Economic Reports 01/31/07
Summary: The FOMC held rates at 5.25% for the 5th straight meeting and basically said its all good.
Meanwhile in the real world.... the housing sector is sinking... residential construction spending declining for the 9th consecutive month.
Chicago PMI falling into contraction for the 1st time in 43 months as manufacturing slows in the region.
GDP increased on a precipitous drop in crude oil prices. Under the covers, the grim story of a durable economy that has been dismantled in Appendix Table A of the report.
FOMC Statement
Spin, spin spin... "Recent indicators have suggested somewhat firmer economic growth... some tentative signs of stabilization have appeared in the housing market.... readings on core inflation have improved modestly in recent months."
What a difference two little words make...
the word "substantial" was removed in relation to the housing market slowdown; and the word "elevated," with regard to core inflation was also removed...
the bond and stock markets roared with blind approval...
Construction Spending Dec -0.4% Full Report
Inside the number: Good news... Nov -0.2%, revised up to +0.1%. 2006 construction outlays +4.8%, the smallest gain since 2002.
Bad news... YOY outlays -1.4%, Spending on housing -1.6%, the ninth consecutive drop, YOY -12.3%.
Worse news... Spending on private residential construction projects -0.8%, also falling for a ninth consecutive month.
Chicago PMI Jan 48.8 vs prior 51.6
Inside the number: the first drop below 50 in 43 months, indicating contraction.
Prices paid fell to 54.9% from 56.9%, new orders slumped to 46.3% from 56.3%, production index rose to 53.2% from 49.7%, and employment fell to 42.8% from 48.2%, the lowest in more than four years.
GDP-Adv. Q4 +3.5% vs Q3 +2.0% Full Report
Inside the number: Vis a Vis shifty & dubious guvmint statistics from the "Bureau of Disinformation" .... The GDP increased on a drop in energy import prices.
The hook in mouth media trumpeted... "Consumer prices fell -0.8%, the 1st quarterly decline in 45 years and the largest drop in 52 years." Nice try boyz, anyone writing monthly checks knows better.
In the real world, prices are still rising... the chain deflator or the core personal consumption expenditure price index, which excludes food and energy prices, +2.1 vs prior +1.9%
For Q4, PCE expenditures rising on non durable goods +6.9%, durable goods +6%, services +2.9%, real PCE +4.4%
Housing continues to collapse.... Residential investments -.2%, the largest drop since 1991. Housing subtracted 1.2 % points from growth.
Corporate America pulling back into M&A and stock buybacks.... Business fixed investment -0.4%, the biggest drop in 4 years. Investments in equipment and software -1.8%.
Automotive manufacturing continues to plunge.... Production of motor vehicles subtracted 1.17% points from growth.
Imports -3.2% on lower oil prices... the resulting improvement in the net trade position contributed 1.64% points to growth, the biggest contribution in 10 years.
And the guvmint keeps right on spending... Government spending +3.7%, including an 11.9% jump in defense spending, the biggest increase since the beginning of the war.
Meanwhile in the real world.... the housing sector is sinking... residential construction spending declining for the 9th consecutive month.
Chicago PMI falling into contraction for the 1st time in 43 months as manufacturing slows in the region.
GDP increased on a precipitous drop in crude oil prices. Under the covers, the grim story of a durable economy that has been dismantled in Appendix Table A of the report.
FOMC Statement
Spin, spin spin... "Recent indicators have suggested somewhat firmer economic growth... some tentative signs of stabilization have appeared in the housing market.... readings on core inflation have improved modestly in recent months."
What a difference two little words make...
the word "substantial" was removed in relation to the housing market slowdown; and the word "elevated," with regard to core inflation was also removed...
the bond and stock markets roared with blind approval...
Construction Spending Dec -0.4% Full Report
Inside the number: Good news... Nov -0.2%, revised up to +0.1%. 2006 construction outlays +4.8%, the smallest gain since 2002.
Bad news... YOY outlays -1.4%, Spending on housing -1.6%, the ninth consecutive drop, YOY -12.3%.
Worse news... Spending on private residential construction projects -0.8%, also falling for a ninth consecutive month.
Chicago PMI Jan 48.8 vs prior 51.6
Inside the number: the first drop below 50 in 43 months, indicating contraction.
Prices paid fell to 54.9% from 56.9%, new orders slumped to 46.3% from 56.3%, production index rose to 53.2% from 49.7%, and employment fell to 42.8% from 48.2%, the lowest in more than four years.
GDP-Adv. Q4 +3.5% vs Q3 +2.0% Full Report
Inside the number: Vis a Vis shifty & dubious guvmint statistics from the "Bureau of Disinformation" .... The GDP increased on a drop in energy import prices.
The hook in mouth media trumpeted... "Consumer prices fell -0.8%, the 1st quarterly decline in 45 years and the largest drop in 52 years." Nice try boyz, anyone writing monthly checks knows better.
In the real world, prices are still rising... the chain deflator or the core personal consumption expenditure price index, which excludes food and energy prices, +2.1 vs prior +1.9%
For Q4, PCE expenditures rising on non durable goods +6.9%, durable goods +6%, services +2.9%, real PCE +4.4%
Housing continues to collapse.... Residential investments -.2%, the largest drop since 1991. Housing subtracted 1.2 % points from growth.
Corporate America pulling back into M&A and stock buybacks.... Business fixed investment -0.4%, the biggest drop in 4 years. Investments in equipment and software -1.8%.
Automotive manufacturing continues to plunge.... Production of motor vehicles subtracted 1.17% points from growth.
Imports -3.2% on lower oil prices... the resulting improvement in the net trade position contributed 1.64% points to growth, the biggest contribution in 10 years.
And the guvmint keeps right on spending... Government spending +3.7%, including an 11.9% jump in defense spending, the biggest increase since the beginning of the war.
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