Housing Starts Dip


Housing starts fell below the one million unit threshold again in August, but were revised up slightly for the month of July. Losses were heavily concentrated in the multifamily market, which has been on a tear. The largest losses in multifamily home construction were experienced in the West, where housing shortages are the most acute. The drop in single-family home construction, which triggers more employment and spending increases, was much less pronounced Read More »

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Fed on Path to Slow Exit from QE


The Federal Open Market Committee (FOMC) voted to further reduce its asset purchases by $5 billion each, which brings its current purchases of mortgage-backed securities down to $5 billion per month and its purchases of Treasury bonds down to $10 billion per month. Chair Yellen also went out of her way to reemphasize that the FOMC plans to end its current round of asset purchases at its next meeting on October 29. (That date also happens to be the 85th anniversary of the 1929 stock market crash, but I am not superstitious.) Read More »

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Inflation Dips on Lower Gas Prices


The Consumer Price Index (CPI) edged 0.2% lower in August, largely on a drop in energy prices. Prices at the pump fell more than 4% alone. All of the savings at the pump is likely to be spent on food, where prices continued to rise during the month. Read More »

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Industrial Production Slips in August


Industrial production fell 0.1% in the month of August, as vehicle production plummeted after an unseasonably strong July. Production figures for July were also revised down, which underscores how uneven gains remain in the manufacturing sector. Production for housing-related durables such as furniture, appliances and carpeting also fell after slightly, Read More »

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Strong Retail Sales Help Dispel Employment Worries


Retail sales jumped 0.6% in August, with strong gains in vehicles, housing-related furniture, appliances and electronics. More importantly, those gains were on top of upward revisions to the month of July which, when combined with improving consumer attitudes about prospects for employment, affirm our view that the initial disappointing employment report for the month of August was more of a fluke than an emerging trend. Read More »

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Five Themes of the Week


The disappointing employment report in the U.S. came at the end of an eventful week in the global economy. Central bankers met and took action in Europe, but held their ground in Japan. Political risks heightened in the United Kingdom, while they appeared to abate in Ukraine Read More »

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Employment Shortfall is a Fluke


Payroll employment rose a marginal 142,000, well below the consensus for the month of August, with downward revisions on net to the two previous months. The weakest part of the data was a shortfall in retail employment, partly due to a strike on the East Coast. Manufacturing flatlined Read More »

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Construction and Manufacturing Surprise to Upside


Construction spending jumped 1.8% in July from June, much more than most expected. Gains were greater in the public sector than in the private sector, as highway and street construction picked up to some extent in response to an unusual volume of repairs that needed to be completed in response to last year’s harsh winter. Highway funding is one of the few things that members of Congress agreed to fund Read More »

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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 »

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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 »

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