It's The Economy Stupid: Consumer Not So Confident, Housing Comes In From The Cold

Consumer Not So Confident, Housing Comes In From The Cold

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Consumer Confidence	DEC	70.0	65.1	73.7	71.5
New Home Sales	NOV	380K	377K	368K	361K
New Home Sales MoM	NOV	3.3%	4.4%	-0.3%	-3.5%

 

Consumer Confidence in U.S. Fell More Than Forecast in December. 

 

Confidence among U.S. consumers declined more than forecast in December as the budget debate in Washington soured Americans’ outlook for the economy.  The Conference Board’s index of sentiment fell to 65.1 from a revised 71.5 reading the prior month. The gauge was projected to fall to 70, according to the Bloomberg survey median.

 

A drop in consumer expectations for the next six months to a one-year low coincides with mounting concerns about looming tax increases and government budget cuts in 2013 that threaten the expansion. At the same time, employment gains, rising home values, and lower gas prices may keep spending, which accounts for about 70 percent of the economy, from foundering.

    

Sales of New U.S. Homes Increased in November to Two-Year High.

 

Sales of new houses rose in November to the highest level in more than two year, the latest sign that the real-estate market is helping lift the U.S. economy.

 

Purchases climbed 4.4 percent to a 377,000 annual pace, the most since April 2010, following a revised 361,000 rate in October, the Commerce Department reported today in Washington.  The median estimate of 71 economists surveyed by Bloomberg called for sales to increase to 380,000.

 

Low mortgage rates and dwindling foreclosures are stabilizing prices and attracting buyers more than three years after a recession that was fueled by the industry’s collapse.

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

 

It's The Economy Stupid: Jobless Claims Trend Lower

Jobless Claims in U.S. Fall, Trending Lower, But Holiday Leads to More Estimates

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Initial Jobless Claims	DEC 22	360K	350K	361K	362K
Continuing Claims	DEC 15	3200K	3206K	3225K	3238K

 

Fewer Americans than forecast filed claims for unemployment insurance last week as state offices rushed to tally the data in a holiday-shortened period.

 

Applications for jobless benefits decreased 12,000 to 350,000 in the week ended Dec. 22. Economists forecast 360,000, according to the median estimate in a Bloomberg survey. Claims in 19 states and

territories were estimated because government office closures on

Dec. 24 prevented a complete count.

 

The level of claims indicates companies are seeing enough demand to maintain headcounts, a necessary development before hiring picks up. To help spur demand, thereby stimulating faster job growth, the Federal Reserve said this month it plans to keep monetary policy accommodative. (No surprise there.)

 

Estimates for first-time claims ranged from 350,000 to 375,000 in the Bloomberg survey of 41 economists. The prior week’s applications were revised to 362,000 from an initially reported 361,000.

 

The federal holiday on Dec. 24 prompted many state offices to close, making it more difficult to completely tally the data in time, the Labor Department spokesman said. Fourteen states and territories provided their own estimates, which are usually “fairly accurate,” the spokesman said. The Labor department estimated data for the five states that didn’t provide any figures, he said.  

 

The four-week moving average of claims, a less-volatile measure, dropped to 356,750, the lowest since March 2008.

 

Let me repeat that because it is significant!  The four-week moving average of jobless claims, a less-volatile measure, dropped to 356,750, the lowest level since March 2008.

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

 

It's The Economy Stupid: Where's the KaBoom?!?!

 

Someone must have stolen the Illudium Q-36 Explosive Space Modulator!

 

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior
Personal Income	NOV	0.3%	0.6%	0.0%
Personal Spending	NOV	0.4%	0.4%	-0.2%
PCE Deflator MoM	NOV	-0.1%	-0.2%	0.1%
PCE Deflator YoY	NOV	1.5%	1.4%	1.7%
PCE Core MoM	NOV	0.1%	0.0%	0.1%
PCE Core YoY	NOV	1.6%	1.5%	1.6%
Durable Goods Orders	NOV	0.3%	0.7%	0.0%
Durables Ex Transportation	NOV	-0.2%	1.6%	1.5%
Cap Goods Orders Non Def Ex Air	NOV	0.0%	2.7%	1.7%
Cap Goods Ship Non Def Ex Air	NOV	0.6%	1.8%	-0.4%

 

The numbers were good.  It’s all good!

 

Season’s Greetings!

Happy Holidays!

Merry Christmas!

Happy Hanukah

Happy Kwanza!

Fleas Navidog!

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

 

It's The Economy Stupid: Mayans, GDP & Jobs

Why is it when we get to the end of our calendar we consider it an occasion to party, but when we get to the end of the Mayan’s calendar we think it could be the end of the world.  Please! To the Mayan’s December 21st was probably the functional equivalent of our December 31^st.  Perhaps they blew it out at the local jungle juice & mescal emporium (bar) on the 21st and just forgot to turn over the stone tablet to the new year.  I mean if they were really that good at forecasting the future don’t you think that maybe they could have foreseen the end of their own civilization and avoided it?  Wait!  They were probably the world’s first economists!!!  Anyway, just in case, it’s been real and it’s been good!  But I digress…

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
GDP QoQ Annualized	3Q T	2.8%	3.1%	2.7%
Personal Consuption	3Q T	1.4%	1.6%	1.4%
GDP Price Index	3Q T	2.7%	2.7%	2.7%
Core PCE QoQ	3Q T	1.1%	1.1%	1.1%
Initial Jobless Claims	DEC 15	360K	361K	343K	344K
Continuing Claims	DEC 8	3200K	3225K	3198K	3213K

 

Surprise!  Surprise!  GDP was not a Grinch!  U.S. Economy Grew 3.1% in Third Quarter, More Than Forecast

 

The U.S. economy grew at a 3.1 percent annual rate in the third quarter, more than previously reported, reflecting the first gain in state and local government spending in three years, more consumer purchases and

a smaller trade gap.  The revised gross domestic product reading exceeded the highest projection in a Bloomberg survey and compared with a previously estimated 2.7 percent gain. The median estimate of economists called for a 2.8 percent advance.  Projections from the 80 economists surveyed ranged from gains of 2.6 percent to 3 percent. NO ONE PREDICTED A 3.1% NUMBER!  Today’s figure marked the third reading for the quarter. The economy expanded at a 1.3 percent pace in the prior three-month period.

 

Okay, but let’s be real people!!!  We will hard-pressed to maintain that pace of growth this quarter as global demand cools and companies limit spending and hiring ahead of looming tax increases and spending cuts. While a stronger housing market will provide some cushion, the Federal Reserve is pursuing record stimulus aimed at driving bigger gains for the expansion.

 

The Initial Jobless Claims and the Continuing Jobless Claims came in just about as expected.  Initial Jobless Claims was at 361K, Continuing Claims at 3225K, both in line with economist’s estimates.

 

Here’s hoping there’s economic news to report tomorrow!

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

 

It's The Economy Stupid: CPI not so much

Consumer Prices in U.S. Declined More Than Forecast in November

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Consumer Price Index MoM	NOV	-0.2%	-0.3%	0.1%
CPI Ex Food & Energy MoM	NOV	0.2%	0.1%	0.2%
Consumer Price Index YoY	NOV	1.9%	1.8%	2.2%
CPI Ex Food & Energy YoY	NOV	2.0%	1.9%	2.0%
Consumer Price Index NSA	NOV	230.341	230.221	231.317
CPI Core Index SA	NOV		231.254	230.994

 

Right now, today, inflation is largely a non-issue.

 

The cost of living (as defined by CPI as opposed to as defined by an average human being pocket book) fell more than forecast in November as energy prices dropped, a sign U.S. inflation remains in check.

 

The 0.3 percent decrease in the consumer-price index was the first drop since May and followed a 0.1 percent gain the prior month. The median estimate of 80 economists surveyed by Bloomberg called for a 0.2 percent drop. The core index, which excludes volatile food and energy costs, climbed less than projected.

 

Bloomberg survey estimates for the consumer-price index ranged from a drop of 0.3 percent to an increase of 0.1 percent.

 

In the 12 months ended in November, consumer prices rose 1.8 percent, today’s report showed.   The core CPI reading increased 0.1 percent last month following a 0.2 percent gain in October. For the past 12 months, core prices were up 1.9 percent, compared with a 2 percent advance for the year through October. The core measure was restrained by a 0.1 percent gain in medical care, that reflected a record drop in drug costs. In addition, clothing and used-car prices fell.  Falling energy costs, including cheaper gasoline, are keeping inflation in check. Energy costs decreased 4.1 percent in November, the biggest drop since May. Gasoline plunged 7.4 percent, the largest decrease since December 2008.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Bridgewater Daily Observations - "Consistent with expectations, the Fed announced yesterday that it will start outright purchases of long-term Treasuries in 2013 ..."

Consistent with expectations, the Fed announced yesterday that it will start outright purchases of long-term Treasuries in 2013, after its current Twist purchases expire at the end of the year. Allowing the Twist purchases to expire without replacing them would have constituted some degree of tightening in our view, and given there is a high probability of fiscal tightening going into next year, avoiding a monetary tightening at the same time is sensible. The Fed will now buy $45bn in long term US Treasuries a month, the same amount that it was buying under the Twist. However, unlike the Twist these will be outright purchases - the Fed will not sell any shorter-term Treasuries to offset them, and they will be financed through the creation of new excess reserves and the expansion of the Fed's balance sheet. These purchases will be in addition to the Fed's ongoing purchases of $40bn in agency MBS per month. In other words, through these purchases the Fed will be injecting new cash into the economy at a rate of about $1 trillion per year. With yesterday's announcement, the Fed has fully shifted from a calendar-based approach, where it announces ahead of time when it plans to end its purchases, to a more flexible and open-ended approach whereby it will change the amount of stimulation it provides as conditions transpire. And it allows the Fed the needed flexibility to push a little harder on the gas or let up as conditions change.


" And it allows the Fed the needed flexibility to push a little harder on the gas..." What if the car stalls or won't start???

It's The Economy Stupid: A Bunch of Stuff

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Advance Retail Sales	NOV	0.5%	0.3%	-0.3%
Retail Sales Less Autos	NOV	0.0%	0.0%	0.0%
Retail Sales Ex Auto & Gas	NOV	0.4%	0.7%	-0.3%	-0.1%
Retail Sales "Control Group"	NOV	0.3%	0.5%	-0.1%	0.0%
Producer Price Index MoM	NOV	-0.5%	-0.8%	-0.2%
PPI Ex Food & Energy MoM	NOV	0.1%	0.1%	-0.2%
Producer Price Index YoY	NOV	1.8%	1.5%	2.3%
PPI Ex Food & Energy YoY	NOV	2.2%	2.2%	2.1%
Initial Jobless Claims	NOV 16	369K	343K	370K	372K
Continuing Claims	NOV 17	3210K	3198K	3205K	3221K

 

 

Retail Sales are better, and that’s good.  Producer Prices were mixed, not rising greatly, and that’s a good thing.  Jobless Claims are down, and that could be a good thing, if the people are finding jobs and not falling out of the workforce.

 

After sleeping on it for a night, I think the Fed’s message was basically:  “We seem to be at a new normal, where long term structural unemployment has gone from 4.5% (the old normal) to 6.5% (the new normal), and we are going to keep rates low until we can move the lousy unemployment numbers down to the new normal and we are going to forget about the old normal for now.” 

 

The only problem is that as the Fed layers on more and more stimulus, each layer seems to produce less and less results.  So we are going to inflate the Fed balance sheet by another Trillion Dollars, and we are very likely to get less bang for our buck.  And my confidence in the Fed being able to unravel all of these Trillions of Dollars in security trades without serious negative side effects is near zero.  They may be good at what they do, but they are not that good.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

Ph:  225-342-0013

Fx:  225-342-9721

Email:  jbroussard@treasusry.state.la.us

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