Economic Reports 01/31/08

Summary: The seeds of economic ruin... Initial claims spiking as the housing debacle ripples start to be felt.

The sting of stagflation... Chicago PMI fell as production & orders fell sharply while prices paid surged and employment contracted.

Real spending contracts... declining across the board as John Q cannot tap his housing ATM for mortgage equity withdrawals anymore.

Durable goods declines 3rd straight and 5th out of 7 months. And yes, quasi double digit annual non durables inflation is evidenced.

Initial Claims 01/26 +69K at 375K vs prior 306K Full Report

Inside the number: prior revised up 5K. 4 week MA +10.25K at 325.75K. Long term unemployment +47K at 2.716M; 4 week MA -9.5K at 2.705M

Chicago PMI Jan 51.5 vs prior 56.4 Full Report

Inside the number: Production growth slowed dramatically 51.3 vs 62,

New Orders broadest contraction since April 03 44.7 vs 56.7; and Order Backlogs had a sharp drop 48 vs 60.7.

Inventories a modest expansion, 1st in 5 months 51.1 vs 44.3; Employment 2nd month of contraction 47 vs 49.3;

Prices Paid surged to their highest in 18 months 81.7 vs 67.4.

Personal Income Dec +0.5% vs prior +0.4% Full Report

Inside the number: Personal Spending PCE Dec +0.2% vs prior +1%. Real Disposable Personal Income 2000 dollars +0.2% vs prior -0.2%.

Oh, and disposable personal income DID NOT increase... read below.

Table 1: Disposable income increased $47 billion; of which $22 billion, reflected an increase in Medicare part D prescription drug benefit payments;;

and $18 billion disability and health insurance; and $7 billion retroactive social security benefit payments. 22+18+7 = $47B

Table 5: PCE +0.2% vs +1%; durable goods -0.5% vs -0.3% vs -0.3%; non durable +0.1% vs +1.8%; services +0.5% vs +0.8%

Table 7: Real PCE 2000 dollars ZERO vs prior +0.4%; durable goods -0.3% vs -0.1%; non durables -0.2% vs +0.4%; services +0.1% vs +0.5%

Table 6: Annual % change Q4 PCE +5.9%; Durable +2.3%; Non durable +8.3%; Services +5.5%

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