Economic Reports 04/30/07
Summary: Another beautiful day in paradise that the Nattering One hates to ruin for those pollyannish types who, like good little lemmings, believe what their told...
"Advertised" real inflation heading for 5%, real consumer spending decelerating and that sucking sound you hear, the service sector contracting...
We commented on last Chicago PMI being "an early spring", this month back to reality...
The pipeline is drying up while stagflation rages through the supply chain and supplier deliveries shows not help, but a recession is on the way...
Construction spending... pay attention as we wipe the lipstick off this ugly pig... even a "happy daze" media spin doctors three card monty can't hide the unfolding disaster.
Personal Spending Mar +0.3% vs prior +0.6% Full Report
Inside the number: Personal Income Mar +0.7% vs prior +0.6%. Real spending FELL (adjusted for advertised inflation) -0.2% vs prior +0.3%, and it gets worse...
Core PCE Inflation Mar +0.4% vs prior +0.4% on track for +4.8% annual. Just put a "1" in front for the real annual number...
Sequentially real spending decelerating Q4 +4.2%; Q1 +3.8% (table 8) and looking at table 7....
Real spending on durable goods +0.1%; nondurable goods -0.1% and services -0.3%.
Real spending had a sequential decline of $15 Billion of which $13.2 Billion was sucked out of services...
despite services having a 3.1% Yoy increase in PCE spending... (table 10)
Chicago PMI Apr 52.9% vs prior 61.7% Full Report
Inside the number: new orders slowed down dramatically 56.5 vs 72.2; prices paid at the highest level in 9 months up 64.9 vs 59.1.
As demand dries up... Production down 62.2 vs 64.9; order backlogs down 48.4 vs 54...
and a recession is on the way... Supplier Deliveries down 43.4 vs 45.8, the 3rd straight decline. Select comments follow...
"Supplier Deliveries is the traditional link between the CHICAGO Report and the national economy as an accepted Leading Indicator."
"Faster deliveries are interpreted as evidence of falling demand and the April level was the third consecutive month of a weakening economy."
"The bottom line is the April reading of the Chicago Business Barometer is consistent with a slowing economy characterized by spreading inflation (“stagflation”)."
"we continue to count our blessings... but we're not investing due to a lack of confidence in current national leadership.".... "We see more turnover in people."
"Lennar, a large FL based builder, announced in late Jan 07 that it expects suppliers to reduce their invoices by 20% or lose the opportunity to quote on new business for 6 months (as reported by CNBC)."
..."construction has gone from bad to worse to dismal." Speaking of which...
Construction Spending Mar +0.2% vs prior +0.3% Full Report
Inside the number: Putting lipstick on the pig... Feb revised up to +1.8% for the 1st increase in 10 months. Good news right?, DEAD WRONG...
This means from Feb to Mar a huge drop of -1.5% in overall spending and it only gets worse...
Smearing the lipstick... The overall rise was on private non residential projects +2.4%... total private residential construction spending for March -1%; federal construction Yoy -10.6%; for Mar -4.1%; federal residential -11.4%.
Wiping off the lipstick... Total Private Construction $ Value hit peak Dec 2005 $665.615 Billion falling to current $568.768 Billion, a drop of $96.847 Billion or 14.5%....
Exposing the cankor sore... spending on private residential SFR construction Yoy -27.2%; YTD -27.3% The gory details are here and here.
Rubbing salt in the cankor sore... National Association of Realtors reported that the number of homes sold for investment purposes plunged by 29% in 2006 in 1.65 M after soaring to a record 2.32 M in 2005.
So, 29% less "investment" buys in 2006, add in: elmination of no down, sub prime and marginal portion of Alt-A buyers for a nice.
Sprinkle on upcoming increases in for sale listings, short sales and foreclosure REO's to record inventory levels.
Simmer at low temp for the spring & summer, voila, more price erosion. Which leads to more lemmings "under water", far less consumer spending and a nice 2nd leg down.
"Advertised" real inflation heading for 5%, real consumer spending decelerating and that sucking sound you hear, the service sector contracting...
We commented on last Chicago PMI being "an early spring", this month back to reality...
The pipeline is drying up while stagflation rages through the supply chain and supplier deliveries shows not help, but a recession is on the way...
Construction spending... pay attention as we wipe the lipstick off this ugly pig... even a "happy daze" media spin doctors three card monty can't hide the unfolding disaster.
Personal Spending Mar +0.3% vs prior +0.6% Full Report
Inside the number: Personal Income Mar +0.7% vs prior +0.6%. Real spending FELL (adjusted for advertised inflation) -0.2% vs prior +0.3%, and it gets worse...
Core PCE Inflation Mar +0.4% vs prior +0.4% on track for +4.8% annual. Just put a "1" in front for the real annual number...
Sequentially real spending decelerating Q4 +4.2%; Q1 +3.8% (table 8) and looking at table 7....
Real spending on durable goods +0.1%; nondurable goods -0.1% and services -0.3%.
Real spending had a sequential decline of $15 Billion of which $13.2 Billion was sucked out of services...
despite services having a 3.1% Yoy increase in PCE spending... (table 10)
Chicago PMI Apr 52.9% vs prior 61.7% Full Report
Inside the number: new orders slowed down dramatically 56.5 vs 72.2; prices paid at the highest level in 9 months up 64.9 vs 59.1.
As demand dries up... Production down 62.2 vs 64.9; order backlogs down 48.4 vs 54...
and a recession is on the way... Supplier Deliveries down 43.4 vs 45.8, the 3rd straight decline. Select comments follow...
"Supplier Deliveries is the traditional link between the CHICAGO Report and the national economy as an accepted Leading Indicator."
"Faster deliveries are interpreted as evidence of falling demand and the April level was the third consecutive month of a weakening economy."
"The bottom line is the April reading of the Chicago Business Barometer is consistent with a slowing economy characterized by spreading inflation (“stagflation”)."
"we continue to count our blessings... but we're not investing due to a lack of confidence in current national leadership.".... "We see more turnover in people."
"Lennar, a large FL based builder, announced in late Jan 07 that it expects suppliers to reduce their invoices by 20% or lose the opportunity to quote on new business for 6 months (as reported by CNBC)."
..."construction has gone from bad to worse to dismal." Speaking of which...
Construction Spending Mar +0.2% vs prior +0.3% Full Report
Inside the number: Putting lipstick on the pig... Feb revised up to +1.8% for the 1st increase in 10 months. Good news right?, DEAD WRONG...
This means from Feb to Mar a huge drop of -1.5% in overall spending and it only gets worse...
Smearing the lipstick... The overall rise was on private non residential projects +2.4%... total private residential construction spending for March -1%; federal construction Yoy -10.6%; for Mar -4.1%; federal residential -11.4%.
Wiping off the lipstick... Total Private Construction $ Value hit peak Dec 2005 $665.615 Billion falling to current $568.768 Billion, a drop of $96.847 Billion or 14.5%....
Exposing the cankor sore... spending on private residential SFR construction Yoy -27.2%; YTD -27.3% The gory details are here and here.
Rubbing salt in the cankor sore... National Association of Realtors reported that the number of homes sold for investment purposes plunged by 29% in 2006 in 1.65 M after soaring to a record 2.32 M in 2005.
So, 29% less "investment" buys in 2006, add in: elmination of no down, sub prime and marginal portion of Alt-A buyers for a nice.
Sprinkle on upcoming increases in for sale listings, short sales and foreclosure REO's to record inventory levels.
Simmer at low temp for the spring & summer, voila, more price erosion. Which leads to more lemmings "under water", far less consumer spending and a nice 2nd leg down.
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