The big economic news this week was that, in the rear view mirror, 3rd quarter GDP rose +2.0% on an annualized basis. Durable goods rose sharply, but not nearly enough to erase the huge decline in August. New home sales rose slightly. Consumer sentiment declined slightly from its 5 year high earlier this month.
A reminder: I watch high frequency weekly indicators not because they lead the economy, but because they are a snapshot of the virtual present, as opposed to looking in the rear view mirror. While there is plenty of noise, they should show turns or continuations in a trend before they show up in monthly or quarterly data.
Same Store Sales and Gallup consumer spending varied from weakly positive to outright negative:
The ICSC reported that same store sales for the week ending October 19 declined -0.7% w/w but were up +2.9% YoY. Johnson Redbook reported a weak 1.3% YoY gain. Johnson Redbook has consistently been lower than the other series for consumer spending. The 14 day average of Gallup daily consumer spending as of October 24 was $68, compared with $71 last year for this period. This is the first time since July that Gallup’s YoY comparison has not been positive.
Bond yields were mixed and credit spreads narrowed further:
Weekly BAA commercial bond rates fell .05% more to 4.55%. Yields on 10 year treasury bonds, however, rose .08% to 1.79%. The credit spread between the two decreased to 2.76%, a new 15 month low. This continues an excellent trend, as it demonstrates a lack of fear of corporate default.
Housing reports were neutral to positive:
The Mortgage Bankers’ Association reported that the seasonally adjusted Purchase Index fell -8%% from the prior week, but is up 7% YoY. These remain near the top end of their 2+ year range. The Refinance Index fell -13% for the week, retreating further from recent multi-year highs.
The Federal Reserve Bank’s weekly H8 report of real estate loans this week decreased by 8, or-.02%, to 3530. The YoY comparison decreased to +1.2%, and is 1.5% above its bottom.
YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker increased +2.4% from a year ago. YoY asking prices have been positive for 10 1/2 months.
Money supply has been mixed in the last month or so but remains quite positive on a yearly basis:
M1 gained +1.2% for the week, and increased +1.1% month over month. Its YoY growth rate rose slightly to 13.1%. As a result, Real M1 also rose to +11.1% YoY. M2 rose +0.3% for the week, and was up 0.8% month over month. Its YoY growth rate also rose slightly to 7.2%, so Real M2 fell slightly to 5.2%. The growth rate for real money supply is still quite positive.
Employment related indicators were neutral to positive:
The Department of labour reported that Initial jobless claimrowell 19,000 from last week’s unrevised 388,000. The four week average rose 2,500 to 368,000, less than 1% above its post-recession low. Averaging the last two weeks’ numbers is clearly the correct thing to do.
The American Staffing Association Index was again level at 95. The index is equal to its high reading for the year. The trend in this index is similar to last year.
The Daily Treasury Statement showed that 18 days into October, $122.5 B was collected vs. $ 118.2 B a year ago, a $4.3 B or +3.6% increase. For the last 20 days ending on Thursday, $133.6 B was collected vs. $129.0 B for the comparable period in 2011, a gain of $4.6 B or 3.6%. The YoY comparison in tax collections has improved markedly since midyear.
Rail traffic remained negative YoY, but still due to coal, while the diffusion index decreased considerably:
The American Association of Railroads reported that total rail traffic was down -0.9% YoY. Non-intermodal rail carloads were again off a huge -4.4% YoY or -13,300, once again entirely due to coal hauling which was off -18,600. Excluding coal, carloads were actually up +13,800. Negative comparisons rose from 8 to 11 types of carloads. Intermodal traffic was up 8,500 or +3.5% YoY.
Finally, the prices of oil and gasoline fell, but gasoline usage was down slightly:
Gasoline prices fell $.13 last week to $3.69. This is nevertheless still very high. Oil prices per barrel declined from $90.05 to $86.28. Gasoline usage turned positive this week on a YoY basis. For one week, it was 8493 M gallons vs. 8501 M a year ago, down -0.1%. The 4 week average at 8611 M vs. 8767 M one year ago, was down -1.8%. The 4 week YoY decline is on top of the YoY decline last autumn.
Turning now to the high frequency indicators for the global economy:
The TED spread continued to fall to year another new 52 week low of 0.21. The one month LIBOR rose slightly from its 52 week low last week up to 0.2120. Both are well below their 2010 peaks and in the middle (TED) or low end (LIBOR) of their respective 3 year ranges.
The Baltic Dry Index rose again from 1010 to 1051, well above its recent 52 week low of 662. The longer term declining trend in shipping rates for the last 3 years remains. The Harpex Shipping Index fremained at 372, its 52 week low.
Finally, the JoC ECRI industrial commodities index fell again from 120.96 to 118.35, and once again turned negative YoY.
Positive comparisons continue to outweigh the negatives. Rail loads are down, but only because of coal. Harpex container ship traffic remains at a low, but open ship traffic continued to rise to nearly a yearly high. Commodities are weak, but this is largely because the Oil choke collar has loosened again. Housing continues to be improved, money supply is positive as are bond rates and credit spreads. Overnight lending rates are at or near 52 week lows. Consumer spending and employment indicators are mixed. This is hardly a strong economy, but it doesn’t look like one in contraction either.
Have a nice weekend.