Category Archives: Uncategorized

Durable Goods New Orders – Long-Term Charts Through December 2018

Many people place emphasis on Durable Goods New Orders as a prominent economic indicator and/or leading economic indicator.

For reference, below are two charts depicting this measure.

First, from the St. Louis Fed site (FRED), a chart through December 2018, updated on February 21, 2019. This value is $254,445 ($ Millions):

(click on charts to enlarge images)

Durable Goods New Orders

Second, here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis, with a last value of 3.5%:

Durable Goods New Orders Percent Change From A Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Manufacturers’ New Orders:  Durable Goods [DGORDER]; U.S. Department of Commerce: Census Bureau; accessed February 21, 2019; 
http://research.stlouisfed.org/fred2/series/DGORDER

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2778.38 as this post is written

Markets During Periods Of Federal Reserve Intervention – February 15, 2019 Update

In the August 9, 2011 post (“QE3 – Various Thoughts“) I posted a chart that depicted the movements of the S&P500, 10-Year Treasury Yield and the Fed Funds rate spanning the periods of various Federal Reserve interventions since 2007.

For reference purposes, here is an updated chart (through February 15, 2019) from the Doug Short site post of February 15 (“Treasury Snapshot:  10-Year Yield at 2.66%“):

markets during Federal Reserve intervention

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2775.60 as this post is written

Charts Indicating Economic Weakness – February 2019

U.S. Economic Indicators

Throughout this site there are many discussions of economic indicators.  At this time, the readings of various indicators are especially notable.  This post is the latest in a series of posts indicating U.S. economic weakness or a notably low growth rate.

While many U.S. economic indicators – including GDP – are indicating economic growth, others depict (or imply) various degrees of weak growth or economic contraction.  As seen in the February 2019 Wall Street Journal Economic Forecast Survey the consensus (average estimate) among various economists is for 3.0% GDP growth in 2018 and 2.2% GDP growth in 2019.  However,  there are other broad-based economic indicators that seem to imply a weaker growth rate.

As well, it should be remembered that GDP figures can be (substantially) revised.

Charts Indicating U.S. Economic Weakness

Below are a small sampling of charts that depict weak growth or contraction, and a brief comment for each:

Total Federal Receipts

“Total Federal Receipts” growth continues to be intermittent in nature since 2015.  As well, the level of growth does not seem congruent to the (recent) levels of economic growth as seen in aggregate measures such as Real GDP.

“Total Federal Receipts” through December had a last value of $312,584 Million.  Shown below is  the measure displayed on a “Percent Change From Year Ago” basis with value -4.1%, last updated February 13, 2019:

MTSR133FMS Percent Change From Year Ago

source:  U.S. Department of the Treasury. Fiscal Service, Total Federal Receipts [MTSR133FMS], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed February 13, 2019:  
https://fred.stlouisfed.org/series/MTSR133FMS

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Loan Demand And Related Measures

As seen in previous updates, various aspects of lending growth and related measures have shown a contraction.  Shown below is a measure, Net Percentage of Domestic Banks Reporting Stronger Demand for Credit Card Loans, that shows a decline.  The current value is -17.4% as of the February 4, 2019 quarterly update:

DEMCC

source: Board of Governors of the Federal Reserve System (US), Net Percentage of Domestic Banks Reporting Stronger Demand for Credit Card Loans [DEMCC], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed February 11, 2019:
https://fred.stlouisfed.org/series/DEMCC

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Vehicle Miles Traveled

I continue to find the flagging growth trend in the “Vehicle Miles Traveled” (NSA) measure since 2015 to be notable.

“Vehicle Miles Traveled” through November had a last value of 258,533 Million.  Shown below is  the measure displayed on a “Percent Change From Year Ago” basis with value .3%, last updated January 17, 2019:

Vehicle Miles Traveled Percent Change From Year Ago chart

source:   U.S. Federal Highway Administration, Vehicle Miles Traveled [TRFVOLUSM227NFWA], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed February 11, 2019: https://fred.stlouisfed.org/series/TRFVOLUSM227NFWA

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Total Construction Spending:  Commercial

“Total Construction Spending: Commercial” is a measure of construction exhibiting a contraction on a “Percent Change From Year Ago” basis.   This measure through November had a last value of $87,459 Million.  Shown below is the measure displayed on a “Percent Change From Year Ago” basis with a value of -.4%, last updated February 5, 2019:

Total Construction Spending: Commercial Percent Change From Year Ago

source:  U.S. Bureau of the Census, Total Construction Spending: Commercial [TLCOMCONS], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed February 11, 2019: https://fred.stlouisfed.org/series/TLCOMCONS

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Rail Freight Carloads

“Rail Freight Carloads” continues to show a downward progression.  Shown below is a chart with data through November (last value of 1,115,510, updated January 15, 2019):

RAILFRTCARLOADSD11

source:  U.S. Bureau of Transportation Statistics, Rail Freight Carloads [RAILFRTCARLOADSD11], retrieved from FRED, Federal Reserve Bank of St. Louis;  accessed February 12, 2019: https://fred.stlouisfed.org/series/RAILFRTCARLOADSD11

Here is the same measure on a “Percent Change From Year Ago” basis, with value .1%:

Rail Freight Carloads Percent Change From Year Ago

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Other Indicators

As mentioned previously, many other indicators discussed on this site indicate weak economic growth or economic contraction, if not outright (gravely) problematical economic conditions.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2753.03 as this post is written


10-Year Treasury Yields – Two Long-Term Charts As Of February 8, 2019

I have written extensively about the importance regarding the level of U.S. interest rates.  Rising interest rates have substantial ramifications for many aspects of the current-day economy.  My commentaries with regard to interest rates and the bond bubble are largely found under the “bond bubble” tag.   From an intervention perspective commentary is found under the “Intervention” category.

As reference, here is a long-term chart of the 10-Year Treasury yield since 1980, depicted on a monthly basis, LOG scale:

(click on charts to enlarge images)(charts courtesy of StockCharts.com; chart creation and annotation by the author)

10-Year Treasury Yield Monthly chart

Here is a long-term chart of the 10-Year Treasury yield since 2008, depicted on a daily basis, LOG scale:

10-Year Treasury Yield Daily chart

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2686.79 as this post is written

The State of the Union Address – Notable Excerpts

I found President Trump’s State of the Union Address last night (February 5, 2019) to contain some noteworthy comments.  While I could comment extensively on many parts of the speech, for now I will indicate excerpts that I found most relevant with regard to the economic situation, and may comment upon them at a future point.  I am highlighting these excerpts for many reasons; it should be noted that I do not necessarily agree with any or all of them.

Here are the excerpts I found most relevant, in the order they occurred in the speech:

In just over 2 years since the election, we have launched an unprecedented economic boom — a boom that has rarely been seen before.  We have created 5.3 million new jobs and importantly added 600,000 new manufacturing jobs — something which almost everyone said was impossible to do, but the fact is, we are just getting started.

Wages are rising at the fastest pace in decades, and growing for blue collar workers, who I promised to fight for, faster than anyone else.  Nearly 5 million Americans have been lifted off food stamps.  The United States economy is growing almost twice as fast today as when I took office, and we are considered far and away the hottest economy anywhere in the world.  Unemployment has reached the lowest rate in half a century. African-American, Hispanic-American and Asian-American unemployment have all reached their lowest levels ever recorded. Unemployment for Americans with disabilities has also reached an all-time low.  More people are working now than at any time in our history –- 157 million.

We passed a massive tax cut for working families and doubled the child tax credit.

We virtually ended the estate, or death, tax on small businesses, ranches, and family farms.

We eliminated the very unpopular Obamacare individual mandate penalty — and to give critically ill patients access to life-saving cures, we passed right to try.

My Administration has cut more regulations in a short time than any other administration during its entire tenure.  Companies are coming back to our country in large numbers thanks to historic reductions in taxes and regulations.

We have unleashed a revolution in American energy — the United States is now the number one producer of oil and natural gas in the world.  And now, for the first time in 65 years, we are a net exporter of energy.

After 24 months of rapid progress, our economy is the envy of the world, our military is the most powerful on earth, and America is winning each and every day.   Members of Congress:  the State of our Union is strong.  Our country is vibrant and our economy is thriving like never before.

On Friday, it was announced that we added another 304,000 jobs last month alone — almost double what was expected.  An economic miracle is taking place in the United States — and the only thing that can stop it are foolish wars, politics, or ridiculous partisan investigations.

also:

As we work to defend our people’s safety, we must also ensure our economic resurgence continues at a rapid pace.

No one has benefitted more from our thriving economy than women, who have filled 58 percent of the new jobs created in the last year.  All Americans can be proud that we have more women in the workforce than ever before — and exactly one century after the Congress passed the Constitutional amendment giving women the right to vote, we also have more women serving in the Congress than ever before.

As part of our commitment to improving opportunity for women everywhere, this Thursday we are launching the first ever Government-wide initiative focused on economic empowerment for women in developing countries.

To build on our incredible economic success, one priority is paramount — reversing decades of calamitous trade policies.

We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end.

Therefore, we recently imposed tariffs on $250 billion of Chinese goods — and now our Treasury is receiving billions of dollars a month from a country that never gave us a dime.  But I don’t blame China for taking advantage of us — I blame our leaders and representatives for allowing this travesty to happen.  I have great respect for President Xi, and we are now working on a new trade deal with China.  But it must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.

Another historic trade blunder was the catastrophe known as NAFTA.

I have met the men and women of Michigan, Ohio, Pennsylvania, Indiana, New Hampshire, and many other States whose dreams were shattered by NAFTA.  For years, politicians promised them they would negotiate for a better deal.  But no one ever tried — until now.

Our new U.S.-Mexico-Canada Agreement — or USMCA — will replace NAFTA and deliver for American workers:  bringing back our manufacturing jobs, expanding American agriculture, protecting intellectual property, and ensuring that more cars are proudly stamped with four beautiful words:  made in the USA.

Tonight, I am also asking you to pass the United States Reciprocal Trade Act, so that if another country places an unfair tariff on an American product, we can charge them the exact same tariff on the same product that they sell to us.

Both parties should be able to unite for a great rebuilding of America’s crumbling infrastructure.

I know that the Congress is eager to pass an infrastructure bill — and I am eager to work with you on legislation to deliver new and important infrastructure investment, including investments in the cutting edge industries of the future.  This is not an option.  This is a necessity.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2737.70 as this post is written

Average Hourly Earnings Trends

I have written many blog posts concerning the worrisome trends in income and earnings.

Along these lines, one of the measures showing disconcerting trends is that of hourly earnings.

While the concept of hourly earnings can be defined and measured in a variety of ways, below are a few charts that I believe broadly illustrate problematic trends.

The first chart depicts Average Hourly Earnings Of All Employees: Total Private (FRED series CES0500000003)(current value = $27.56):

(click on chart to enlarge image)(chart last updated 2-1-19)

CES0500000003

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of All Employees:  Total Private [CES0500000003] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed February 1, 2019: 
http://research.stlouisfed.org/fred2/series/CES0500000003

This next chart depicts this same measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 2-1-19)

There are slightly different measures available from a longer-term perspective. Pictured below is another measure, the Average Hourly Earnings of Production and Nonsupervisory Employees – Total Private (FRED series AHETPI)(current value = $23.12):

(click on chart to enlarge image)(chart last updated 2-1-19)

AHETPI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of Production and Nonsupervisory Employees:  Total Private [AHETPI] ; U.S. Department of Labor: Bureau of Labor Statistics;  accessed February 1, 2019: 
http://research.stlouisfed.org/fred2/series/AHETPI

Pictured below is this AHETPI measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 2-1-19)

AHETPI Percent Change From Year Ago

I will continue to actively monitor these trends, especially given the post-2009 dynamics.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2712.69 this post is written

Consumer Confidence Surveys – As Of February 1, 2019

The Doug Short site had a post of February 1, 2019 (“Michigan Consumer Sentiment: January Final Remains Low“) that displays the latest Conference Board Consumer Confidence and Thomson/Reuters University of Michigan Consumer Sentiment Index charts.  They are presented below:

(click on charts to enlarge images)

Conference Board Consumer Confidence

University of Michigan Consumer Sentiment Index

There are a few aspects of the above charts that I find highly noteworthy.  Of course, until the sudden upswing in 2014, the continued subdued absolute levels of these two surveys was disconcerting.

Also, I find the “behavior” of these readings to be quite disparate as compared to the other post-recession periods, as shown in the charts between the gray shaded areas (the gray areas denote recessions as defined by the NBER.)

While I don’t believe that confidence surveys should be overemphasized, I find these readings to be notable, especially in light of a variety of other highly disconcerting measures highlighted throughout this site.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2707.65 as this post is written

Broad-Based Indicators Of Economic Activity

The Chicago Fed National Activity Index (CFNAI) and the Aruoba-Diebold-Scotti Business Conditions Index (ADS Index) are two broad-based economic indicators that I regularly feature in this site.

The short-term and long-term trends of each continue to be notable.

The post on the Doug Short site of January 31, 2019, titled “The Philly Fed ADS Index Business Conditions Index Update” displays both the CFNAI MA-3 (3-month Moving Average) and ADS Index (91-Day Moving Average) from a variety of perspectives.

Of particular note, two of the charts, shown below, denote where the current levels of each reading is relative to the beginning of past recessionary periods, as depicted by the red dots.

The CFNAI MA-3:

(click on charts to enlarge images)

CFNAI MA-3 chart

The ADS Index, 91-Day MA:

ADS Index 91-day moving average

Also shown in the aforementioned post is a chart of each with a long-term trendline (linear regression) as well as a chart depicting GDP for comparison purposes.

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2704.88 as this post is written

Employment Cost Index (ECI) – Fourth Quarter 2018

While the concept of Americans’ incomes can be defined in a number of ways, many prominent measures continue to show disconcerting trends.

One prominent measure is the Employment Cost Index (ECI).

Here is a description from the BLS document titled “The Employment Cost Index:  what is it?“:

The Employment Cost Index (ECI) is a quarterly measure of the change in the price of labor, defined as compensation per employee hour worked. Closely watched by many economists, the ECI is an indicator of cost pressures within companies that could lead to price inflation for finished goods and services. The index measures changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits. As a fixed-weight, or Laspeyres, index, the ECI controls for changes occurring over time in the industrial-occupational composition of employment.

On January 31, 2019, the ECI for the fourth quarter was released.  Here are two excerpts from the BLS release titled “Employment Cost Index – December 2018“:

Compensation costs for civilian workers increased 0.7 percent, seasonally adjusted, for the 3-month period ending in December 2018, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.6 percent and benefit costs (which make up the remaining 30 percent of compensation) increased 0.7 percent from September 2018. (See tables A, 1, 2, and 3.)

also:

Compensation costs for civilian workers increased 2.9 percent for the 12-month period ending in December 2018 compared with a compensation costs increase of 2.6 percent in December 2017. Wages and salaries increased 3.1 percent for the 12-month period ending in December 2018 and increased 2.5 percent for the 12-month period ending in December 2017. Benefit costs increased 2.8 percent for the 12-month period ending in December 2018. In December 2017, the increase was 2.5 percent. (See tables A, 4, 8, and 12.)

Below are three charts, updated on January 31, 2019 that depict various aspects of the ECI, which is seasonally adjusted (SA):

The first depicts the ECI, with a value of 135.2:

ECIALLCIV chart

source: US. Bureau of Labor Statistics, Employment Cost Index: Total compensation: All Civilian[ECIALLCIV], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed January 31, 2019:
https://research.stlouisfed.org/fred2/series/ECIALLCIV/

The second chart depicts the ECI on a “Percent Change from Year Ago” basis, with a value of 2.9%:

ECIALLCIV Percent Change From Year Ago

The third chart depicts the ECI on a “Percent Change” (from last quarter) basis, with a value of .7%:

ECI Percent Change chart

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2688.98 as this post is written

Money Supply Charts Through December 2018

For reference purposes, below are two sets of charts depicting growth in the money supply.

The first shows the MZM (Money Zero Maturity), defined in FRED as the following:

M2 less small-denomination time deposits plus institutional money funds.
Money Zero Maturity is calculated by the Federal Reserve Bank of St. Louis.

Here is the “MZM Money Stock” (seasonally adjusted) chart, updated on January 18, 2019 depicting data through December 2018, with a value of $15,753.50 Billion:

MZM money supply

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 3.3%:

MZMSL Percent Change From Year Ago chart

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed Janaury 24, 2019; 
https://research.stlouisfed.org/fred2/series/MZMSL

The second set shows M2, defined in FRED as the following:

M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

Here is the “M2 Money Stock” (seasonally adjusted) chart, updated on January 17, 2019, depicting data through December 2018, with a value of $14,455.1 Billion:

M2 Money Supply chart

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 4.5%:

M2 Money Supply Percent Change From A Year Ago chart

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 24, 2019; 
https://research.stlouisfed.org/fred2/series/M2SL

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2638.70 as this post is written