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Advance Estimate of 2nd Quarter GDP & Revisions From 2014 to Present

July 31, 2017

The Advance Estimate of 2nd Quarter GDP from the Bureau of Economic Analysis released on Friday included an annual revision to the past 3 years of GDP releases, revising previously published data from the first quarter of 2014 through the first quarter of 2017, which on net indicated that US economic growth over the period from 2014 to 2016 was at a 2.3% annual rate, revised from the 2.2% composite annual growth previously published for that period of the current expansion.  In addition to the recent quarters of 2017, this report also showed that the GDP growth rate for 2014 was revised from 2.4% to 2.6%; that the growth rate for 2015 was revised from 2.6% to 2.9%, and that the GDP growth rate for 2016 was revised from 1.6% to 1.5%.
The first quarter of 2017, which had been revised up to a

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The Great US Natural Gas Exports Myth

July 10, 2017

Mr Trump was in Europe last week for the annual meeting of the G-20, the heads of government for the world’s 20 largest economies.  Part of Trump’s agenda on that trip was to promote exports of US natural gas in Europe, with the apparent intention of undermining Russian dominance of natural gas markets on the continent.  The groundwork for this natural gas scheme was laid in late June, when the US Senate voted 98 to 2 to impose further sanctions on Russia, with the intention of waylaying the construction of the Nord-Stream 2, a subsea natural gas pipeline planned from Russia to Germany, which international energy firms are involved in.  To an extent, the Europeans went along with that scheme, extending their own energy sanctions against Russia to January 31st, 2018.  Nonetheless, I found

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May Personal Income up 0.4%, Spending up 0.1%; 2 Months PCE to Add 184 Basis Points to Q2 GDP

July 3, 2017

The May report on Personal Income and Outlays, released on Friday by the Bureau of Economic Analysis, gives us nearly half the data that will go into 2nd quarter GDP, since it gives us 2 months of data on our personal consumption expenditures (PCE), which accounts for more than 69% of GDP, and the PCE price index, the inflation gauge the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated.  This same report also gives us monthly personal income data, disposable personal income, which is income after taxes, and our monthly savings rate.  However, because this report feeds in to GDP and other national accounts data, the change reported for each of those are not the

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OPEC cuts still not reducing global oil glut, and they know it

May 15, 2017

Both oil and natural gas prices moved higher last week, as both commodities saw larger than expected withdrawals of supplies from storage, while oil prices were also underpinned by expectations that OPEC would extend their production cuts when they meet in Vienna later this month.    An expression of confidence in that extension from Saudi energy minister Khalid al-Falih on Monday buttressed the rebound from last week’s crash, as oil rose 21 cents to close at $46.43 a barrel.  Prices then moved lower on Tuesday, closing at $45.88 a barrel, after the EIA raised its forecast on domestic crude output for this year and next, and cut its 2017 price outlook.  However, when the weekly EIA report showed the largest crude oil inventory draw since December, oil prices surged as much as 4% before

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4th Quarter GDP Revised to Show Growth at a 2.1% Rate

April 4, 2017

The Third Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 2.1% rate in the 4th quarter, revised from the 1.9% growth rate indicated by the second estimate reported last month, as personal consumption expenditures and inventory investment were greater than was previously estimated, while losses from trade were worse than was previously estimated.  In current dollars, our fourth quarter GDP grew at a 4.2% annual rate, increasing from what would work out to be a $18,675.3 billion a year output rate in the 3rd quarter to a $18,869.4 billion annual rate in the 4th quarter, with the headline 2.1% annualized rate of increase in real output arrived at after an annualized inflation adjustment averaging 2.1%, also known as the GDP deflator, was applied to the current dollar change.

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Half million barrel per day global oil surplus persisted in February

March 21, 2017

Since oil pricing, and hence the industry’s plans for new oil field exploitation in the US, is still largely dependent on what OPEC does, we’ll start by looking at the new OPEC Monthly Oil Market Report for March, which covers February OPEC & global data.  The first table we’ll include here is from page 60 of that OPEC pdf and it shows oil production in thousands of barrels per day for each of the OPEC members over the recent years, quarters and months, just as the column headings are labeled. For all their official production measurements, OPEC uses "secondary sources", such as analyst’s reports from satellites and shipping data, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures.  This is also the oil production data we often see quoted in the media, other than that from independent analysis by energy research divisions of organizations such as Platts and Reuters, who will compute & use their own numbers..

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Trade Deficit, Up 9.6% in January, on Track to Clip 78 Basis Points from Q1 GDP

March 14, 2017

Our trade deficit rose by 9.6% January, as the value of both our exports and our imports increased, but our imports increased by much more. The Census report on our international trade in goods and services for January indicated that our seasonally adjusted goods and services trade deficit rose by $4.2 billion to $48.5 billion in January, the highest in 5 years, from a December deficit which was revised but statistically unchanged at $44.3 billion. The value of our January exports rose by $1.1 billion to $192.1 billion on a $1.1 billion increase to $128.0 billion in our exports of goods and a decrease of less than $0.1 billion to $61.1 billion in our exports of services, while our imports rose $5.3 billion to $240.6 billion on a $5.1 billion increase to $197.6 billion in our imports of goods and a $0.2 billion increase to $42.9 billion in our imports of services.   Export prices averaged 0.2% higher in January, so the real growth in exports was less than the nominal dollar value by that percentage, while import prices were 0.6% higher, meaning real imports were smaller than the nominal dollar values reported here by that percentage.
The increase in our January exports of goods was mostly a result of higher exports of industrial supplies and of automotive products, offset by a decrease in our exports of capital goods.

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4th Quarter GDP Growth Remains at a 1.9% Rate

March 6, 2017

The Second Estimate of our 4th Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services grew at a 1.9% rate in the 4th quarter, unrevised from the advance estimate reported last month, as personal consumption expenditures were greater than initially estimated, but both private and state and local investment grew less than was first estimated.  In current dollars, our fourth quarter GDP grew at a 3.9% annual rate, increasing from what would work out to be a $18,675.3 billion a year output rate in the 3rd quarter to a $18,855.5 billion annual rate in the 4th quarter, with the headline 1.9% annualized rate of increase in real output arrived at after an annualized inflation adjustment averaging 2.0%, aka the GDP deflator, was applied to the current dollar change.
While we cover the details below, remember that the press release for the GDP reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that which actually occurred over the 3 month period, and that they only use the prefix "real" to indicate that the change has been adjusted for inflation using prices chained from 2009, and then calculate all percentage changes in this report from those artificial 2009 dollar figures, which we think would be better thought of as representing quantity indexes.

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Despite OPEC Cuts, Global Glut Grows A Million Barrels a Day

February 21, 2017

Last week saw the release of the OPEC Monthly Oil Market Report for February (pdf), which covers global oil data for January.  It’s the production data in that report, not the IEA estimates that we looked at last week, that will determine, by OPEC’s own standards, whether their members have complied with the production cuts they have agreed to or not.  This first table we’ll look at is from page 59 of the OPEC pdf and it shows oil production in thousands of barrels per day for each of the OPEC members over the recent years, quarters and months as the column headings are labeled.  For all their official production measurements, OPEC uses "secondary sources", such as analyst’s reports derived from satellite and shipping data, as an impartial adjudicator of their output quotas and production cuts, to resolve any potential disputes that might arise if each member reported their own figures.  This is also the data we typically see quoted in the media, other than in independent analysis by energy research divisions of organizations such as Platts and Reuters that will publish their own numbers.

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New Record Highs for US Oil Exports, for Gasoline Inventories, and for Oil Inventories

February 20, 2017

This week’s oil data for the week ending February 10th from the US Energy Information Administration showed that our imports of crude oil fell back from last week’s 4 year high but still remained elevated, while our refining of that oil fell for the 5th week in a row to the second lowest rate in a year, and as a result there was another large surplus of crude that was added to our oil supplies, which were thus boosted to an all time high.  Our imports of crude oil fell by an average of 881,000 barrels per day to an average of 8,491,000 barrels per day during the week, while at the same time our exports of crude oil rose by 459,000 barrels per day to an average of 1,026,000 barrels per day, which meant that our effective imports netted out to 7,465,000 barrels per day for the week, 1,340,000 barrels per day less than last week.  At the same time, our crude oil production slipped by 1,000 barrels per day to an average of 8,977,000 barrels per day, which means which means that our daily supply of oil, from net imports and from wells, totaled an average of 16,442,000 barrels per day during the week.
At the same time, refineries reportedly used 15,458,000 barrels of crude per day during the week, 435,000 barrels per day less than during the prior week, while at the same time, 1,361,000 barrels of oil per day were being added to oil storage facilities in the US.

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OPEC cuts their oil output but keeps on drilling

February 13, 2017

Oil continued to trade in a narrow range last week as news that OPEC had achieved 90% compliance to their agreed to production cuts offset the news that US oil supplies saw their 2nd largest weekly jump in the EIA’s records.   Strength in U.S. dollar, which makes internationally traded commodities cheaper, weighed on oil prices to start off the week, as US WTI oil for March delivery fell 1.5% to close at $53.01 a barrel, after closing the prior week at $53.83.  Prices continued to fall on Tuesday, after the EIA forecast that US crude output would hit a fracking era high in 2018 and the American Petroleum Institute reported the 2nd largest increase in oil inventories in history, along with large increases in gasoline and distillate supplies, and again ended another 1.5% lower at $52.17 a barrel.   However, prices steadied on Wednesday, despite confirmation of the large oil supply increase from the EIA, and closed up 17 cents at $52.34 a barrel, as a drop in gasoline supplies encouraged traders to think that demand for gas was returning to normal.  Momentum from that rebound carried into Thursday, when prices rose to close at $53.00, after oil ministers from Iran and Qatar suggested that OPEC production cuts might be extended into the 2nd half of this year.  Oil prices then rose 1.6% on Friday to close out the week 3 cents higher than last week at $53.

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Using December CPI to compute real PCE shows a 138 basis point boost to 4th qtr GDP

January 23, 2017

The consumer price index increased by 0.3% in December, as higher prices for fuel and housing were only slightly offset by lower prices for groceries. The Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the seasonally adjusted price index for urban consumers rose 0.3% in December after it had risen 0.2% in November, 0.4% in October, 0.3% in September, and 0.2% in August.  The unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose to 241.432 in December from 241.353 in November, which left it statistically 2.075% higher than the 236.525 index reading of last December, which is reported as a 2.1% YoY increase.  Regionally, prices for urban consumers have risen by 2.5% in the West, by 2.0% in the South, 1.9% in the Northeast and by 1.8% in the Midwest over the past year, with generally greater price increases within regions in cities of more than 1,500,000 people.  With higher prices for gasoline partially responsible for the increase in the index, seasonally adjusted core prices, which exclude food and energy, rose by 0.2% for the month, with the unadjusted core index rising from 249.227 to 249.134, which left it 2.197% ahead of its year ago reading of 243.779…
The volatile seasonally adjusted energy price index increased by 1.5% in December, after it had risen by 1.2% in November, 3.5% in October, and 2.

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Producer Prices Up 0.3% in December, Unprocessed Goods Spike 8.3%

January 16, 2017

The seasonally adjusted Producer Price Index (PPI) for final demand rose 0.3% in December as prices for finished wholesale goods increased 0.7%, while margins of final services providers increased by 0.1%.  This followed a November report that indicated the overall PPI had increased 0.4%, with prices for finished goods up 0.2% while final demand for services rose 0.5%, and an October report that indicated the PPI was unchanged, with prices for finished goods up 0.4% while final demand for services fell 0.3%.   Producer prices are now up 1.6% from a year ago, a figure which is now rapidly increasing, since most of the price decreases relating to lower oil and commodity prices went by the boards in early 2015.  While investors may follow this index as a leader of consumer inflation, its primary importance to us is as an adjustment for changes in price to metrics in other economic reports.  Other than personal consumption expenditures, imports, and exports, most other components of GDP, including all inventories, are deflated with components of this index. 

As noted, the price index for final demand for goods, aka ‘finished goods’, rose by 0.7% in December, after rising by 0.2% in November, 0.4% in October, 0.5% in September, but after falling by 0.4% in August, as the index for wholesale energy prices rose 2.

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Further Deterioration of Trade Deficit in November Means A Bigger Hit to 4th Quarter GDP

January 9, 2017

Our trade deficit rose by 6.8% in November as the value of our imports increased while the value of our exports was somewhat lower. The Census report on our international trade in goods and services for November indicated that our seasonally adjusted goods and services trade deficit rose by $2.88 billion to $45.24 billion in November from a revised October deficit of $42.36 billion.  The value of our November exports fell by $0.4 billion to $185.8 billion on a $0.7 billion decrease to $122.4 billion in our exports of goods which was partially offset by a $0.3 billion increase to $63.5 billion in our exports of services, while our imports rose $2.4 billion to $231.1 billion on a $2.7 billion increase to $189.0 billion in our imports of goods which was slightly offset by a $0.3 billion decrease to $42.1 billion in our imports of services.  Export prices were on average 0.1% lower in November, so our real November exports would be greater than the nominal value by 0.1%, while import prices were 0.3% lower, meaning real imports were greater than the nominal dollar values reported here by that percentage….
The drop in our November exports of goods resulted from lower exports of capital goods and automotive vehicles, which were partially offset by increases in our exports of industrial supplies and consumer goods.

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US gasoline production at record levels, but supplies are still dropping on record exports

January 2, 2017

Prices for both oil and natural gas reached 2016 highs on Wednesday of last week before sliding lower, in trading volume that was about one-third of normal.  After closing the prior week at $53.02 a barrel, prices for US oil rose steadily after the markets opened on Tuesday, closing 1.7% higher at $53.90 a barrel, as traders focused on the OPEC and non-OPEC production cuts that are set to begin next week.  The OPEC inspired rally continued into Wednesday, with prices hitting $54.33 a barrel before getting knocked back when the American Petroleum Institute’s weekly report showed a 4.2 million barrel increase in commercial crude oil inventories, instead of the expected 1.5 million-barrel drawdown, but oil still closed at an 18-month high of $54.06 a barrel.  Prices continued to slide on Thursday, even though the EIA reported a much smaller 614,000 barrel increase in oil supplies, and ended the day down 29 cents at $53.77 a barrel.  Oil prices then slipped again on Friday, amid profit taking before the long weekend, closing at $53.72 a barrel, and thus ended the year up 45%, in the largest annual increase since 2009…
Prices for natural gas, meanwhile, rose from the pre-Christmas close of $3.662 per mmBTU (million British thermal units) to $3.

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3rd Quarter GDP Revised to Indicate Growth at a 3.5% Rate

December 26, 2016

The Third Estimate of our 3rd Quarter GDP from the Bureau of Economic Analysis indicated that our real output of goods and services increased at a 3.5% annual rate in the quarter, revised from the 3.2% growth rate reported in the second estimate last month, as personal consumption growth was revised higher, state and local government shrunk less than was previously estimated, and private non-residential fixed investment increased, rather than decreased as was previously reported.  In current dollars, our second quarter GDP grew at a 5.0% annual rate, revised up from the 4.6% reported in the 2nd estimate, increasing from what would extrapolate to $16,583.1 billion annually in the 2nd quarter of this year to an annualized $16,727.0 billion in the 3rd quarter, with the headline 3.5% annualized rate of increase in real output arrived at after an annualized inflation adjustment averaging 1.4%, aka the GDP deflator, was applied to the current dollar change.

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Oil Production Cuts Could Result in 600,000 Barrel Per Day Global Deficit in First Half of 2017

December 19, 2016

Oil prices remained volatile last week, as countervailing waves of avarice and anxiety about the coming Russian and OPEC led production cuts swept over the oil markets, but by the end of the week they were little changed from last week’s close.  What might have been the largest price move of the year for US oil was unleashed before the week even started, as oil prices jumped $3 a barrel to $54.50 a barrel at the opening of Asian trading at 11 PM on Sunday, as global oil traders reacted to the agreement by Russia and ten other non OPEC oil producers last Saturday to join the cartel in cutting their oil output.  Prices in New York were as high as $54.51 a barrel after US markets opened, the highest price since July 6, 2015, but fell back from there over the rest of the day to close Monday up just $1.33 at $52.83 a barrel.  Oil then traded 50 cents higher on Tuesday morning, but slipped back to close at $52.98 a barrel after the American Petroleum Institute reported large increases in crude and gasoline inventories.  Prices then fell back to close at $51.04 a barrel on Wednesday, despite the EIA report that US crude supplies had actually fallen, as the IEA (International Energy Agency) reported that OPEC had pumped 34.2 million barrels a day in November, a record high that was 300,000 barrels a day higher than their October record.

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The 18% Jump in Our October Trade Deficit Portends a Big Hit to Q4 GDP

December 12, 2016

Our trade deficit rose by 17.8% in October as the value of our exports decreased and the value of our imports increased.  The Census report on our international trade in goods and services for October indicated that our seasonally adjusted goods and services trade deficit rose by more than $6.4 billion to $42.6 billion in October from a revised September deficit of $36.2 billion. The value of our October exports fell by $3.4 billion to $186.4 billion on a $3.5 billion decrease to $123.1 billion in our exports of goods and a $0.1 billion increase to $63.3 billion in our exports of services, while our imports rose $3.0 billion to $229.0 billion on a $2.8 billion increase to $186.5 billion in our imports of goods and a $0.2 billion increase to $42.4 billion in our imports of services.   Export prices were on average 0.2% higher in October, so the relative real decrease in October exports would be greater than the nominal decrease by that percentage, while import prices were 0.5% higher, meaning real imports were smaller than the nominal dollar values reported here by that percentage.
The drop in our October exports of goods resulted from lower exports of foods, feeds and beverages, industrial supplies and materials, and consumer goods.

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OPEC agrees to cut production back to March levels, oil prices spike 14%

December 4, 2016

At their meeting in Vienna on Wednesday, the member nations of OPEC agreed to cut their oil production by 4.5% for a period to run 6 months, effective January 1st.  The amount of oil output each member is expected to forgo is generally based on their October production, although for some countries, such as Iran, the baseline for the output cut has been adjusted for special factors.   Libya and Nigeria, whose recent production has been disrupted by civil conflict, will be exempt from the cuts.  Indonesia, an OPEC oil importer who would not agree to a cut, was suspended from OPEC, and what they would have cut was to be absorbed by other member.  Figures released by OPEC indicate they want a cut of almost 1.2 million barrels per day, or roughly in line with what we previewed last week.  In addition, OPEC announced that non-OPEC oil producers, who were not represented at the meeting, will contribute an additional output cut of 600,000 barrels per day.  Presumably, details on those non-OPEC oil production cuts will be worked out at a December 9th meeting at Doha, but since Russia is on board with a cut of 300,000 barrels per day, achieving that target should not be difficult.  Oil traders apparently believe that OPEC and other producers will be able to achieve what they’ve set out, because since the announcement of the deal, oil prices have risen 14%…

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15 Million Fracking Jobs at Risk; 12 Million Export Jobs Could Also Be Lost

November 7, 2016

On Friday, the US Chamber of Commerce released a report, apparently timed for the weekend before the election when a number of fracking initiatives are on the ballot nationally, which alleged that "14.8 million jobs could be lost, gasoline prices and electricity prices could almost double, and each American family could see their cost of living increase by almost $4,000" if fracking were banned in the US.  The 58 page pdf, “What If Hydraulic Fracturing Was Banned?” covers the recent 10 year history of fracking, then projects what they imagne would happen to the US economy over the 2017 to 2022 period if a fracking ban were initiated, and finally wraps up with scary state specific scenarios for Ohio, Pennsylvania, Colorado and Texas.  Their report is long on conclusions, but pretty short on methodology, and some of the links they cite are already broken.   I was hoping to ignore it, but by Saturday morning it was already being picked up by the news services, with several headlines indicating that a fracking ban would kill 15 million jobs. So we’ll just quickly make a few points on how outrageous that allegation is…
As of the October employment report from the Bureau of Labor Statistics, which was coincidentally was also released on Friday, direct oil and gas industry employment was at 172,300 payroll jobs.

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August PCE, trade balance, construction, factory and wholesale inventories mostly down, but all add to Q3 GDP

October 11, 2016

Over recent days, we’ve seen the release of five reports which provide us with the lions share of contributions to 3rd quarter GDP for the months of July and August. The August report on Personal Income and Spending from the Bureau of Economic Analysis includes 2 months of data on personal consumption expenditures and thus accounts for more than 46% of 3rd quarter GDP by itself.  At the same time, the August report on our International Trade, the August report on Construction Spending (pdf), the Full Report on Manufacturers’ Shipments, Inventories and Orders for August and the August report on Wholesale Trade, Sales and Inventories include metrics that lead us to estimates on how several other components of GDP will fare.  This post reviews those five reports, with an eye to assessing their impact on GDP growth. As we’ll see, despite headlines that generally indicated contraction, all of them will ultimately contribute to GDP growth in the 3d quarter.
August Personal Income up 0.2%; 2 Months PCE Would Add 1.

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July PCE, Trade Deficit, Construction, and Factory Inventories Point to 3rd Qtr GDP Growth Over 3%

September 6, 2016

In addition to the Employment Situation Summary for August from the Bureau of Labor Statistics, last week also saw the release of four July reports that give us the lion’s share of that month’s contribution to 3rd quarter GDP, and in some cases suggest revisions to 2nd quarter GDP.  Those reports were the July report on Personal Income and Spending from the Bureau of Economic Analysis, and the July report on our International Trade, the July report on Construction Spending (pdf), and the Full Report on Manufacturers’ Shipments, Inventories and Orders for July, all from the Census Bureau.  This post reviews those four reports, with an eye to assessing their impact on GDP growth.
July Personal Consumption Expenditures Up 0.33%, Would Add 1.89 Percentage Points to Q3 GDP

The July report on Personal Income and Outlays from the Bureau of Economic Analysis includes the month’s data for our personal consumption expenditures (PCE), which accounts for roughly 69% of the month’s GDP, and with it the PCE price index, the inflation gauge the Fed targets, and which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated.   In addition, this release also reports our personal income data, disposable personal income, which is income after taxes, and our monthly savings rate.

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New Well Productivity Triples in the Utica; Gasoline Supplies at a Summertime High

July 25, 2016

Oil prices continued to erode last week as traders and the media continued to focus on the increasing glut of refined products.  After closing at $45.24 a barrel on Monday, down from last Friday’s $45.95, oil fell again late Tuesday to close at $44.65 a barrel after the American Petroleum Institute’s estimates showed an unexpected increase in gasoline supplies.  Prices steadied on Wednesday when the EIA confirmed that gasoline inventory increase, but also showed the ninth consecutive weekly crude drawdown as trading for August oil expired.  Prices then sank to close at $44.75 a barrel on Thursday in a delayed reaction to the EIA report, which also showed the combination of oil and product stockpiles at a new all-time high.  Oil then traded below $44 a barrel on Friday as the media picked up on the gasoline glut story, and stayed depressed Friday afternoon to close at $44.19 a barrel, after the rig count report showed the largest percentage increase in oil drilling rigs since December 2009.  Since it’s probably easier to look at a picture of how oil prices have slumped than to read text, we’ll include a graph of the daily price changes over the past three months below.

This graph now shows daily prices per barrel over the past 3 months for the September contract of the US benchmark oil, West Texas Intermediate (WTI).

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The 10.1% Increase in the May Trade Deficit Was Not Bad Enough to Hit GDP

July 11, 2016

Our trade deficit increased by 10.1% in May as the value of our exports decreased and the value of our imports increased.   The Census report on our international trade in goods and services for May indicated that our seasonally adjusted goods and services trade deficit rose by $3.8 billion (rounded) to $41.1 billion in May from a revised April deficit of $37.4 billion.  The value of our May exports fell by $0.3 billion to $182.4 billion on a $0.2 billion decrease to $119.8 billion in our exports of goods and a $0.1 billion decrease to $62.5 billion in our exports of services, while our imports rose $3.4 billion to $217.1 billion on a $3.4 billion increase to $182.1 billion in our imports of goods while our imports of services were virtually unchanged at $41.4 billion.  Export prices were on average 1.1% higher in May, so the real relative quantity of May exports would be lower than the nominal dollar amount by that percentage, while import prices were 1.4% higher, meaning real imports were relatively smaller than the nominal dollar values reported here by that percentage.
Most of the decrease in our May exports could be accounted for by lower exports of capital goods and of automotive vehicles, parts, and engines, which were partially offset by an increase in exports of foods, feeds, and beverages.

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April and May PCE To Add 2.66 Percentage Points to Q2 GDP Growth

July 4, 2016

The May report Personal Income and Outlays from the BEA gives us nearly half the data that will go into 2nd quarter GDP, since it gives us 2 months of data on our personal consumption expenditures (PCE), which accounts for more than 2/3rds of GDP, and the PCE price index, which is used to adjust that personal spending data for inflation to give us the relative change in the output of goods and services that our spending indicated.  This same report also gives us monthly personal income data, disposable personal income, which is income after taxes, and our monthly savings rate.  However, because this report feeds in to GDP and other national accounts data, the change reported for each of those are not the current monthly change; rather, they’re seasonally adjusted amounts at an annual rate.  In other words, they tell us how much income and spending would increase for a year if May’s adjusted income and spending were extrapolated over an entire year.  However, the percentage changes are computed monthly, from one month’s annualized figure to the next, and in this case of this month’s report they give us the percentage change in each annualized metric from April to May.
Therefore, when the opening line of the press release for this report tell us "Personal income increased $37.1 billion, or 0.2 percent, and disposable personal income (DPI) increased $33.9 billion, or 0.

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Oil Crashes on Brexit, Oil Imports at a 42 Month High, Record Gasoline Output and Usage

June 27, 2016

Oil prices crashed along with global financial markets on Friday following the British vote on Thursday to exit the European Union (typically referred to as "Brexit"), which is widely expected to precipitate a period of political instability in Europe.  Conservative British Prime Minister David Cameron, who had campaigned for remaining in the EU, submitted his resignation; British Labor Party leader Jeremy Corbyn also faces a no-confidence vote, as both major parties had campaigned to remain in the EU.  In response to the British vote, populist parties on the left and right across Europe are calling for referendums in their own countries, with speculation that France, the Netherlands, Austria, Finland and Hungary might also vote to leave the EU, effectively rebalkanizing the continent.  Although markets in the US and Britain recovered to end down less than 4%, it was European markets that were hit the hardest, with German and French indexes down 7% and 8% respectively and markets in the southern tier of European countries down as much as 15%.

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May Retail Sales Boost PCE Contribution to 2nd Quarter GDP

June 20, 2016

Seasonally adjusted retail sales rose 0.5% in May after retail sales for March and April were revised slightly higher..  The Advance Retail Sales Report for May (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $455.6 billion for the month, which was an increase of 0.5 percent (±0.5%)* from April’s revised sales of $453.6 billion and 2.5 percent (±0.7%) above the adjusted sales of May of last year.  April’s seasonally adjusted sales were revised from the $453.4 billion originally reported to $453.6 billion, while March sales were also revised higher, from $447.8 billion, to $447.9 billion, with this report.  Estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated unadjusted sales rose 4.5%, from $412,328 million in April to $471,421 million in May, while they were up 3.6% from the $462,615 million of sales in May a year ago…
Included below is the table of the monthly and yearly percentage changes in sales by business type taken from the Census pdf..  The first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from April to May in the first sub-column, and then the year over year percentage change for those businesses since last May in the 2nd column.

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A Record Low for New Foreclosures, Another Record High for Average Time in Foreclosure

June 13, 2016

The Mortgage Monitor for April (pdf) from Black Knight Financial Services (BKFS, formerly LPS) reported that there were 595,235 home mortgages, or 1.17% of all mortgages outstanding, remaining in the foreclosure process at the end of April, which was down from 630,766, or 1.25% of all active loans, that were in foreclosure at the end of March, and down from 1.63% of all mortgages that were in foreclosure in April of last year.  These are homeowners who at least had a foreclosure notice served but whose homes had not yet been seized, and the April "foreclosure inventory" now represents the lowest percentage of homes that were in the foreclosure process since the summer of 2007.  New foreclosure starts, which have been volatile from month to month, fell to 58,728 in April from 72,762 in March and from 70,400 in April a year ago. This was the lowest number of foreclosure starts in any month since April 2005, before the mortgage crisis began.
In addition to homes in foreclosure, BKFS data also showed that 2,145,589 mortgages, or 4.24% of all mortgage loans, were at least one mortgage payment overdue but not in foreclosure at the end of April, up from the 4.08% of homeowners with a mortgage who were more than 30 days behind in March, but down from the mortgage delinquency rate of 4.72% in April a year earlier.   Of those who were delinquent in April, 730,179 home owners, or 1.

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The Impact of April’s Income and Outlays, Trade Deficit, Construction Spending, and Factory Inventories on GDP

June 6, 2016

With the first Friday of the month, the Employment Situation Summary for May from the Bureau of Labor Statistics was obviously the most widely watched release of last week.  But the week also saw the release of four reports for April that give us the lion’s share of that month’s contribution to 2nd quarter GDP, and in some cases suggest revisions to 1st quarter GDP.  Those reports were the April report on Personal Income and Spending from the Bureau of Economic Analysis, the Commerce Dept report on our International Trade for April, the Full Report on Manufacturers’ Shipments, Inventories and Orders for April and the April report on Construction Spending (pdf), both from the Census Bureau. 
April Personal Consumption Up 1.0%, On Track to Add 2.05 Percentage Points to 2nd Quarter GDP
Other than the employment report and the GDP report itself, the monthly report on Personal Income and Outlays from the Bureau of Economic Analysis is probably the most important economic release we see monthly; as each monthly report on personal consumption expenditures (PCE) accounts for roughly 23% of GDP by itself.

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what the EIA doesn’t tell us when comparing US output to that of Russia & Saudi Arabia

May 30, 2016

On Monday of last week, the U.S. Energy Information Administration posted an article on their daily blog (Today in Energy) titled "United States remains largest producer of petroleum and natural gas hydrocarbons"..  The article featured a graph of our production of gas and oil vis a vis that of Russia and Saudi Arabia and went on to tell the familiar story about how fracking made it possible for our output of gas and oil to pass that of Russia in 2012, and that, as the headline indicates, we’re still on top.  As the week progressed, copies of the graphic from that post started showing up on other sites around the web, some to highlight the "we’re number one" aspect that it showed, some to disparage the Saudis, who by the looks of that graph, barely come close.  So i thought it would be instructive to take a look at that graph, and see what it shows, and more importantly, what it doesn’t show…

The above bar graph, from the EIA’s Monday blog post, shows the annual oil & gas output for the US, Russia, & Saudi Arabia since 2008 in both quadrillion BTUs (scale on left margin) and in millions of barrels of oil equivalent (right margin).

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