Archive for the ‘Economic Indicators’ Category
The US Bureau of Labor Statistics announced this morning that nonfarm payrolls fell by 63,000 in February, leaving unemployment at approximately 4.8%. This comes on the heels of a loss of 22,000 jobs in January, making it two straight months of job decreases.
As Steve Liesman noted on CNBC this morning, we’ve never had two straight months of decreases in a row outside of a recession.
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Income, Outlays
The US Bureau of Economic analysis released numbers on personal consumption expenditures (PCE) and income today before the stock market open. Even when adjusted for inflation, personal income rose 0.4% boosted by bonus payouts and gains on the exercising of stock options. However, personal expenditures remained relatively flat when adjusted for inflation (unadjusted figures rose 0.4%).
Bottom line: flat spending points to a slower economy.
Inflation Up
Inflation continues to remain a threat, with the PCE price index increasing 0.4% when food and energy are included, and 0.3% when excluding food and energy. I always look at the former - food and energy are volatile, but bottom line is that they are an expense that impacts consumers.
Bottom line: not good, inflation is never good for the market.
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The US Commerce Department announced today that durable goods (items which last 3 or more years) fell about 5.3% in January. These products (which include items such as appliances, expensive electronics, and home furnishings) are typically the first to feel the pinch in a recession.
Not good news for the stock market- especially given the gathering storm cloud of price inflation and credit liquidity problems which continue to plague the economy.
Tags: , Economic Indicators
Inflation as measured by the Consumer Price Index (CPI) came in at 0.4% growth, above market expectations for a 0.3% rise in prices.
I’m only reporting the overall CPI number here, as this includes both energy and food prices. The “core” CPI number excludes these items, but I believe this distorts the impact to consumers (hey, we all have to eat and most of us have to drive to get to work).
Housing Starts
Furthermore, housing starts came in slightly under expectations at 1,012 K for January vs. consensus estimates of 1,015 K. A thousand more, a thousand less - it doesn’t matter. The bottom line is that we are continuing to see a weak market for housing due to the collapse of the credit markets. Unfortunately, this will probably continue for some time.
Unfortunately, the US economy continues to look like it is on the verge of a recession. The US Commerce Department announced today that new home construction fell a staggering 25% in 2007 vs. the prior year. Unfortunately, we haven’t seen a dip that severe since the dark days of 1980 (when new construction fell 26%). With unemployment at around 5% in December and continued problems with credit liquidity, the stock market could be in for some serious pain moving forward.
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New Residential Construction - Jan. 17th, 2008 Press Release
Tags: Economic Indicators, stock market
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