November monthly data reported this past week was sparse, but included Case-Shiller home prices, which continued to rebound, and new home sales, which were flat. The Chicago PMI manufacturing index expanded slightly. Consumer confidence about the present increased sharply, but confidence about the future declined just as sharply, probably due to the “fiscal cliff” fiasco in Washington. This decline will be reflected as a component of the LEI.
I watch the high frequency weekly indicators because even though they are more noisy, they will signal a turn or continuation in the direction of the economy well before monthly data is reported. Even now November monthly data is still affected by Hurricane Sandy, while the weekly data is already completely unaffected.
To begin with, Employment related indicators were perhaps the most positive all year:
The Department of labour reported that Initial jobless claims fell from 361,000 to 350,000. The four week average fell by 11,000 to 356,750. As I suggested last week, this week saw a new post-recession low in the 4 week average. Since 2 and 3 weeks ago were still slightly affected by Sandy, we could set yet more new lows in the next week or two.
The American Staffing Association Index again remained at 94. The general trend in this index is now declining slightly in comparison to last year.
The Daily Treasury Statement showed that for the first 18 days of December, $156.5 B was collected vs. $139.0 B for the first 18 days of December last year. For the last 20 days ending on Thursday, $156.5 B was collected vs. $151.0 B for the comparable period in 2011, an increase of $14.5 B or +9.7%. Tax collections have continued to increase sharply for well over a month.
Same Store Sales and Gallup consumer spending continued very positive:
The ICSC reported that same store sales for the week ending December 21 rose slightly, up +0.7% w/w and were up +3.2% YoY. Johnson Redbook showed a 2.9% YoY gain, which is a strong gain for them. The 14 day average of Gallup daily consumer spending as of December 27 was $85, compared with $77 for this week last year. Gallup’s report has been running strongly positive this month.
Bond yields rose but credit spreads narrowed slightly:
Weekly BAA commercial bond yields rose +.07% this week at 4.70%. Yields on 10 year treasury bonds also rose +.11% to 1.80%. The credit spread between the two likewise decreased by .04% to 2.90%. Spreads are well off their 52 week highs.
Housing reports continue to be generally positive:
The Mortgage Bankers’ Association did not report during this holiday week.
The Federal Reserve Bank’s weekly H8 report of real estate loans this week rose 28 w/w to 3549. The YoY comparison, which is from the bottom, increased to +2.3%.
YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker increased +2.6% from a year ago. YoY asking prices have been positive for over an entire year.
Money supply was almost fully positive:
M1 fell -1.9% for the week, but increased +2.5% month over month. Its YoY growth rate declined slightly to +13.2%, so Real M1 also fell to +11.4% YoY. M2 increased +0.3% for the week, and was up +1.1% month over month. Its YoY growth rate rose to 8.1%, so Real M2 rebounded to 6.3%. The growth rate for real money supply has started to increase again in the last month.
Rail traffic rebounded and had a strongly positive week:
The American Association of Railroads reported that total rail traffic increased for the second week in a row, up +24,900 carloads YoY, or +4.9%. Non-intermodal rail carloads also up for the first time in many months, +2200 or +0.9%. Coal hauling was off -14,500, so ex-coal carloads were up +17,100. Negative comparisons declined to a recent low of 5. Intermodal traffic, which had suffered due to Pacific port strikes, rebounded to +22,300 or +10.2% YoY. It is very unlikely that this rebound will be sustained at this level.
Finally, the prices of oil and gasoline rose off their seasonal bottoms, and gasoline usage also fell:
Gasoline prices rose $.01 last week to $3.26. This is equal to last year’s seasonal lows and probably marks the seasonal low this year as well. Oil prices per barrel increased from $88.38 to $90.70. Gasoline usage was down for one week at 8608 M gallons vs. 8923 M a year ago, or -3.5%. The 4 week average at 8517 M vs. 8761 M one year ago, was off -2.8% YoY.
Turning now to the high frequency indicators for the global economy:
The TED spread rose sharply from 0.26 to 0.30, at the high end of its 3 month range. The one month LIBOR remained staady at 0.2097, near its 3 year low.
The Baltic Dry Index was essentially flat, drifting down 1 from 700 to 699, a 3 month low, but still within the middle of its 1 year range. Harper Peterson took a holiday break and did not report its Harpex Shipping Index this week. The longer term declining trend in shipping rates for the last 3 years is intact.
Finally, the JoC ECRI industrial commodities index rose from 124.57 to 125.64. It is now up 7.07 YoY.
There was very little weakness in the high frequency data this past week. Shipping remains weak, as does gasoline usage. There were slight increases in bank lending rates and interest rates. But almost everything else was positive or strongly positive. Layoffs set a new nearly 5 year low. Tax withholding is soaring. Housing loans and prices are positive. Consumer spending continues to be very positive. Gas prices are seasonally accomodative. Money supply is very positive. Commodity prices signal strength. This week railroad data was again quite positive.
Just as at the end of last year, the most up-to-date weekly data shows a solid positive bias, perhaps reflecting a new seasonality of autumn and winter growth, that has been balanced by spring and summer stalls. Meanwhile, the “fiscal cliff” remains a wild card.
Have a nice weekend, and best wishes for a happy and safe New Year.