Economic Reports 03/30/07
Summary: Real personal spending decelerating with increased stagflation.
Chicago PMI jumping on the first "robin" of spring. Contradictory data showing risk for inflationary pressures and an anticipation of decreased future production.
Yoy single family private residential construction spending decreased almost 30% and could take the rest of the economy down with it.
Mich Sentiment-Rev. Mar falling to 88.4 vs prior 88.8 - Ho Hum... $13 B 5 year note auction with weak bid to cover 2.14 and paltry indirect bidder demand 16.7%.
Personal Spending Feb +0.2% vs prior 0.5% Full Report
Inside the number: Personal spending accounted for almost all the GDP gain in Q4 and has decelerated in Q1.
Real spending falling on durable goods -0.1%, and non durable goods -0.4%, while stagflated services price rose +0.5%
Yeah, stagflation still ragin PCE +0.4%, Yoy +2.3%; Core PCE +0.3%, Yoy +2.4%.
No January bonus checks as Personal Income decelerating in Feb +0.6% vs prior % 1.0 with real disposable income up only +0.1%.
Wait till Q2 and Q3 when the housing decline dominoes start to fall and spending really starts to slow....
Chicago PMI Mar 61.7 vs prior 47.9 Full Report
Inside the number: largest gain in the 39 year history of this index which measures manufacturing, non profit and services industries.
New orders up to 72.2 vs 48.7, biggest gain ever; Prices paid fell to 59.1 vs 63.2. Production up to 64 vs 51, biggest leap since 1996.
Backlogs up to 54 vs 44.3, largest jump since April 1999.
Disturbing: Employment fell to 45 from 50.6; Inventories fell to 48.8 vs 54.5; supplier deliveries fell to 45.8 from 46.5.
More important... Capital equipment purchases fell from 129.3 to 110.9.
Comments: “2007 from a construction standpoint is history. 2008 may be better pending interest rate cuts. "
"The Chicago Business Barometer may have focused on the first robin of spring and lost sight of economic storms in the distance."
The increase in backlogs and new orders is encouraging, however...
the disturbing decline in other categories indicates a reluctance to "gear up" for potential future production increases.
If the upward trend continues, inflationary pressures will ensue. Or is the reluctance a harbinger of anticipated slowing?
Construction Spending Feb +0.3% vs prior -0.8% Full Report
Inside the number: The overall increase in total construction trumpeted by the media was overshadowed.
Total private residential construction: declining monthly -1.0%; YTD -2.2% from the period one year ago. Worse yet, Yoy -15.1%.
But we save the best for last... Since March 2006 down 11 straight months for a 15.3% decline and...
private residential construction spending on single family homes... drum roll please... Yoy - 27.6%.
New permits have declined -28.6% and housing starts -28.5%. read here . 1.8 Million new homes were built last year.
At the current pace there will be 600,000 less built this year. How many less jobs, services and spending will that mean?
The gory truth (which the Nattering One knows you can handle) can be found here and here.
Chicago PMI jumping on the first "robin" of spring. Contradictory data showing risk for inflationary pressures and an anticipation of decreased future production.
Yoy single family private residential construction spending decreased almost 30% and could take the rest of the economy down with it.
Mich Sentiment-Rev. Mar falling to 88.4 vs prior 88.8 - Ho Hum... $13 B 5 year note auction with weak bid to cover 2.14 and paltry indirect bidder demand 16.7%.
Personal Spending Feb +0.2% vs prior 0.5% Full Report
Inside the number: Personal spending accounted for almost all the GDP gain in Q4 and has decelerated in Q1.
Real spending falling on durable goods -0.1%, and non durable goods -0.4%, while stagflated services price rose +0.5%
Yeah, stagflation still ragin PCE +0.4%, Yoy +2.3%; Core PCE +0.3%, Yoy +2.4%.
No January bonus checks as Personal Income decelerating in Feb +0.6% vs prior % 1.0 with real disposable income up only +0.1%.
Wait till Q2 and Q3 when the housing decline dominoes start to fall and spending really starts to slow....
Chicago PMI Mar 61.7 vs prior 47.9 Full Report
Inside the number: largest gain in the 39 year history of this index which measures manufacturing, non profit and services industries.
New orders up to 72.2 vs 48.7, biggest gain ever; Prices paid fell to 59.1 vs 63.2. Production up to 64 vs 51, biggest leap since 1996.
Backlogs up to 54 vs 44.3, largest jump since April 1999.
Disturbing: Employment fell to 45 from 50.6; Inventories fell to 48.8 vs 54.5; supplier deliveries fell to 45.8 from 46.5.
More important... Capital equipment purchases fell from 129.3 to 110.9.
Comments: “2007 from a construction standpoint is history. 2008 may be better pending interest rate cuts. "
"The Chicago Business Barometer may have focused on the first robin of spring and lost sight of economic storms in the distance."
The increase in backlogs and new orders is encouraging, however...
the disturbing decline in other categories indicates a reluctance to "gear up" for potential future production increases.
If the upward trend continues, inflationary pressures will ensue. Or is the reluctance a harbinger of anticipated slowing?
Construction Spending Feb +0.3% vs prior -0.8% Full Report
Inside the number: The overall increase in total construction trumpeted by the media was overshadowed.
Total private residential construction: declining monthly -1.0%; YTD -2.2% from the period one year ago. Worse yet, Yoy -15.1%.
But we save the best for last... Since March 2006 down 11 straight months for a 15.3% decline and...
private residential construction spending on single family homes... drum roll please... Yoy - 27.6%.
New permits have declined -28.6% and housing starts -28.5%. read here . 1.8 Million new homes were built last year.
At the current pace there will be 600,000 less built this year. How many less jobs, services and spending will that mean?
The gory truth (which the Nattering One knows you can handle) can be found here and here.
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