The November ISM manufacturing index was a bit stronger than expected (52.7 vs. 51.8), and it reinforces the growing list of indicators which point to moderate growth and not a double-dip recession. As the chart above suggests, the current level of the ISM index is consistent with real economic growth in the current quarter of 3% or so, which is also consistent with the views of an increasing number of forecasters.
Construction spending was flat in October. Residential construction spending has been flat since mid-2009, continuing its worst performance on record. Total construction spending is now a mere 2% of GDP, also the lowest on record. This sector has been down and out for so long now that the only question is when the rebound will start. The more time passes, the more likely we are to see a rebound, and when it gets underway it could be very powerful. But that good news will probably come after we have seen more good news from other sectors of the economy.
Weekly claims for unemployment haven't changed much in the past few weeks, but the next few weeks could be very interesting. Seasonal adjustment factors anticipate a surge in claims in the coming week, so if actual claims don't surge, then the adjusted number will decline. Seasonal factors then anticipate another surge in claims towards the end of December and the first two weeks of January. If actual claims don't almost double from current levels in the next 6 weeks, then reported claims will decline. I suspect that companies are running at very lean and mean levels, and that would suggest that actual claims will not surge by as much as they have in the past around this time of the year. Something to look forward to in any event.
Scott-
ReplyDeleteLet's talk Europe. Mario Monti said yesterday that Italy will balance it's budget by 2013. Now, this is certainly something to take with a grain of salt, but let's assume for a minute that they are serious. Isn't this big news? If they can do it, then they have better growth prospects and are within ear shot of actually lowering their debt levels. Why is nobody talking about this? Why is nobody encouraged by the result of the Spanish election. Seems to me that Spaniards voted to take their medicine, no? Your thoughts are appreciated.
Real estate is deader than Jimmy Hoffa. I hope this is "good news" in that if real estate recovers, we get a strong US general economic recovery.
ReplyDeleteThe Fed needs to engage in sustained and target-oriented QE to push money into the stock and property markets. If the Fed would set targets for growth, and not inflation, we would be better off.
The experience and record of Japan and Europe central banking--with targeted inflation--is disastrous.
Sharp reductions in federal outlays--defense, USDA, Medicare--would help too.
Auto sales at 13.63 million SAAR, according to Autodata
ReplyDeleteDonny Baseball,
ReplyDeletePerhaps the stock market is "talking" about it with the recent 500 point day. :)
Bob