Category Archives: Uncategorized

Consumer Confidence Surveys – As Of November 27, 2018

The Doug Short site had a post of November 27, 2018 (“Consumer Confidence Declined in November“) 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

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.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2676.67 as this post is written

Money Supply Charts Through October 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 November 21, 2018 depicting data through October 2018, with a value of $15,603.2 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%:

MZM Money Supply Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 26, 2018:

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 November 15, 2018, depicting data through October 2018, with a value of $14,271.5 Billion:

M2 Money Supply

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 3.7%:

M2 Money Supply Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 26, 2018:

https://research.stlouisfed.org/fred2/series/M2SL

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2632.56 as this post is written

Durable Goods New Orders – Long-Term Charts Through October 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 October 2018, updated on November 21, 2018. This value is $248,520 ($ 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 6.7%:

DGORDER Percent Change From 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 November 21, 2018;

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 2641.89 as this post is written

Walmart’s Q3 2019 Results – Comments

I found various notable items in Walmart’s Q3 2019 management call transcript (pdf) dated November 15, 2018.  (as well, there is Walmart’s press release of the Q3 results (pdf) and related presentation materials)

I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly management call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Brett Biggs, EVP & CFO, page 10, wrt Walmart U.S.:

Walmart U.S. delivered strong comp sales growth of 3.4 percent. We
started the quarter strong with a solid back-to-school season and finished
strong with solid sales of fall seasonal goods. Our omnichannel offering
continues to resonate with customers and drive momentum in this healthy
consumer environment. Keep in mind that we lapped last year’s comp
sales benefit of 30-50 basis points from hurricanes, with only a marginal
benefit from storms this year. On a two-year stacked basis, comp sales
increased 6.1 percent. Growth was strong across channels with store
traffic and ticket up 1.2 percent and 2.2 percent, respectively, while
eCommerce sales grew 43 percent and contributed approximately 140
basis points to the segment comp.

comments from Brett Biggs, EVP & CFO, page 11, wrt Walmart U.S.:

Walmart U.S. gross margin rate declined 28 basis points due
primarily to the pricing strategy, higher transportation expenses, and the
increasing mix of eCommerce growth, partially offset by the overlap from
last year’s hurricanes.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2701.58 as this post is written

Charts Indicating Economic Weakness – November 2018

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 October 2018 Wall Street Journal Economic Forecast Survey the consensus (average estimate) among various economists is for 3.1% GDP growth in 2018 and 2.4% 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 October had a last value of $252,692 Million.  Shown below is  the measure displayed on a “Percent Change From Year Ago” basis with value 7.4%, last updated November 13, 2018:

Monthly Treasury Receipts

source:  U.S. Department of the Treasury. Fiscal Service, Total Federal Receipts [MTSR133FMS], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed November 13, 2018:

https://fred.stlouisfed.org/series/MTSR133FMS

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Real Hourly Earnings

The level and growth rates of wages and household earnings continues to be (highly) problematical.  I have extensively discussed these worrisome trends in income and earnings.

As seen in many measures the problem is chronic (i.e long-term) in nature.

Shown below is a chart depicting the 12-month percent change in real average weekly earnings for all employees from January 2008 – September 2018.  As seen in the chart below, growth in this measure over the time period depicted has been intermittent, volatile, and, especially since 2017, weak:

U.S. Real Average Weekly Earnings

source:  Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Real average weekly earnings increase 1.1 percent, September 2017 to September 2018 on the Internet at https://www.bls.gov/opub/ted/2018/real-average-weekly-earnings-increase-1-point-1-percent-september-2017-to-september-2018.htm(visited November 09, 2018).

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Unemployment

I have written extensively concerning unemployment, as the current and future unemployment issue is of tremendous importance.

The consensus belief is that employment is robust, citing total nonfarm payroll growth and the current unemployment rate of 3.7%.  However, my analyses continue to indicate that the conclusion that employment is strong is incorrect.  While the unemployment rate indicates that unemployment is (very) low, closer examination indicates that this metric is, for a number of reasons, highly misleading.

My analyses indicate that the underlying dynamics of the unemployment situation remain exceedingly worrisome, especially with regard to the future.  These dynamics are numerous and complex, and greatly lack recognition and understanding, especially as how from an “all-things-considered” standpoint they will evolve in an economic and societal manner.  I have recently written of the current and future U.S. employment situation on the “U.S. Employment Trends” page.

While there are many charts that can be shown, one that depicts a worrisome trend is the  Civilian Labor Force Participation Rate for those with a Bachelor’s Degree and Higher, 25 years and over.  Among disconcerting aspects of this measure is the long-term (most notably the post-2009) trend, especially given this demographic segment.

The current value as of the November 2, 2018 update (reflecting data through the October employment report) is 73.4%:

Civilian Labor Force Participation Rate: Bachelor's Degree and Higher, 25 years and over

source:  U.S. Bureau of Labor Statistics, Civilian Labor Force Participation Rate: Bachelor’s Degree and Higher, 25 years and over [LNS11327662], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed November 12, 2018:

https://fred.stlouisfed.org/series/LNS11327662

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New Home Sales

For numerous economic reasons, the number and price of homes sales, especially new home sales, is a very important aspect of the U.S. economy.

As an indication for the overall health of the overall new home sales market, below is the Dow Jones Home Construction Index, depicted on a weekly basis, LOG scale, from the year 2000 through the closing price of 635.79 on November 13, 2018.  As one can see, the latest peak was on January 24, 2018 at 1008.89:

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

DJUSHB Weekly chart since 2000

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Other Indicators

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

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2722.18 as this post is written

Markets During Periods Of Federal Reserve Intervention – October 31, 2018 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 October 31, 2018) from the Doug Short site post of November 6 (“Treasury Yields:  A Long-Term Perspective“):

S&P500 during Federal Reserve Intervention

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2778.97 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 = $27.30):

(click on chart to enlarge image)(chart last updated 11-2-18)

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 November 2, 2018:

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 11-2-18)

Average Hourly Earnings Percent Change From Year Ago

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 = $22.89):

(click on chart to enlarge image)(chart last updated 11-2-18)

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 November 2, 2018:

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 11-2-18)

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 2714.94 this post is written

Employment Cost Index (ECI) – Third 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 October 31, 2018, the ECI for the third quarter was released.  Here are two excerpts from the BLS release titled “Employment Cost Index – September 2018“:

Compensation costs for civilian workers increased 0.8 percent, seasonally adjusted, for the 3-month period ending in September 2018, the U.S. Bureau of Labor Statistics reported today. Wages and salaries (which make up about 70 percent of compensation costs) increased 0.9 percent and benefit costs (which make up the remaining 30 percent of compensation) increased 0.4 percent from June 2018. (See tables A, 1, 2, and 3.)

also:

Compensation costs for civilian workers increased 2.8 percent for the 12-month period ending in September 2018 compared with a compensation costs increase of 2.5 percent in September 2017. Wages and salaries increased 2.9 percent for the 12-month period ending in September 2018 and increased 2.5 percent for the 12-month period ending in September 2017. Benefit costs increased 2.6 percent for the 12-month period ending in September 2018. In September 2017, the increase was 2.4 percent. (See tables A, 4, 8, and 12.)

Below are three charts, updated on October 31, 2018 that depict various aspects of the ECI, which is seasonally adjusted (SA):

The first depicts the ECI, with a value of 134.3:

ECIALLCIV_10-31-18 134.3

source: US. Bureau of Labor Statistics, Employment Cost Index: Total compensation: All Civilian[ECIALLCIV], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed October 31, 2018:

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 2.8%:

ECIALLCIV_10-31-18 134.3 2.8 Percent Change From Year Ago

The third chart depicts the ECI on a “Percent Change” (from last quarter) basis, with a value of .8%:

ECIALLCIV_10-31-18 134.3 .8 Percent Change

_________

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 2719.26 as this post is written

Consumer Confidence Surveys – As Of October 30, 2018

The Doug Short site had a post of October 30, 2018 (“Consumer Confidence Up Again in October“) 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

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 2682.63 as this post is written

Velocity Of Money – Charts Updated Through October 26, 2018

Here are three charts from the St. Louis Fed depicting the velocity of money in terms of the MZM, M1 and M2 money supply measures.

All charts reflect quarterly data through the 3rd quarter of 2018, and were last updated as of October 26, 2018.

Velocity of MZM Money Stock, current value = 1.326:

MZMV_10-26-18 1.326

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 28, 2018:

http://research.stlouisfed.org/fred2/series/MZMV

Velocity of M1 Money Stock, current value = 5.586:

M1V_10-26-18 5.586

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 28, 2018:

http://research.stlouisfed.org/fred2/series/M1V

Velocity of M2 Money Stock, current value = 1.455:

M2V_10-26-18 1.455

_________

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 2658.69 as this post is written