Employment Report: August is a Quirky Month


Payroll employment is expected to rise a slightly tepid 175,000 in August after averaging more than 240,000 for the previous twelve months. Private employment is expected to increase by 170,000. We expect the unemployment rate to hold at 5.3%. The slowdown in employment growth is mostly cosmetic and reflective of the statistical agencies’ inability to seasonally adjust the data. August is among the most difficult months for the Bureau of Labor Statistics (BLS)to estimate; since the onset of the recovery in 2010 BLS has consistently undershot the final estimate for the month by a substantial margin. Read More »

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Construction Spending Higher In June and July


Construction spending surged 0.7% in July and was revised up for the month of June; it is now at the highest level since mid-2008, which is good but still suppressed relative to the bubble. Gains in the private sector offset a drop in the public sector. The rise in single-family home construction outpaced gains Read More »

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Consumers Go Car Shopping


Personal disposable incomes rose 0.4% after adjusting for inflation in the month of July, faster than consumer spending, which edged up 0.3% during the month. The bulk of the rebound in consumer spending, which came on the heels of a slight upward revision to June, occurred in vehicle purchases. Consumers have been reluctant to spread the saving that they have seen at the pump on much else other than new vehicle purchases. Read More »

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Growth in 2Q Revised Much Higher


The economy expanded at a revised 3.7% pace in the second quarter, almost 1.5% stronger than initial estimates for the period. The changes were driven by a strong upward revision to business investment. Commercial construction activity was particularly strong, while the contraction in equipment spending is now significantly less than initially reported. Read More »

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Durable Goods Surprise to the Upside


Durable goods orders surged a more-than-expected 2% in July and were revised up to show a whopping 4.1% gain in June. More importantly, July’s gains occurred outside of the highly volatile aircraft sector; we saw increases in everything from machinery to vehicles and communications equipment. The increase in machinery is encouraging as it appears to be occurring outside of the oil sector, which is still being battered by falling oil prices. Read More »

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Solid New Home Sales in July


New home sales increased in July to an annualized level of 507,000; that is up a solid 26,000 from the previous month. The revision to June was essentially flat. Three of the four regions posted increases with the South leading the way, followed by the West and Northeast. The Midwest was the only region to show a decline. Even though the Northeast posted the smallest monthly increase, it performed the best on a percentage basis, up almost 40% from last year.

The median sales price rose 2% from last year, reversing the downward trend Read More »

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Market Gremlins Disrupt Liftoff


Rapid declines in global equity prices, risks that the downdraft in China will take the U.S. market down again tomorrow and a legitimate concern that inflation will further decelerate are now expected to keep the Federal Reserve on the sidelines in September. A move in December is still possible, but a close call. Uber dove Charlie Evans, President of the Chicago Federal Reserve Bank looks now prescient among his peers. He argued that inflation would be lower for longer than his colleagues believed and that a move too soon could undermine the Fed’s ability to contain an external shock. Indeed, one could argue that indecision by the Fed compounded the uncertainty surrounding the fallout associated with China. Read More »

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Existing Home Sales Beat Expectations


In July, existing home sales topped expectations by coming in at 5.59 million homes (annualized) sold. Revisions to the previous month were essentially flat. The July increase was driven by gains in the South Read More »

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Yuan Devaluation: Nod to Markets or Currency Manipulation?


Last week the Chinese central bank, the People’s Bank of China (PBOC), announced a change in its exchange rate-setting mechanism that resulted in a de facto devaluation of the yuan, which dropped by more than 4% by the end of the week. The decision was widely interpreted as a deliberate attempt to weaken the currency, thus creating uncertainty and disruption in financial markets. Read More »

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Fed Holds Cards Close to Vest


The Federal Open Market Committee (FOMC) minutes show that the Federal Reserve continued to edge toward liftoff, but members were not there yet last month. The divide between those on the FOMC who would like to raise rates in September and those who would prefer to wait is widening. Read More »

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