Monthly Archives: October 2012

Hurricane Repairs

I received the following question from an international journalist this morning: Is the reconstruction effort being discussed now simply ‘robbing Peter to pay Paul’ by taking money that would otherwise be spent in other areas of the economy? I do believe that our (economists’) understanding is often clouded by the numbers we collect. We look [...]

Employment Costs Edge Lower

The employment cost index edged slightly lower to 0.4% in the third quarter. All of the downward movement occurred in wages and salaries, which slowed to a 0.3% pace in the third quarter. Benefit costs, however, picked up at a 0.8% pace. This is still substantially lower compared to the pre-recession period in 2007 and [...]

Home Prices Increase

The S&P/Case-Shiller home price index of 20 metropolitan areas increased 0.9% in August from July, marking the seventh monthly gain and confirming the trend in other home price measures. Gains in some of the worst-hit markets such as Phoenix were particularly strong, reflecting a low level of inventories and overshooting now on the downside. Chicago, [...]

Spending Outpaces Incomes

Personal spending rose a surprisingly strong 0.8%, double the rise in income growth in September. Adjusting for inflation, incomes actually declined; consumers used cash from refinancing their homes to spur back-to-school spending. The willingness to reduce the saving rate has also picked up as housing prices appear to be coming back and fuel consumer confidence. [...]

Consumer Sentiment Up to 2007 Levels

Consumer Sentiment jumped to 82.6 in October, the highest mark since the fall of 2007 and prior to the start of the recession. People surveyed felt considerably better about their own personal financial positions; this sentiment is being supported by reports that home prices are rising rather than falling. Home equity is the single, largest [...]

Q3 GDP Boosted by Sharp Increase in Defense Outlays

Real GDP increased at a 2% annual rate in the third quarter, buoyed by an unexpected and unsustainable rebound in federal government spending. Defense outlays increased at a double-digit rate, indicating a surge in operations and maintenance:  largely installations support, weapons and service support. This coincides with a transfer payment to Afghanistan, which is not [...]

Weekly Jobless Claims Turn Lower

Business Investment Flat, though Aircraft Boost Durable Goods Orders

Orders for durable goods rose 9.9% in September after tumbling 13.1% in August. The reason behind this large swing was aircraft orders; big-ticket items add a lot of volatility to monthly readings. Despite the headline number, which was better than expected, there is some reason for disappointment in the report. Orders for non-defense capital goods [...]

Fed on Hold

The Federal Open Market Committee (FOMC) offered little today that is new.  Additional mortgage-backed security (MBS) purchases will continue until unemployment falls “substantially” which, given Chicago Federal Reserve Bank President Charles Evans’s influence on the committee, suggests that will be the case until we see the unemployment rate dip below 7% for a period of [...]

New Home Sales Coming Back

New home sales rose 5.7% to a 389,000 unit annualized rate in September; that’s up almost 30% from a year ago. This is a small fraction of improvement compared to the peak, but it is enough to tip the scales for those builders who are still left to get off the sidelines and build again. [...]