In the rear view mirror, second quarter GDP was revised down from 2.5% to 2.0%. The more forward looking durable goods orders declined for a second month, down -0.7%. Another leading indicator, the University of Michigan final consumer sentiment reading for November showed that consumer confidence has rebounded about halfway from its debt ceiling debacle collapse that began in July. Personal income was up 0.4%, while spending rose only 0.1%. The personal savings rate rose .2% to 3.5%.
With the continuing exception of Oil prices, and a small increase in corporate bond yield spreads, all of the high frequency weekly indicators turned in another positive week.
Let’s start again this week by looking at jobs. While there was some weekly noise, the trend remains positive. The BLS reported that Initial jobless claims rose 5,000 to 393,000. The four week average declined 2500 to 394,250. The four week average remains close to its best reading in over 3 years.
The American Staffing Association Index rose by 1 to 92 last week. In the last couple of months, this series has resumed a slight upward trajectory, but remains lower YoY.
Tax withholding returned to a positive YoY reading this week. Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that while for the first 16 reporting days of November, $109.7 B was collected vs. $112.1 a year ago, a decline of -2.4 B, for the last 20 days, $137.5 B was collected vs. $130.0 a year ago, an increase of $7.5 B or 5.7%. I use the 20 day metric precisely because there is a definite pattern to deposits by day of the week. Thus it appears that last week’s negative YoY 4 week loss may have been an outlier. This will be closely watched in the next several weeks.
Housing continues to show stabilisation. The Mortgage Bankers’ Association reported that seasonally adjusted purchase mortgage applications increased 8.2% last week. On a YoY basis, purchase applications were up 4.8%. Although YoY reports have been negative for several months, the actual change is very slight, and we remain firmly within the range that purchase mortgage applications have been in since May 2010. Refinancing fell -4.0% w/w despite near record low rates, and may have been strongly influenced by seasonality.
YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker showed that the asking prices declined -0.3% YoY. Once again, this is a new “best” YoY reading in 5 1/2 years. The areas with YoY% increases in price increased to 21, meaning that 40% of all metropolitan areas in this survey now have YoY positive changes in asking prices. Only Chicago still showed double-digit YoY% declines. YoY asking prices for houses could turn positive on a nationwide basis as early as this week.
Retail same store sales remained positive as they have been all year. The ICSC reported that same store sales for the week of November 12 decreased -0.9% w/w but increased 2.8% YoY. Shoppertrak reported that YoY sales rose 3.8% YoY but were off -3.4% week over week. We have entered a period of high seasonality, so the YoY figures are by far the more reliable measure of sales.
The American Association of Railroads reported that total carloads increased 1.9% YoY, up about 10,400 carloads YoY to 545,100. Intermodal traffic (a proxy for imports and exports) was up 7,000 carloads, or 3.0% YoY. The remaining baseline plus cyclical traffic increased 3400 carloads or 1.1% YoY. Total rail traffic has improved substantially in the last two months after having turned negative for 6 of 12 weeks during the summer.
Weekly BAA commercial bond rates rose .04% to 5.16%. Contrarily, yields on 10 year treasury bonds fell .03% to 2.02%. This is the second week of very small increasing spreads in contrary directions. If it were to continue and amplify, it would represent significant weakness.
Finally, the Oil choke collar remains engaged, as Oil closed at $96.77 a barrel on Friday. This remains above the recession-trigger level calculated by analyst Steve Kopits. Gas at the pump decreased $.07 to $3.37 a gallon. Measured this way, we probably are about $.10 above the 2008 recession trigger level. Gasoline usage is once again off substantially, down -2.7% YoY, at 8592 M gallons vs. 8829 M a year ago. The 4 week moving average is off -3.9%. This continues to suggest that consumers have permanently altered their gasoline usage habits towards more conservation.
Money supply was not reported this week.
If ECRI’s recession call is correct, it appears it will have to be imported from Europe and China via manufacturing, or else the consumer is going to have to finally give out due to real wage declines. There is simply no sign of recession in the recent weekly indicators. More specifically, the continuation of sub-400,000 initial jobless claims reports suggest that we will see a good jobs report this coming Friday.