Monthly Archives: January 2013

Hedging Tax Hikes Distorts Income, but Suppresses Spending

Personal disposable income growth jumped 2.8% in December, more than twice the increase in November. All of that acceleration may be attributed to special dividends and early bonuses that were released to top income earners by their employers as a way to avoid higher income taxes associated with the fiscal cliff negotiations. Indeed, personal disposable [...]

Fed Flies under the Radar

The Federal Open Market Committee (FOMC) voted to maintain all policies put in place in December with increased asset purchases and economic targets for shifts in interest rates. Voting members of the FOMC were particularly cautious to remain somewhat upbeat in their assessment of the economy, referring to the fourth quarter’s 0.1% drop in real [...]

GDP Contracts in Q4 2012

Real GDP fell 0.1%, much weaker than the already weak estimates for the fourth quarter. Inventories, government spending and exports all declined. This is likely to be a disappointment for markets and analysts, who expected a meager growth rate below 1.0%. The drop in inventories was mostly due to the residual drop in farm stocks [...]

Consumer Confidence Wavers on Higher Tax Bills

The Conference Board index of Consumer Confidence plummeted to 58.6 in January, almost half of its base year of 100 in 1985. Losses occurred in both current economic conditions and views about the future, virtually wiping out all of the gains we had seen in 2012. The expiration of the payroll tax holiday, combined with [...]

Durable Goods Orders Suggest Return of Investment

Durable goods orders jumped 4.6% in December, the seventh increase in eight months. Gains were widespread across sectors. Transportation led with orders for vehicles still robust. Hopefully, there are some heavy trucks in there, given the poor condition of the fleets I see on the road these days. Non-defense aircraft orders are also still showing [...]

New Home Sales Falter in December

December Home Sales Slip on Tight Supplies

Trucking as Economic Indicator

One of favorite economic indicators: the number of trucks on the road. This is the most trucks I have seen on this route, I-94 towards Detroit, MI,  since pre-financial crisis in 2008. I’ve seen many trucks today, mostly full, going to and from Michigan. I have noticed a few empty trucks leaving. The trucks look [...]

Housing Starts Surged in December

Housing starts jumped 12.1% to 954,000 in December, with gains in multi-family starts continuing to outpace gains in single-family starts. Gains were broad-based across all regions, with the largest gains in the South and West. This matches a pattern we have seen in home prices, as prices are now rising fastest in areas hit the [...]

Industrial Production Rebound Moderates in December

The index of industrial production increased 0.3% in December, less than a third of the pace of November, as the catch-up in production following Superstorm Sandy dissipated. Vehicle production remained on the rise in response to strong replacement demand following Sandy and the pent up demand we have seen building since the onset of the [...]