Saturday , October 21 2017
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Doug Short

Doug Short

My original dshort.com website was launched in February 2005 using a domain name based on my real name, Doug Short. I'm a first wave boomer with a Ph.D. in English from Duke and a lifelong interest in economics and finance. In 2011 my website was acquired by Advisor Perspectives.

Articles by Doug Short

Existing-Home Sales: Fourth Consecutive Decline in August

19 hours ago

This morning’s release of the September Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.39 million units. The Investing.com consensus was for 5.30 million. The latest number represents a 0.7% increase from the previous month and a 1.5% decrease year-over-year.Here is an excerpt from today’s report from the National Association of Realtors.
Lawrence Yun, NAR chief economist, says closings mustered a meager gain in September, but declined on an annual basis for the first time in over a year (July 2016; 2.2 percent). “Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country,” he

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Secular Trends in Residential Building Permits and Housing Starts

2 days ago

Yesterday, we reported separately on the latest residential building permits and housing starts in the government’s monthly report, courtesy of the Census Bureau and the Department of Housing and Urban Development. Despite the fact that both are monthly SAAR series (seasonally adjusted annualized rate), they are exceptionally volatile and subject to extensive revisions. Thus it is unwise to assign much credibility to a single month.Over the long haul, however, the two offer a compelling study of trends in residential real estate, especially when we adjust the Permits and Starts for population growth. Here is an overlay of the two series since the 1959 inception of the Starts data and the 1960 inception of the Permits data. The monthly

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Conference Board Leading Economic Index: First Decline in Over a Year

2 days ago

The latest Conference Board Leading Economic Index (LEI) for September decreased to 128.6 from 128.8 in August and saw its first decline in over a year, partially due to the impact of the hurricanes. The Coincident Economic Index (CEI) came in at 115.7, up fractionally from the previous month.
The Conference Board LEI for the U.S. declined slightly for the first time in over a year. Negative contributions from initial claims for unemployment insurance (inverted), building permits and average weekly manufacturing hours more than offset the positive contributions from the ISM® new orders index and the financial components. In the six-month period ending September 2017, the leading economic index increased 1.7 percent (about a 3.5 percent

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Philly Fed Manufacturing Index: Continued Growth in October

2 days ago

The Philly Fed’s Manufacturing Business Outlook Survey is a monthly report for the Third Federal Reserve District, covers eastern Pennsylvania, southern New Jersey, and Delaware. While it focuses exclusively on business in this district, this regional survey gives a generally reliable clue as to the direction of the broader Chicago Fed’s National Activity Index.The latest Manufacturing Index came in at 27.9, up from last month’s 23.8 and has been positive for fifteen consecutive months. The 3-month moving average came in at 23.5, up from 20.7 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 46.4, a decrease from the previous month’s

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Weekly Unemployment Claims: Down 22K, Lowest Since 1973

2 days ago

Here is the opening statement from the Department of Labor:
In the week ending October 14, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 22,000 from the previous week’s revised level. This is the lowest level for initial claims since March 31, 1973 when it was 222,000. The previous week’s level was revised up by 1,000 from 243,000 to 244,000. The 4-week moving average was 248,250, a decrease of 9,500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 257,500 to 257,750.
Claims taking procedures continue to be severely disrupted in Puerto Rico and the Virgin Islands as a result of power outages and infrastructure damage caused by Hurricanes Irma and

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Weekly Heating Oil Prices

3 days ago

We’ve used data based on the Energy Information Administration (EIA), which publishes price data weekly on home heating oil in 38 states by dollar-per-gallon before taxes. Unlike natural gas and electricity, home heating oil is provided by independent retailers.The latest price of home heating oil nationwide is $2.66, down less than a penny from last week. Supply is also down from last week.EIA’s heating oil data is seasonal – from October through March. Here’s a look at the series since its inception in 1990.

EIA breaks the data down into regions and sub-regions. Here we’ve overlayed the US average with the East Coast

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Five Decades of Middle-Class Wages: September 2017 Update

3 days ago

We’ve updated this series to include Friday’s release of the Consumer Price Index as the deflator and the September monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $37,346, down 12.9% from 44 years ago.The Bureau of Labor Statistics has been collecting data on this workforce cohort since 1964. The government numbers provide some excellent insights on the income history of what we might think of as the private middle-class wage earner.The first snapshot shows the growth of average hourly earnings. The nominal data exhibits a relatively smooth upward trend.
There are, however, two critical pieces of information that dramatically alter the nominal series: The average hours per week and

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New Residential Building Permits: Up in September

3 days ago

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for September new residential building permits. The latest reading of 1.215M was a decrease from 1.272M in August and above the Investing.com forecast of 1.245M.Here is the opening of this morning’s monthly report:
Building Permits

Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,215,000. This is 4.5 percent (±1.6 percent) below the revised August rate of 1,272,000 and is 4.3 percent (±1.7 percent) below the September 2016 rate of 1,270,000. Single-family authorizations in September were at a rate of 819,000; this is 2.4 percent (±1.7 percent) above the

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New Residential Housing Starts Down in Again in September

3 days ago

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for September new residential housing starts. The latest reading of 1.127M was well below the Investing.com forecast of 1.180M and a decrease from the previous month’s upwardly revised 1.183M.Here is the opening of this morning’s monthly report:
Building Permits

Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,215,000. This is 4.5 percent (±1.6 percent) below the revised August rate of 1,272,000 and is 4.3 percent (±1.7 percent) below the September 2016 rate of 1,270,000. Single-family authorizations in September were at a rate of 819,000; this is 2.4

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The Big Four Economic Indicators: Industrial Production Up 0.3% in September

4 days ago

Note: This commentary has been updated to incorporate the September data for Industrial Production.Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:
Nonfarm Employment
Industrial Production
Real Retail Sales
Real Personal Income (excluding Transfer Receipts)
The Latest Indicator DataToday’s report on Industrial Production for September shows a 0.3% increase

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NAHB Housing Market Index: “Builder Confidence Rises Four Points in October”

4 days ago

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook.The latest reading of 68, up 4 from last month’s number, came in above the Investing.com forecast of 64.Here is the opening of this morning’s monthly report:

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “However, builders need to be mindful of long-term repercussions from

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Weekly Gasoline Price Update: Regular and Premium Down Two Cents

4 days ago

It’s time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium are down six cents each from last week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $3.07 and Santa Barbara, CA is the most expensive city, averaging $3.20. Arkansas has the cheapest at $2.19. The WTIC end of day spot price closed at 51.87, a 1.8% increase from this time last week.How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here’s a visual answer.
The next chart is a monthly chart overlay of West Texas Light Crude, Brent Crude, and unleaded gasoline end-of-day spot prices (GASO).In this monthly chart, WTIC end of day spot

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World Markets Update

4 days ago

All eight indexes on our world watch list have posted gains for 2017 through October 16. The top performer thus far is Hong Kong’s Hang Seng with a gain of 30.42%, followed by India’s BSE SENSEX at 22.56%. In third is our own S&P 500 with 14.24%.The Last Four WeeksThe tables below provide a concise overview of performance comparisons over the last four weeks for these eight major indexes. We’ve also included the average for each week so that we can evaluate the performance of a specific index relative to the overall mean and better understand weekly volatility. The colors for each index name help us visualize the comparative performance over time.
2017 YTD Performance
Here is an overlay of the eight illustrating their comparative

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A Long-Term Look at Inflation

5 days ago

The Consumer Price Index for Urban Consumers (CPI-U) released Friday puts the year-over-year inflation rate at 2.23%. It is substantially below the 3.76% average since the end of the Second World War and above its 10-year moving average, now at 1.74%.For a comparison of headline inflation with core inflation, which is based on the CPI excluding food and energy, see this monthly update.
For a better understanding of how CPI is measured and how it impacts your household, see our Inside Look at CPI components.
For an even closer look at how the components are behaving, see this X-Ray View of the data for the past six months.
The Bureau of Labor Statistics (BLS) has compiled CPI data since 1913, and numbers are conveniently available

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Inflation: An X-Ray View of the Components

5 days ago

Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation.We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components. Some of us have higher transportation costs, others medical costs, etc.A conspicuous feature in the year-over-year table is the volatility in energy, significantly a result of gasoline prices, which is also reflected in Transportation.
Here is the same table with month-over-month numbers (not seasonally

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Empire State Manufacturing Survey: Activity Grew in October

5 days ago

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 30.2 was an increase of 5.8 from the previous month’s 24.4.The Investing.com forecast was for a reading of 20.7.The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state.
Here is the opening paragraph from the report.
Business activity grew at a robust pace in New York State, according to firms responding to the October 2017 Empire State Manufacturing Survey. The headline general business

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S&P 500 Snapshot: Up 14% YTD

7 days ago

The index closed with a daily gain of 0.09% and a week-over-week gain of 0.15%. The index is up 14.0% YTD.The U.S. Treasury puts the closing yield on the 10-year note at 2.28%.
Here is a daily chart of the S&P 500. Today’s selling puts the volume 2% above its 50-day moving average.Here’s a monthly snapshot of the index going back to December 2007.A Perspective on DrawdownsHere’s a snapshot of record highs and selloffs since the 2009 trough.Here is a more conventional log-scale chart with drawdowns highlighted.Here is a linear scale version of the same chart with the 50- and 200-day moving averages.A Perspective on VolatilityFor a sense of the correlation between the closing price and intraday volatility, the chart below overlays the S&P

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The Big Four Economic Indicators: September Real Retail Sales

8 days ago

Note: With the release of September Retail Sales and the Consumer Price Index, we’ve updated this commentary to include the latest Real Retail Sales.Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:
Nonfarm Employment
Industrial Production
Real Retail Sales
Real Personal Income (excluding Transfer Receipts)
The Latest Indicator DataMonth-over-month nominal sales

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What Inflation Means to You: Inside the Consumer Price Index

8 days ago

Note: The charts in this commentary have been updated to include today’s Consumer Price Index news release.Back in 2010, the Fed justified its aggressive monetary policy "to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate" (full text). In effect, the Fed has been trying to increase inflation, operating at the macro level. But what does inflation mean at the micro level — specifically to your household?Let’s do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart below illustrates the components

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ECRI Weekly Leading Index: “Consensus Plays Catch Up to Our Global Growth Call”

8 days ago

Today’s release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 145.2, up 1.2 from the previous week. Year-over-year the four-week moving average of the indicator is now at 3.62%, up from 3.17% last week. The WLI Growth indicator is now at 1.2, up from 0.7 the previous week."Consensus Plays Catch Up to Our Global Growth Call"ECRI’s latest article touts their predictions from a year ago regarding global growth, especially in the G7. ECRI’s 20-Country Long Leading Index was also showing promise in February. Consensus has finally "caught up" with their predictions based on coincident data, like GDP. Read more
The ECRI Indicator Year-over-YearBelow is a chart of ECRI’s smoothed year-over-year percent change

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Michigan Consumer Sentiment: October Preliminary Surges, Highest Since ’04

8 days ago

The University of Michigan Preliminary Consumer Sentiment for October came in at 101.1, up 6.0 from the September Final reading of 95.1 and its highest since 2004. Investing.com had forecast 95.1.Surveys of Consumers chief economist, Richard Curtin, makes the following comments:
Consumer sentiment surged in early October, reaching its highest level since the start of 2004. The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which would mark the 2nd longest expansion since the mid 1800’s. While the early October surge indicates greater optimism about the

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September Retail Sales: Up 1.6% MoM

8 days ago

The Census Bureau’s Advance Retail Sales Report for September released this morning showed a slight increase over the August figures. Headline sales came in at 1.6% month-over-month to one decimal. Today’s headline number was slightly below the Investing.com consensus of 1.7%. Core sales (ex Autos) came in at 1.0% MoM. Figures were revised going back to August 2016.Here is the introduction from today’s report:
Advance estimates of U.S. retail and food services sales for September 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $483.9 billion, an increase of 1.6 percent (±0.5 percent) from the previous month, and 4.4 percent (±0.7 percent) above September 2016. Total sales

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Consumer Price Index: September Headline at 2.2%

8 days ago

The Bureau of Labor Statistics released the September Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.23%, up from 1.94% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.69%, up fractionally from the previous month’s 1.68%.Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.2 percent.

The gasoline index increased 13.1 percent in September and accounted for about three-fourths

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The Philly Fed ADS Business Conditions Index Update

9 days ago

Note: We’ve updated our periodic look at the Philly Fed ADS Index today’s release, which includes jobless claims through October 7.The Philly Fed’s Aruoba-Diebold-Scotti Business Conditions Index (hereafter the ADS index) is a fascinating but relatively little known real-time indicator of business conditions for the U.S. economy, not just the Third Federal Reserve District, which covers eastern Pennsylvania, southern New Jersey, and Delaware. Thus it is comparable to the better-known Chicago Fed’s National Activity Index (more about the comparison below).Named for the three economists who devised it, the index, as described on its home page, "is designed to track real business conditions at high frequency."
The index is based on six

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September Producer Price Index: Final Demand Up 0.4% MoM

9 days ago

Today’s release of the September Producer Price Index (PPI) for Final Demand came in at 0.4% month-over-month seasonally adjusted, up from last month’s 0.2%. It is at 2.6% year-over-year, up from 2.4% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.4% MoM, up from 0.1% the previous month and is up 2.2% YoY. Investing.com MoM consensus forecasts were for 0.4% headline and 0.2% core.Here is the summary of the news release on Final Demand:
The Producer Price Index for final demand advanced 0.4 percent in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices moved up 0.2 percent in August and edged down 0.1 percent in July. (See table

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Weekly Unemployment Claims: Down 15K, Affected by Hurricanes

9 days ago

Here is the opening statement from the Department of Labor:
In the week ending October 7, the advance figure for seasonally adjusted initial claims was 243,000, a decrease of 15,000 from the previous week’s revised level. The previous week’s level was revised down by 2,000 from 260,000 to 258,000. The 4-week moving average was 257,500, a decrease of 9,500 from the previous week’s revised average. The previous week’s average was revised down by 1,250 from 268,250 to 267,000.
Hurricanes Harvey, Irma, and Maria impacted this week’s claims. [See full report]

Today’s seasonally adjusted 243K new claims, down 15K from last week’s revised 258K, was better than the Investing.com forecast of 251K.Here is a close look at the data over the

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Millennials and the Labor Force: A Look at the Trends

10 days ago

Millennials make up the largest percentage of our population today, yet have seen some of the lowest labor force participation growth and highest unemployment out of all age groups since the turn of the century. This has larger implications when coupled with slow wage growth, high home prices, and mounting student debt.The general consensus is that Millennials consist of individuals born between the early 1980s to the early 2000s. Here we will focus on the Bureau of Labor Statistics data for those born between 1981 and 2000. Based on this definition, Millennials currently make up about 32 percent of the Civilian NonInstitutional Population, which is the lowest fraction of the population for this cohort since the BLS began its five-year

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Trends in the Teenage Workforce Update

10 days ago

In July of 2015, CNN Money featured an article with the optimistic and intriguing title "More American teens are getting jobs. That’s good for everyone." The article opens with an example of 16-year-old Lauren Miller, who loves her minimum wage job at Hershey Lodge in Pennsylvania, "roasting s’mores and organizing activities for kids." The article goes on to quote Diane Swonk, chief economist at Mesirow Financial: "The trend is moving in the right direction," says Swonk. The teenage economy "is certainly something I’m watching more closely" [link].After reading the article, we revised one of our monthly charts on Labor Force Participation to include the age 16-19 cohort — one we elsewhere combine with the 20-24 year-olds. The first

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Baby Boomer Employment Across Time

10 days ago

With the release of the September employment report, let’s review the status of the 20th century Baby Boom, which was one of the most powerful demographic events in the history of the United States. The chart below illustrates the 19-year surge in births following World War II that stretched from 1946 through 1964.The boom in births is all the more remarkable when we view the births-to-population ratio. The ratio had dropped dramatically during the Great Depression, which made the post-war boom in births even more dramatic. The regression drawn through the series helps us better appreciate the magnitude of the boom and the subsequent drop in births during the "stagflation" era of the seventies and early 1980s.
Boomers in the

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Job Openings & Labor Turnover: Clues to the Business Cycle

10 days ago

The latest JOLTS report (Job Openings and Labor Turnover Summary), with data through August, is now available. The first chart below shows four of the headline components of the overall series, which the BLS began tracking in December 2000. The time frame is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular Nonfarm Employment (PAYEMS) series goes back to 1939. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends.The chart below shows the monthly data points four of the JOLTS series. They are quite volatile, hence the inclusion of six-month moving averages to help identify the trends. For the last

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