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Jill Mislinski

Jill Mislinski

Jill has been working with Advisor Perspectives since 2012 and is currently their Research Director as part of Doug Short’s team. Her background is in mathematics and physics and she holds a Master of Science in Physical Science with a concentration in physics and astronomy from the University of Chicago.

Articles by Jill Mislinski

ECRI Weekly Leading Index: Fractional Increase from Previous Week

November 27, 2015

Today’s release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 131.1, up slightly from 131.0 the previous week. The WLI annualized growth indicator (WLIg) is at -2.0, up 0.6 from the previous week’s -2.6, and well off its interim low of -4.7 in mid-January.
"Key Points from Interview on Cyclical Outlook"
ECRI’s latest feature commentary published earlier this week discusses key points on the current cyclical outlook. These include the fact that job growth remains weak despite the latest positive jobs reports, the growth rate cycle is continuing to slow with no signs of change, and the Fed stated that short term interest rates are likely to remain low given current trend growth, and that they are beginning to agree with ECRI’s view.
Read the article here.
The ECRI Indicator Year-over-Year
Below is a chart of ECRI’s smoothed year-over-year percent change since 2000 of their weekly leading index. The latest level is below where it was at the start of the last recession.

Appendix: A Closer Look at the ECRI Index
The first chart below shows the history of the Weekly Leading Index and highlights its current level.

For a better understanding of the relationship of the WLI level to recessions, the next chart shows the data series in terms of the percent off the previous peak.

Read More »

FHFA House Price Index Up 1.3% in Q3

November 25, 2015

The Federal Housing Finance Agency (FHFA) has released the U.S. House Price Index (HPI) for the most recent month. Here is the opening of the report.

U.S. house prices rose 1.3 percent in the third quarter of 2015 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the 17th consecutive quarterly price increase in the purchase-only, seasonally adjusted index. FHFA’s seasonally adjusted monthly index for September was up 0.8 percent from August. House prices rose 5.7 percent from the third quarter of 2014 to the third quarter of 2015.
The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. New this quarter, video highlights of the HPI are available online. [Link to reports]

Investing.com had forecast a 0.5 percent increase.
The chart below illustrates the HPI series, which is not adjusted for inflation, along with a real (inflation-adjusted) series using the Consumer Price Index: All Items Less Shelter.

In the chart above we see that the nominal HPI index is rapidly approaching its pre-recession peak of what’s generally regarded to have been a housing bubble. Adjusted for inflation, the index remains well off its historic high.
The next chart shows the growth of the nominal and real index since the turn of the century.

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New Home Sales Slightly Below Expectations, but Up 10.7% MoM

November 25, 2015

This morning’s release of the October New Home Sales from the Census Bureau at 495,000 disappointed general expectations, and the previous month was revised downward by 21K. The MoM increase was 10.7%. The Investing.com forecast was for 500K.
Here is the opening from the report:

Sales of new single-family houses in October 2015 were at a seasonally adjusted annual rate of 495,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.7 percent (±17.7%)* above the revised September rate of 447,000 and is 4.9 percent (±17.6%)* above the October 2014 estimate of 472,000. [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which is produced in conjunction with the Department of Housing and Urban Development. The data since January 1963 is available in the St. Louis Fed’s FRED repository here.

Over this time frame we see the steady rise in new home sales following the 1990 recession and the acceleration in sales during the real estate bubble that peaked in 2005.
The Population-Adjusted Reality
Now let’s examine the data with a simple population adjustment. The Census Bureau’s mid-month population estimates show a 71% increase in the US population since 1963. Here is a chart of new home sales as a percent of the population.

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Michigan Consumer Sentiment: November Final Survey Drops from Preliminary

November 25, 2015

The University of Michigan Final Consumer Sentiment for November came in at 91.3, a drop from the 93.1 November Preliminary reading. Investing.com had forecast a more optimistic 93.1.
Surveys of Consumers chief economist, Richard Curtin makes the following comments:

Although some of the gains recorded earlier in the month evaporated in late November, consumer confidence remained quite favorable, just below the average for the past six months 91.6. Other than for the past twelve months, the Sentiment Index was higher in November than any time since the start of 2007. Nonetheless, the data indicate that consumers have become increasingly aware of economic cross currents in the domestic as well as the global economy. Nearly all of the recent advance was focused on current conditions rather than future economic prospects, and the entire November gain was due to lower income households. Households with incomes in the top third of the distribution, who account for more than half of all spending, expressed a more cautious optimism. This more guarded outlook reflected somewhat weaker personal financial prospects and a greater insistence that their purchases will be contingent on the availability of discounted prices and reduced interest rates. To be sure, the resilience of consumers has steadied the course of the macroeconomy during the past few years..

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The “Real” Goods on the October Durable Goods Data

November 25, 2015

Earlier today the Census Bureau posted the Advance Report on October Durable Goods New Orders. This series dates from 1992 and is not adjusted for either population growth or inflation.
Let’s now review Durable Goods data with two adjustments. In the charts below the gray line shows the goods orders divided by the Census Bureau’s monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index for All Commodities, chained in today’s dollar value. This gives us the "real" durable goods orders per capita and thus a more accurate historical context in which to evaluate the conventional reports on the nominal monthly data.
We’ve included a callout in the upper right corner to document the decline from the latest month from the all-time peak for the series.

Economists frequently study this indicator excluding Transportation or Defense or both. Just how big are these two subcomponents? Here is a stacked area chart to illustrate the relative sizes over time based on the nominal data. We’ve also included a dotted line to show the relative size of the Core Capex subset, which we’ll illustrate in more detail below.

The next chart is similar to the first one except that it excludes the volatile Transportation component, the series usually referred to as "core" durable goods.

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New Jobless Claims: Down 12K, Better Than Forecast

November 25, 2015

Here is the opening statement from the Department of Labor:

In the week ending November 21, the advance figure for seasonally adjusted initial claims was 260,000, a decrease of 12,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 271,000 to 272,000. The 4-week moving average was 271,000, unchanged from the previous week’s revised average. The previous week’s average was revised up by 250 from 270,750 to 271,000.
There were no special factors impacting this week’s initial claims. [See full report]

Today’s seasonally adjusted 260K new claims was down 12K from last week, below the Investing.com forecast of 270K.
The four-week moving average is at 271,000, unchanged from last week’s revised number.
Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the volatility in recent months.

As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (the highlighted number) is a more useful number than the weekly data. Here is the complete data series.

The headline Unemployment Insurance data is seasonally adjusted.

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Home Prices Rose 4.9% Year-over-Year in September; Rising More Than Double Inflation

November 25, 2015

With yesterday’s release of the September S&P/Case-Shiller Home Price we learned that seasonally adjusted home prices for the benchmark 20-city index were down fractionally month over month at -0.1%. However, the seasonlly adjusted year-over-year change has hovered between 1.9% and 2.3% for nine months.
The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was flat from the previous month. The nonseasonally adjusted index was up 5.5% year-over-year.
Investing.com had forecast a 0.3% MoM seasonally adjusted increase and 5.1% YoY nonseasonally adjusted for the 20-city series.
Here is an excerpt of the analysis from today’s Standard & Poor’s press release.

"Home prices and housing continue to show strength with home prices rising at more than double the rate of inflation," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "The general economy appeared to slow slightly earlier in the fall, but is now showing renewed strength. With unemployment at 5% and hints of higher inflation in the CPI, most analysts expect the Federal Reserve to raise its Fed Funds target range to 25 to 50 basis points, the first increase since 2006.

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Richmond Fed: Manufacturing Slowed in November

November 24, 2015

Today the Richmond Fed Manufacturing Composite Index dropped 2 points to -3 from last month’s -1. Investing.com had forecast an increase to 0. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at -3.0, indicating contraction. The complete data series behind today’s Richmond Fed manufacturing report (available here), which dates from November 1993.
Here is a snapshot of the complete Richmond Fed Manufacturing Composite series.

Here is the latest Richmond Fed manufacturing overview.

Fifth District manufacturing activity slowed in November, according to the most recent survey by the Federal Reserve Bank of Richmond. Shipments remained sluggish and new orders declined. Hiring in the sector changed little compared to the previous month, while the average workweek shortened and wages rose mildly. Raw materials prices rose at a somewhat faster pace, while prices of finished goods increased modestly in November.
Manufacturers’ expectations were less optimistic in November compared to October. However, they still looked for an improvement in business conditions during the next six months. Compared to October’s outlook, producers expected slower growth in shipments and in the volume of new orders in the six months ahead.

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Q3 GDP Per Capita at 1.3% for Second Estimate

November 24, 2015

Earlier today we learned that the Second Estimate for Q3 real GDP came in at 2.1 percent (rounded from 2.08 percent), a slight increase from the 1.5 percent of last month’s Advance Estimate.
Here is a chart of real GDP per capita growth since 1960. For this analysis we’ve chained in today’s dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale.
The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than long-term trend. In fact, the current GDP per-capita is 9.8% below the pre-recession trend but fractionally above the -10.1% below trend in Q1 2014.

The real per-capita series gives us a better understanding of the depth and duration of GDP contractions.

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Q3 GDP Second Estimate at 2.1%, A Slight Improvement from Advance Estimate of 1.5%

November 24, 2015

The Second Estimate for Q3 GDP, to one decimal, came in at 2.1 percent, a small increase from the 1.5 percent for the Advance Estimate. Today’s number was on par with most mainstream estimates, with Investing.com and Briefing.com both forecasting 2.1 percent.
Here is an excerpt from the Bureau of Economic Analysis news release:

Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 2.1 percent in the third quarter of 2015, according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.9 percent.
The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 1.5 percent. With the second estimate for the third quarter, the decrease in private inventory investment was smaller than previously estimated.

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Existing-Home Sales Decline from Last Month’s Jump

November 23, 2015

This morning’s release of the October Existing-Home Sales shows a decline from last month’s jump to a seasonally adjusted annual rate of 5.36 million units from 5.55 million in September. The Investing.com consensus was for 5.40 million. The latest number represents a 3.4% decrease from the previous month and an 3.9% increase year-over-year.
Here is an excerpt from today’s report from the National Association of Realtors.

Lawrence Yun, NAR chief economist, says a sales cooldown in October was likely given the pullback in contract signings the last couple of months. "New and existing-home supply has struggled to improve so far this fall, leading to few choices for buyers and no easement of the ongoing affordability concerns still prevalent in some markets," he said. "Furthermore, the mixed signals of slowing economic growth and volatility in the financial markets slightly tempered demand and contributed to the decreasing pace of sales." [Full Report]

For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 is available in the St. Louis Fed’s FRED repository here.

Over this time frame we clearly see the Real Estate Bubble, which peaked in 2005 and then fell dramatically. Sales were volatile for the first year or so following the Great Recession.

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Weekly Gasoline Price Update: Regular and Premium Down Eight and Seven Cents

November 23, 2015

It’s time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium dropped eight and seven cents, resepctively. WTIC ended today at $41.75, up a penny from the previous week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $2.83 and Los Angeles,CA is averaging $2.81. Indiana has the cheapest at $1.79.
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 closed today at 41.75 a barrel.

The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

Read More »

Chicago Fed: Economic Growth Improved in October

November 23, 2015

"Index shows economic growth improved in October." This is the headline for today’s release of the Chicago Fed’s National Activity Index, and here are the opening paragraphs from the report:

Led by improvements in employment- and production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to –0.04 in October from –0.29 in September. Two of the four broad categories of indicators that make up the index increased from September, but only one category made a positive contribution to the index in October.
The index’s three-month moving average, CFNAI-MA3, decreased to –0.20 in October from –0.03 in September. October’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year.
The CFNAI Diffusion Index, which is also a three-month moving average, decreased to –0.18 in October from –0.07 in September. Forty-one of the 85 individual indicators made positive contributions to the CFNAI in October, while 44 made negative contributions. Forty-six indicators improved from September to October, while 39 indicators deteriorated. Of the indicators that improved, 16 made negative contributions. [Download PDF News Release]

The previous month’s CFNAI was revised upward from -0.

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Kansas City Fed Survey: Back in Positive Territory

November 20, 2015

The Kansas City Fed Manufacturing Survey business conditions indicator measures activity in the following states: Colorado, Kansas, Nebraska, Oklahoma, Wyoming, western Missouri, and northern New Mexico
Quarterly data for this indicator dates back to 1995, but monthly data is only available from 2001.
Here is an excerpt from the latest report:

KANSAS CITY, Mo. The Federal Reserve Bank of Kansas City released the November Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity was largely flat, although expectations for future activity improved considerably.
"We saw our composite index move just slightly into positive territory for the first time since February, as some segments of durable manufacturing improved even as activity in our energy states remained sluggish," said Wilkerson. [Full release here]

Here is a snapshot of the complete Kansas City Fed Manufacturing Survey. The three-month moving average, which helps us visualize trends, is back to levels last seen in April.

The next chart is an overlay of the general and future outlook indexes — the outlook six months ahead. Future factory indexes increase in November to 8, a significant increase from last month’s -1 and the highest its been since February.

Read More »

ECRI Weekly Leading Index: “Multiple Jobholders Boost ‘Full-time’ Employment”

November 20, 2015

Today’s release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 131.0, up slightly from a revised 130.3 the previous week. The WLI annualized growth indicator (WLIg) is at -2.6, up 0.5 from the previous week’s revised -3.1, and well off its interim low of -4.7 in mid-January.
"Multiple Jobholders Boost "Full-time" Employment"
ECRI’s latest feature commentary published earlier this week points out the flaws in the recent positive jobs report. The Fed may increase rates in December as a result of a seemingly strong labor market, but ECRI says the recent jump in employment is due to increases in multiple jobholders. Since May, multiple jobholders have increased 147% while single jobholders shrank – a result that is not obvious as multiple jobholders are considered "full-time".
Here’s an excerpt:

The latest jobs report far exceeded consensus expectations as the economy added 271,000 nonfarm payroll jobs, and the number of full-time workers surpassed its pre-recession high. As a result, a December rate hike appears highly probable, essentially extinguishing lingering concerns following the weak Q3 GDP reading.

Read the article here.
The ECRI Indicator Year-over-Year
Below is a chart of ECRI’s smoothed year-over-year percent change since 2000 of their weekly leading index.

Read More »

New Jobless Claims: Down 5K, As Expected

November 19, 2015

Here is the opening statement from the Department of Labor:

In the week ending November 14, the advance figure for seasonally adjusted initial claims was 271,000, a decrease of 5,000 from the previous week’s unrevised level of 276,000. The 4-week moving average was 270,750, an increase of 3,000 from the previous week’s unrevised average of 267,750.
There were no special factors impacting this week’s initial claims. [See full report]

Today’s seasonally adjusted 271K new claims, unchanged from last week, was on par with the Investing.com forecast of 271K.
The four-week moving average is at 270,750, up from last week’s 267,750.
Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the volatility in recent months.

As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (the highlighted number) is a more useful number than the weekly data. Here is the complete data series.

The headline Unemployment Insurance data is seasonally adjusted. What does the non-seasonally adjusted data look like? See the chart below, which clearly shows extreme volatility of the non-adjusted data (the red dots).

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Conference Board Leading Economic Index Rose in October

November 19, 2015

The Latest Conference Board Leading Economic Index (LEI) for October is now available. The index increased 0.6 percent from September’s 123.3. The latest indicator value came in above the 0.5 percent forecast by Investing.com.
Here is an overview from the LEI press release:

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.6 percent in October to 124.1 (2010 = 100), following a 0.1 percent decline in September, and a 0.1 percent decline in August. [Full notes in PDF]

Here is a chart of the LEI series with documented recessions as identified by the NBER.

For additional perspective on this indicator, see the latest press release, which includes this overview:

"The U.S. LEI rose sharply in October, with the yield spread, stock prices, and building permits driving the increase," said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. "Despite lackluster third quarter growth, the economic outlook now appears to be improving. While the U.S. LEI’s six-month growth rate has moderated, the U.S. economy remains on track for continued expansion heading into 2016."

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage off the previous peak for the index and the number of months between the previous peak and official recessions.

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Philly Fed Manufacturing Index: Activity Improves Slightly in November

November 19, 2015

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 direction of the broader Chicago Fed’s National Activity Index.
The latest gauge of General Activity came in at 1.9, up from last month’s -4.5. The 3-month moving average came in at -2.9, down from -0.7 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook was up at 43.4, versus the previous month’s 36.7.
Today’s 1.9 came in above the -1.0 forecast at Investing.com.
Here is the introduction from the survey released today:

Manufacturing conditions in the region showed slight improvement this month, according to firms responding to the November Manufacturing Business Outlook Survey. The indicator for general activity was slightly positive this month, following two months in negative territory. Indexes for new orders and shipments remained negative, although they increased from lower readings in October. Firms reported slight increases in overall employment this month but declines in average work hours. Manufactured goods prices were near steady. The survey’s future indicators showed improvement.

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New Residential Building Permits: Up 45K in October

November 18, 2015

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for October new residential building permits.
The latest reading of 1.150M was on par with the Investing.com forecast of 1.150M.
Here is the opening of this morning’s monthly report:

Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,150,000. This is 4.1 percent (±1.5%) above the revised September rate of 1,105,000 and is 2.7 percent (±2.2%) above the October 2014 estimate of 1,120,000.
Single-family authorizations in October were at a rate of 711,000; this is 2.4 percent (±1.5%) above the revised September figure of 694,000. Authorizations of units in buildings with five units or more were at a rate of 405,000 in October. [link to report]

Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Here is the data with a simple population adjustment. The Census Bureau’s mid-month population estimates show substantial growth in the US population since 1960. Here is a chart of housing starts as a percent of the population. We’ve added a linear regression through the monthly data to highlight the trend.

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New Residential Housing Starts Below October Forecast

November 18, 2015

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for October new residential housing starts.
The latest reading of 1.106M was below the Investing.com forecast of 1.160M.
Here is the opening of this morning’s monthly report:

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,060,000. This is 11.0 percent (±13.5%)* below the revised September estimate of 1,191,000 and is 1.8 percent (±11.2%)* below the October 2014 rate of 1,079,000.
Single-family housing starts in October were at a rate of 722,000; this is 2.4 percent (±9.9%)* below the revised September figure of 740,000. The October rate for units in buildings with five units or more was 327,000.[link to report]

Here is the historical series for total privately-owned housing starts, which dates from 1959. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

The Population-Adjusted Reality
Here is the data with a simple population adjustment. The Census Bureau’s mid-month population estimates show substantial growth in the US population since 1959. Here is a chart of housing starts as a percent of the population. We’ve added a linear regression through the monthly data to highlight the trend.

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October Consumer Price Index: Up Fractionally from September

November 17, 2015

The Bureau of Labor Statistics released the October CPI data this morning. The year-over-year unadjusted Headline CPI came in at 0.17%, up from -0.04% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.91% (rounded t0 1.9%), little changed from the previous month’s 1.89% (rounded to 1.9%).
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) increased 0.2 percent in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.2 percent before seasonal adjustment.
The indexes for food, energy, and all items less food and energy all increased modestly in October. The food index, which increased 0.4 percent in September, rose 0.1 percent in October, with four of the six major grocery store food group indexes rising. The energy index, which declined in August and September, advanced 0.3 percent in October; major energy component indexes were mixed.
The index for all items less food and energy rose 0.2 percent in October, the same increase as in September. Advances in the indexes for shelter and medical care were the largest contributors to the increase, with the indexes for personal care, airline fares, recreation, alcoholic beverages, and tobacco also rising.

Read More »

Empire State Manufacturing Declined for Fourth Consecutive Month

November 16, 2015

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at -10.7 (-10.74 to two decimals) shows a fractional increase from last month’s -11.6, which still signals a decline in activity. These are some of the lowest levels since 2009.
The Investing.com forecast was for a reading of -6.0.
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.

The November 2015 Empire State Manufacturing Survey indicates that business activity declined for a fourth consecutive month for New York manufacturers. The headline general business conditions index was little changed at -10.7. New orders and shipments also declined, although at a slower pace than last month. Price indexes suggested that input prices increased slightly, while selling prices were slightly lower. Labor market conditions continued to deteriorate, with survey indicators pointing to a decline in both employment levels and hours worked.

Read More »

Weekly Gasoline Price Update: Regular and Premium Down, WTIC Largest Drop Since July

November 16, 2015

It’s time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium dropped five and four cents, resepctively. WTIC ended today at $41.74, down $6.63 from the previous week and its largest weekly decline since July. According to GasBuddy.com, Hawaii has the highest average price for Regular at $2.85 and Los Angeles,CA is averaging $2.88. South Carolina has the cheapest at $1.89.
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 closed today at 41.74 a barrel.

The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

Read More »

ECRI Weekly Leading Index: “The Case of the Wage Inflation Deception”

November 13, 2015

Today’s release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 130.4, down slightly from 129.8 the previous week. The WLI annualized growth indicator (WLIg) is at -2.9, up 0.7 from the previous week’s revised -3.6, and well off its interim low of -4.7 in mid-January.
"The Case of the Wage Inflation Deception"
ECRI’s latest feature commentary published earlier this week discusses the issue of wage inflation deception. Average hourly earnings is currently at a six-year high, which the Fed sees as signs of a stronger labor market. However, aggregate pay and aggregate hours are both at four-month and twenty-month lows, respectively. ECRI believes that a rise in average hourly earnings is not a sign of strength when looking at the larger labor market picture and that the Fed may raise rates in December.
Here’s an excerpt:

At the beginning of this year, following the acceleration in U.S. growth in 2014, we asked with regard to the Fed rate hike, "If not now, when?" It looks like – following an illusory uptick in AHE growth, along with a one month of "strong" nonfarm payroll jobs data that saw its yoy growth rate stay at an 11-month low, and yoy job growth according to the household survey fall to a 22-month low – the answer is December.

Read the article here.

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Producer Price Index: Tenth Consecutive Month of YoY Decline

November 13, 2015

Today’s release of the October Producer Price Index (PPI) for Final Demand came in at -0.4% month-over-month seasonally adjusted, up from -0.5% in September. It is down -1.6% year-over-year, the tenth consecutive month of YoY shrinkage. Core Final Demand (less food and energy) came in at -0.3% MoM, down from 0.2% the previous month and is up 1.7% YoY.The Investing.com forecasts were for 0.2% headline and 0.1% core.
Here is the summary of the news release on Finished Goods:

The Producer Price Index for final demand decreased 0.4 percent in October, seasonally adjusted. Final demand prices moved down 0.5 percent in September and were unchanged in August. On an unadjusted basis, the final demand index fell 1.6 percent for the 12 months ended in October, a record 12-month decline for this index, which was introduced in November 2009.In October, 70 percent of the decrease in the final demand index can be traced to prices for final demand services, which moved down 0.3 percent. The index for final demand goods declined 0.4 percent. More…

Finished Goods: Headline and Core
The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we fully support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core.

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Retail Sales: October Retail Sales Disappoint Expectations

November 13, 2015

The Census Bureau’s Advance Retail Sales Report released this morning shows that seasonally adjusted sales in October increased 0.1% month-over-month and are up 1.7% year-over-year. Core Retail Sales (ex Autos) came in at 0.2% MoM and are up only 0.5% YoY.
The Investing.com forecasts were 0.3% for Headline Sales and 0.4% for Core Sales.
The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

The year-over-year percent change provides another perspective on the historical trend. Here is the headline series.

Here is the year-over-year version of Core Retail Sales.

Retail Sales: "Control" Purchases
The next two charts illustrate retail sales "Control" purchases, which is an even more "Core" view of retail sales. This series excludes Motor Vehicles & Parts, Gasoline, Building Materials as well as Food Services & Drinking Places.

Here is the same series year-over-year. Note the highlighted values at the start of the two recessions since the inception of this series in the early 1990s.

For a better sense of the reduced volatility of the "Control" series, here is a YoY overlay with the headline retail sales.

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New Jobless Claims: Unchanged from Last Week, but Worse than Forecast

November 12, 2015

Here is the opening statement from the Department of Labor:

In the week ending November 7, the advance figure for seasonally adjusted initial claims was 276,000, unchanged from the previous week’s unrevised level. The 4-week moving average was 267,750, an increase of 5,000 from the previous week’s unrevised average of 262,750.
There were no special factors impacting this week’s initial claims. [See full report]

Today’s seasonally adjusted 276K new claims, unchanged from last week, was worse than the Investing.com forecast of 270K.
The four-week moving average is at 267,750, up from last week’s 262,750.
Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the volatility in recent months.

As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (the highlighted number) is a more useful number than the weekly data. Here is the complete data series.

The headline Unemployment Insurance data is seasonally adjusted. What does the non-seasonally adjusted data look like? See the chart below, which clearly shows extreme volatility of the non-adjusted data (the red dots). The 4-week MA gives an indication of the recurring pattern of seasonal change (note, for example, those regular January spikes).

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Intuit Small Business Index: Up Fractionally

November 10, 2015

The latest Intuit Small Business Employment Index (SBI) came out this morning at 97.56 (97.561 to three decimal points), barely changed from last month’s 97.55.
The Intuit Small Business Employment Index (SBI) which measures employment in firms with fewer than 20 employees with data going back to 2007. The real-time data comes directly from Intuit software, not from surveys, and is the only source of monthly data on small business revenues, expenses, and payroll data. It allows for a much earlier read on the health of small businesses.
Here is an excerpt from Intuit’s overview of the index:

The goal of the Intuit Small Business Employment index is to provide a forecast of the current level of employment for firms with fewer than 20 employees that BLS will report when it next releases the BED data. To construct this forecast, we use a combination of data from Intuit’s small business payroll service customers, data from BLS on payroll employment (from the establishment survey) and self-employment (from the household survey). The forecast model measures the relationship between past BLS levels of employment for small firms to total payroll employment, private payroll employment, construction payroll employment, self-employment, plus an index of employment built from data from Intuit Online Payroll customers.

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Weekly Gasoline Price Update: Regular and Premium Up Two Cents

November 9, 2015

It’s time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium gained about two cents each. WTIC ended today at $48.37, up $2.23 from the previous week. According to GasBuddy.com, Hawaii has the highest average price for Regular at $2.87 and Los Angeles,CA is averaging $2.94. South Carolina has the cheapest at $1.93.
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 closed today at 48.37 a barrel.

The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

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The Labor Market Conditions Index for October: Back Above Zero with Revisions

November 9, 2015

The Labor Market Conditions Index (LMCI) is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. It is a dynamic factor model of labor market indicators, essentially a diffusion index subject to extensive revisions based on nineteen underlying indicators in nine broad categories (see the table at the bottom for details). Today’s release of the October data came in at 1.6, up from a revised 1.3 in September. Upward revisions were made to the previous six months and two minor negative revisions were made in September and November of 2014 of -0.2 and -0.1, respectively.
The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976. Here is a linear view of the complete LMCI. We’ve highlighted recessions with callouts for its value the month recessions begin and for the latest index value.

As we readily see, with the exception of the second half of the double-dip recession in the early 1980, sustained contractions in this indicator is a rather long leading indicator for recessions. It is more useful as a general gauge of employment health. Note that in the most recent FOMC minutes for July 28-29, the phrase "labor market conditions" was used ten times.

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