months of 31,000. Moreover, we have seen upward revisions consistently, which means momentum is moving to the upside.

Some of the largest gains occurred in low-wage food services and drinking establishments. Some of that increase in employment reflects a move by employers to keep low-wage employees below the 30 hours per week threshold for providing health care insurance; Read More »


Trade Deficit Widens

The trade deficit widened from $40 billion in August to $43 billion in September. Imports were essentially unchanged while exports declined slightly. Exports of industrial materials and supplies, which include telecommunications equipment and capital goods, were particularly weak. Read More »