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Robert Oak

Robert Oak

Owner of The Economic Populist. Just a regular person like yourself.

Articles by Robert Oak

CPI Up 0.2% as Fresh Vegetables Soar in April

11 days ago

The Consumer Price Index for April reversed last month’s course and rose by 0.2%.  Inflation increases were across the board.  Food rose 0.2%, energy 1.1% and all other items together increased 0.1%.  Shelter continues on it’s tear with a 0.3% monthly increase.  Natural gas had a huge monthly increase of 2.2%.  Fresh vegetables had the largest monthly jump since February 2011, an increase of 5.1%.

Yearly overall inflation was 2.2% and is shown in the below graph.  This is less than March’s 2.4% annual inflation rise but the average prices increase over the last 10 years has been much lower, 1.7%.

Core inflation, or CPI with all food and energy items removed from the index, has increased 1.9% for the last year. and this is the same as last month.  Core inflation is

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April Unemployment Rate Lowest Since May 2007

18 days ago

The April unemployment report on the surface looks really good because the unemployment rate is the lowest it has been since May 2007.  Yet the cause of the low rate for the month is a mixed bag.  Labor participation rates also remain low.  On the other hand, an alternative measure of the unemployment rate, U-6, is the lowest it has been since November 2007.  The question is more becoming why is the labor participation rate still low and what happened to those long term unemployed.

This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status.
Those employed number 153,156,000, a 156,000 increase from the previous month.  From a year ago, the ranks of the employed has increased by 2.128 million.  Most of the annual gains have happened in the last three months.  The annual gain is above what is required to keep up with new jobs for the increased population growth.

Those officially unemployed is 7,056,000, a -146,000 monthly drop.

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2017 Q1 US GDP a Sad 0.7%

21 days ago

The first quarter GDP initial estimate is a pathetically weak 0.7%.  While the usual suspects, changes in private inventories, imports and government spending all contracted, the real drama is in the very weak consumer spending growth.  Consumer spending is most of GDP and only gained a paltry 0.3% for Q1.  Generally speaking, Q1 GDP’s showing is pathetic, yet fear not, there are two revisions before the final and very often the revisions are not nearly as bad as the initial report.  Q4 GDP was 2.1% by comparison.

As a reminder, GDP is made up of: where Y=GDP, C=Consumption, I=Investment, G=Government Spending, (X-M)=Net Exports, X=Exports, M=Imports*.  GDP in this overview, unless explicitly stated otherwise, refers to real GDP.  Real GDP is in chained 2009 dollars.
The below table shows the GDP component comparison in percentage point spread from Q1 2017 to Q4 2016.  There are always two revisions after the initial quarterly GDP report release.  Trade data especially is revised, so expect imports and export figures to change.

Comparison of Q1 2017 and Q4 2016 GDP Components

Component

Q1 2017

Q4 2016

Spread

GDP

+0.69.

+2.08

-1.39

C

+0.23

+2.40

–2.17

I

+0.69

+1.47

-0.

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Inflation Retreats in March

April 17, 2017

The March Consumer Price Index dropped by -0.3%.   That’s unusual and a decline in CPI has not happened since February 2016.  The reason was volatile gas prices but America finally is catching a break on cell phone service costs too.  The gasoline index by itself dropped -6.2% for the month.  The bigger surprise is Inflation without food and energy prices considered dropped by -0.1%.  That hasn’t happened since 2010.

Yearly overall inflation was 2.4%, much less than last month’s 2.7% increase, and is shown in the below graph.

Core inflation, or CPI with all food and energy items removed from the index, has increased 2.0% for the last year. and this is the smallest annual amount since November 2015.  For the past decade the annualized inflation rate has been 1.9%.  Core inflation is the figure the Federal Reserve considers for interest rate increase decisions.

Core CPI’s monthly -0.1% percentage change is graphed below.  Within core inflation, shelter increased 0.1%, which is actually less of a jump than typical and the lowest increase since June 2014.  Did people get a break on buying a home or rent?  Of course not, rent increased 0.3%, whereas hotels and motels went down -2.8%. and home ownership equivalent rent increased 0.2%.  Shelter overall is up 3.5% for the year with rent increasing 3.9% annually.

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The March Unemployment Report Was Pretty Good

April 14, 2017

The March unemployment report on the surface looked bad due too less than one hundred thousand jobs gained.  But that is just one number and also not part of the report which calculates the unemployment rate and other statistics.  The unemployment rate actually dropped -0.2 percentage points to 4.5%.  That in itself is a decade low.  The better news is the monthly drop was due to less people being unemployed and almost half a million more were working.

This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status.
Those employed number 153,000,000, a 472,000 increase from the previous month.  From a year ago, the ranks of the employed has increased by 1.699 million.  Most of the annual gains have happened in the last two months.  The annual gain is just around what is required to keep up with new population growth.

Those officially unemployed is 7,977,000, a shocking -326,000 monthly drop.

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Pending Home Sales Second Highest Level in a Decade

April 3, 2017

The National Association of Realtors Pending Home Sales just jumped to the second highest level in a decade and the highest level in nearly a year.  Pending home sales increased 5.5% in a month to an index level of 112.3.  In May 2006, the index was 112.5 and from a year ago, the figure is up 2.6%.  Last April saw a pending home sales index of 113.6.

The above graph shows pending home sales have recovered to 2006 bubble year levels but not the years previous.  The NAR believes the jump in pending home sales is simply pent up demand.  They also believe the economy is good.  Truth be told, not all got in the stock market.  Also, the great economy for the middle class NAR assessment is questionable with such unaffordable housing forcing people into horrific debt.  NAR also notes February was the warmest in decades.  We don’t know where they are living for the entire Northwest had record cold and rain.
Buyers came back in force last month as a modest, seasonal uptick in listings were enough to fuel an increase in contract signings throughout the country.
The stock market’s continued rise and steady hiring in most markets is spurring significant interest in buying, as well as the expectation from some households that delaying their home search may mean paying higher interest rates later this year.

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New Home Sales Continue to Sizzle and Pop

April 3, 2017

The February 2017 New Residential Single Family Home Sales increased by 6.1%.  Monthly sales increased by 34,000 annualized units to 592,000 for the month.  Annual sales have increased 12.8%.  Sales were 525,000 a year ago.  In this Census survey, amounts are annualized and represent what the yearly volume would be if just that month’s rate were applied to the entire year.  These figures are also seasonally adjusted.  New home sales also has a high monthly error margin and this month it was ±17.3%, with an annual error margin of ±18.0%.  What this shows is the housing market is simply on fire.  Prices are soaring and supply is short.  We believe comparisons to the 2006 housing bubble are becoming appropriate.

The February 2017 average home sale price is a very unaffordable $390,400.  This is a whopping 9.9% monthly increase.  From a year ago the average price has increased 11.7% and we can see from graphs housing prices are exceeding the 2006, 2007 bubble prices.

The median home price is $296,200,  This is a decreased by -3.9% from the previous month.  For the year, the median new home sales price has decreased by -4.9%.   Median means half of new homes were sold below this price and both the average and median sales price for single family homes are not seasonally adjusted.

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Existing Home Sales Show Houses Snapped Up

April 1, 2017

NAR’s February existing home sales dropped 3.7% from January.  Sales were 5.48 million, whereas January had 5.69 million annualized sales.  Sales are still a soaring 5.4% higher than a year ago.   Prices are through the roof and inventories are now absurdly tight.  Affordability and availability are cited as the main reasons for the drop in sales as actual foot traffic looking at properties has increased.

The national median existing home sales price, all types, is $228,400, a 7.7% increase from a year ago.  January’s jump in median price was 8.1% and February makes it 60 months in a row that prices have soared.  The average existing sales price for homes in February was $270,100, a 5.8% increase from a year ago.  Below is a graph of the median price.

Cheaper homes have simply dried up as noted by NAR:
Lawrence Yun, NAR chief economist, says closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. "Realtors® are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers," he said. "Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.

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CPI Tamer in February

March 20, 2017

The Consumer Price Index for February returned to Earth with a 0.1% monthly increase.  January stayed unrevised at 0.6%.  The monthly change was the smallest gain since July 2016.  The main cause was gasoline, again, which dropped -3.0% for the month.  Inflation with food and energy price changes removed increased 0.2%.  From a year ago overall CPI has now risen 2.7%.  Without energy and food considered, prices have increased 2.2% for the year.   CPI measures inflation, or price increases.

Yearly overall inflation is shown in the below graph and we can see the 2.7% increase is really a balloon in comparison to previous annual gains.

Core inflation, or CPI with all food and energy items removed from the index, has increased 2.2% for the last year.  For the past decade the annualized inflation rate has been 1.9%.  Core inflation is the figure the Federal Reserve considers for interest rate increase decisions and no surprise this is why they raised rates and probably will again based on these figures.

Core CPI’s monthly 0.2% percentage change is graphed below.  Within core inflation, shelter increased 0.3%, with monthly rental costs increasing 0.3% and home ownership equivalent rent increased 0.3%.  Shelter overall is up 3.5% for the year with rent increasing 3.9% annually.  Recreation soared up 0.6%, the largest increase since 2001.

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February’s Unemployment Report Has Little to Write Home About

March 19, 2017

February’s unemployment report is just another no change type of thing.  The unemployment rate is 4.7%, a -0.1 percentage point change from last month.  Those unemployed declined slightly as did those no longer in the labor force.  The labor participation rate finally hit 63.0% which is still very low  The biggest movement was those employed increased by 447 thousand.  Folks, there just isn’t much to write home about again.  On paper things continue to look great, yet we all know there are millions underemployed and not working who should be., although things have clearly improved.

This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status.
Those employed number 152,528,000, a 447,000 increase from the previous month.  From a year ago, the ranks of the employed has increased by 1.485 million.  The annual gain is just around what is required to keep up with new population growth.

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Factory Orders Increase 1.2% for January

March 14, 2017

The Manufacturers’ Shipments, Inventories, and Orders report shows factory new orders increased by 1.2% for January.  That’s after December new orders rose by 1.3%.  Durable goods new orders by themselves was revised to 2.0% from 1.8%.  Transportation new orders were the monthly increase leader with a gain of 6.2%.  This is after transportation equipment new orders had declined for two months.  The year to date in comparison to the same time period in 2016, new orders for all manufacturing industries increased 5.5% while just durable goods new orders have had a much smaller 1.6% year to date gain.  Inventories increased 0.2% for the month and are up 0.8% for the year.  The Census manufacturing statistical release is called Factory Orders by the press and covers both durable and non-durable manufacturing orders, shipments and inventories.

Within transportation equipment, motor vehicles bodies & parts new orders increased by 0.8%.  Aircraft new orders increased 69.8% in nondefense and in defense increased 62.2%.  Ships and boats new orders decreased by -33.7%.  There are other categories of transportation equipment not listed in the report.  This month’s gain was clearly caused by volatile aircraft, and the increase in autos & parts being minor.
Core capital goods new orders decreased by -0.1%.  The previous month showed a 0.8% increase.

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Northwest Housing Prices Are On Fire

March 8, 2017

The December 2016 S&P Case Shiller home price index shows a seasonally adjusted 5.6% price increase from a year ago for the 20 metropolitan housing markets and a 4.9% yearly price increase in the top 10 housing markets.  Both Seattle and Portland’s annual home price gain exceeded 10%.  Home prices are still climbing and nationally exceeded their 2006 housing bubble peak.  The U.S. National Home Price Index has also increased 5.8% from a year ago and continues at a 30 month high.  From the 2006 price peak, the national index, covering all nine geographic divisions, has increased 0.5%.  Since the price low of March 2012, the 10-City composite index has increased 41.0% and the 20-City composite index has increased 43.7%.  S&P is wondering if housing is in another bubble or if these prices are sustainable.

Prices are back to winter 2007 levels and once again unaffordable as wages and incomes have not similarly recovered.  The housing bubble peak was in July and June 2006.  Nationally, housing prices have surpassed that peak by 0.5%.  The 20-city index is still -6.7% below and the 10-city index is -8.8% below their 2006 bubble peaks.  We can only assume that America is back to being a debtor nation and we don’t know how anyone is making their mortgage.

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Inflation Soars in January

February 27, 2017

The Consumer Price Index for January really blew up.  The monthly change was a whopping 0.6%, the largest monthly gain since February 2013.  The main cause was gasoline, which jumped up 7.8% for the month.  Inflation with food and energy price changes removed increased 0.3% as most costs increased.  From a year ago overall CPI has now risen 2.5%, the highest annual increase since March 2012.  Without energy and food considered, prices have increased 2.3% for the year, the largest increase since November 2011.   CPI measures inflation, or price increases.

Yearly overall inflation is shown in the below graph and we can see the 2.5% increase and how much higher this is in comparison to other annual gains.

Core inflation, or CPI with all food and energy items removed from the index, has increased 2.3% for the last year, which is quite a jump.  For the past decade the annualized inflation rate has been 1.9%.  Core inflation is the figure the Federal Reserve considers for interest rate increase decisions and no surprise this is why they raised rates and probably will again based on these figures.

Core CPI’s monthly 0.3% percentage change is graphed below.  Within core inflation, shelter increased 0.2%, with monthly rental costs increasing 0.3% and home ownership equivalent rent increased 0.2%.  Shelter overall is up 3.

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Over Half a Trillion 2016 Trade Deficit

February 12, 2017

The U.S. December 2016 monthly trade deficit decreased 3.2% from last month and now stands at $44.3 billion.  For all of 2016, the trade deficit increased 0.4% from the year previous.  While that doesn’t sound like much, the total amount is -$502.3 billion.  This is in spite of petroleum imports being much less of a trade deficit factor.  China alone is almost half of the trade deficit.  While pundits proclaim Trump will start a trade war, with these kind of figures, surely that war is long over and America obviously surrendered.

Graphed below are imports and exports graphed and by volume since 1995 and note the global trade collapse in 2009.  For the year the goods trade deficit decreased by -1.6% to $750.1 billion while the services surplus shrank by -5.5% to be $247.8 billion.  Imports are in maroon and exports are shown in blue, both scaled to the left.

Below are the goods import monthly changes, seasonally adjusted.  On a Census basis, overall imports increased by $3.7 billion to $187.241 billion.  Passenger car imports was $1.351 billion more in just a month to $15.3 billion.   Imported passenger cars now exceeds crude oil imports, which were slightly over $10 billion.

Industrial supplies and materials:  +$1.092 billion

Capital goods:  +$0.982 billion

Foods, feeds, and beverages:  -$0.

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Nothing Special in the Unemployment Report

February 6, 2017

January is the month when annual adjustments are added to the unemployment report.  These adjustments are just tacked onto the month of January, hence one cannot compare the past month without removing these figures.  Yet, with or without the annual adjustments, this year’s end result isn’t much of a shift.  The January unemployment rate is 4.8%.  Those employed had little change as did those unemployed.  Even those dropping out of the labor force was not dramatic.  The labor participation rate is now 62.9%, a still terrible figure and the employment to population ratio is also still low  Folks, there just isn’t much to write home about.  On paper things look great, yet we all know there are millions underemployed and not working who should be.

This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status.
Those employed number 152,081,000.  From a year ago, the ranks of the employed has increased by 1,548 million.

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Q4 GDP A Bumbling 1.9%

January 30, 2017

The GDP initial estimate reports a weak 1.9% economic growth for the 4th quarter.  Imports really hammered GDP, just in time to validate now President Trump.  Consumer spending was lower while changes in private inventories added a full percentage point to Q4 GDP.  Generally speaking this report shows just how much imports can slow economic growth.  U.S. Exports curtailed and as a result, -1.7 percentage points of GDP were lost in Q4.  Yes America, the trade deficit is back.  

As a reminder, GDP is made up of: where Y=GDP, C=Consumption, I=Investment, G=Government Spending, (X-M)=Net Exports, X=Exports, M=Imports*.  GDP in this overview, unless explicitly stated otherwise, refers to real GDP.  Real GDP is in chained 2009 dollars.
The below table shows the GDP component comparison in percentage point spread from 2016 Q3 to Q4.  While the focus will be on trade, note that consumer spending was less in the 4th quarter as well.  There are always two revisions after the initial quarterly GDP report release.

Comparison of Q3 2016 and Q4 2016 GDP Components

Component

Q3 2016

Q4 2016

Spread

GDP

+3.52

+1.88

-1.64

C

+2.03

+1.70

-0.33

I

+0.50

+1.67

+1.17

G

+0.

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Industrial Production Pops On Bad Weather

January 25, 2017

The Federal Reserve Industrial Production & Capacity Utilization report shows industrial production soared 0.8% in December after a November -0.7% decline.  The reason for the December increase was utilities.  Utilities jumped up by 6.6% on colder weather in December and very warm weather in November.  Manufacturing production by itself increased 0.2% and mining was unchanged.  The bigger news is industrial production has declined by -0.6% for the forth quarter.  For the year, industrial production increased by 0.5%.  The G.17 industrial production statistical release is also known as output for factories and mines.

Total industrial production has only moved the needle by 0.5% from what it was a year ago, as mining imploded on oil and gas and manufacturing has barely budged.  December industrial production was 4.6 percentage points above the 2012 average.  Industrial production is still way below the very long term 1972-2015 average by -4.5 percentage points.  Below is graph of overall industrial production’s percent change from a year ago.  Industrial production is a recession indicator and follows the grey recession bars.

Here are the major industry groups industrial production percentage changes from a year ago.  While mining looks bad, the annual change was much worse just a few months ago.
Manufacturing:   +0.

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December Retail Sales Soar on Autos

January 17, 2017

December 2016 retail sales increased by 0.6% and are up a whopping 4.1% from a year ago.  November’s retail sales were revised to a 0.2% monthly increase.  The reason for December’s gain were automobile sales, online sales and gas.  Auto sales blew through the roof at a 2.4% monthly increase and gas did also on rising prices.  Without autos & parts sales, retail sales would have increased only 0.2% for the month.  Retail sales without gasoline station sales considered would have been a 0.5% monthly increase.  For the year, retail sales without auto sales have increased 3.4%.  Nonstore (online) retailers have shot up by 13.2%.  Overall retail sales are a good sign for consumer spending growth and also for the increasing online shopping use.

Graphed are the retail sales categories monthly percentage changes.   General Merchandise includes Walmart, super centers, Costco and so on.  Department stores by themselves declined by -0.6% for the month which is awful for the holidays.  From a year ago, department store sales have declined by -8,4%, a terrible figure and explains the flurry of closings and layoffs going on.  Grocery stores by themselves had no change for the month and have increased by 2.4% for the year.  Miscellaneous retailers declined by -1.0% for the month but have increased 7.1% for the year.

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December Unemployment Report Looks Static

January 12, 2017

The December 2016 unemployment report looks almost static as changes in most of the statistics are small.  The unemployment rate ticked up by 0.1% to 4.7%.  Those employed increased by 63,000 a very small monthly number.  Those unemployed monthly change was also relatively small.  Even those dropping out of the labor force barely registered for the month.  The labor participation rate ticked up a tenth of a percentage point but the civilian to employment ratio remained the same.  Next month is when annual Census adjustments and revisions are made so we suspect all things will change with next months report.  In the meantime this report just looks like business as usual.

This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status.
Those employed number 152,111,000, a monthly increase of 63 thousand.  From a year ago, the ranks of the employed has increased by 2.081 million.

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Case-Shiller Shows Housing Unaffordable

January 1, 2017

The October 2016 S&P Case Shiller home price index shows a seasonally adjusted 5.6% price increase from a year ago for the 20 metropolitan housing markets and a 4.3% yearly price increase in the top 10 housing markets.  Last month the annual gain was 5.4%.  Home prices are still climbing over double the rate of inflation and are back up to 2007 housing bubble price levels.  The U.S. National Home Price Index has also increased 5.6% from a year ago and has hit an all time high.  This index covers all nine U.S. Census geographical divisions.  Since the price low of March 2012, the 10-City composite index has increased 40.4% and the 20-City composite index has increased 43.1% and prices are back to winter 2007 levels.  Affordability is gone with measures showing 20-30% declines since 2012.

We can see below that prices on every Case-Shiller index are back to 2007 levels and thus completely unaffordable with stagnant wages and incomes.  Inflation has increased but wages and incomes have barely budged.  The housing bubble peak was in July and June 2006.  Nationally, housing prices have surpassed that peak by 0.2%.  The 20-city index is still -7.1% below and the 10-city index is -9.2% below.  Yet labor participation rates are still at record lows showing millions people simply never returned to the labor force and assuredly many were not by choice.

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CPI Increased 0.2% As Gasoline Prices and Rents Rise

December 25, 2016

The November Consumer Price Index increased by 0.2%.  Once again, the main causes are shelter, which increased 0.3% for the month and gasoline, which rose 2.7% for the month.  Food inflation had no change for the fifth month in a row.  Inflation with food and energy price changes removed increased 0.2% as shelter is part of this measure.  From a year ago overall CPI has now risen 1.7%, the highest annual increase in two years.  Without energy and food considered, prices have increased 2.1% for the year.   CPI measures inflation, or price increases.

Yearly overall inflation is shown in the below graph and we can see the 1.7% increase.

Core inflation, or CPI with all food and energy items removed from the index, has increased 2.1% for the last year.  For the past decade the annualized inflation rate has been 1.9%.  Core inflation is the figure the Federal Reserve considers for interest rate increase decisions and no surprise this is why they raised rates.

Core CPI’s monthly percentage change is graphed below.  This month core inflation increased 0.2%.  Within core inflation, shelter increased 0.3%, with monthly rental costs increasing 0.3% and home ownership equivalent rent increased 0.3%.  Shelter overall is up 3.6% for the year with rent increasing 3.9% annually.  Car insurance increased 1.0% and has been rising, now 6.7% for the year.

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Party Over on Cheap Debt

December 15, 2016

The Federal Reserve raised the federal funds rate from 0.5 to 0.75 percent.  That means the party might be over on cheap interest rates, especially mortgages.  Yet according to the Wall Street Journal, markets do not always follow the Federal Funds rate as other market factors come into play:
From 2004 to 2006, when the Fed raised its benchmark short-term rate 4.25 percentage points, yields on 10-year U.S. Treasury notes, corporate bonds and mortgage rates barely budged because of strong global appetite for U.S. securities.
No surprise many banks issuing credit cards always announced their rate increases.  Now one can expect to pay $25 more per year for every $1000 of debt carried.  But people, don’t carry credit card debt unless you have a 0% introductory rate.  Auto loans aren’t that impacted either, $25,000, 6 year loan means $36 more in interest charges per year.
On mortgages it is more unclear.  According to CNBC, fixed mortgages are tied to U.S. Treasuries and thus more safe from Federal Fund Rates shock increases, but anyone with an adjustable rate mortgage should consider refinancing.  Home equity loans also are impacted and their rates increase immediately, unlike adjustable rate mortgages.
According to USA Today, the rising fixed mortgage rate from 3.47% to 4.13% on $200,000 is already costing people $75 more a month.

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The Uber Low Unemployment Rate Isn’t All That it is Cracked Up to Be

December 5, 2016

The November 2016 unemployment report shows continuing distorted monthly unemployment figures.  The unemployment rate ticked down by -0.3% to 4.6%, a nine year low, but this isn’t the great news as many proclaim.  The reason the unemployment rate dropped is yet another almost half a million, 446 thousand more, were considered no longer part of the labor force.  Another reason the unemployment rate declined so far is those unemployed dropped by -387,000 and those employed rose by 160,000.  Both the labor participation rate and the civilian to employment ratio ticked down a tenth of a percentage point and remain very low.  This report sounds like good news on the surface, but it’s really just a continuation of the never ending shrinking group of people participating in the labor market.

This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status.
Those employed number 152,085,000, a monthly increase of 160 thousand.

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CPI Jumps 0.4% on Shelter and Gas Costs

November 18, 2016

The October Consumer Price Index increased by a high 0.4%.  This is a six month high.  The usual suspects were shelter, which soared up 0.4% for the month and gasoline, which rose 7.0% for the month.  Food inflation had no change for the second month in a row.  Inflation with food and energy price changes removed increased 0.1% as shelter and medical costs are part of this measure.  From a year ago overall CPI has now risen 1.6%, the highest annual increase in two years.  Without energy and food considered, prices have increased 2.1% for the year.   CPI measures inflation, or price increases.

Yearly overall inflation is shown in the below graph and we can see the 1.6% increase.

Core inflation, or CPI with all food and energy items removed from the index, has increased 2.1% for the last year.  For the past decade the annualized inflation rate has been 1.9%.  Core inflation is the figure the Federal Reserve considers for interest rate increase decisions and this month’s statistics support an increase.

Core CPI’s monthly percentage change is graphed below.  This month core inflation increased 0.1%, the 2nd in a row.  Within core inflation, shelter increased 0.4%, with monthly rental costs increasing 0.4% and home ownership equivalent rent increased 0.3%.  Shelter overall is up 3.5% for the year with rent increasing 3.8% annually.

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Consumer Credit Increases By $19.3 Billion

November 9, 2016

The Federal Reserve’s consumer credit report for September 2016 shows a 6.3% annualized monthly increase in consumer credit, and 7.0% for the entire third quarter.  Revolving credit increased 5.2% for the month as well as Q3,.  Non-revolving credit increased 7.4% for September and 7.6% for Q3.  Consumer credit matters due to personal consumption being the driving force in economic growth.

Revolving credit are things like credit cards and non-revolving are things like auto loans and student loans.   Mortgages, home equity loans and other loans associated with real estate are not included in this report.  Overall consumer credit increased $19.3 billion dollars to $3,706.8 billion, seasonally adjusted.  Revolving credit rose by $4.2 billion to $978.8 billion while non-revolving credit jumped up by $15.1 billion to a whopping $2,728.0 billion.  The report gives percent changes in simple annualized rates, also known as a continuously compounded annualized rate of change. Consumer credit contractions correlate to recessions.  The consumer credit report does not include charge offs and delinquencies.  Graphed below is total consumer credit.

To get a feel for how much of non-revolving credit was student loans, unfortunately we must deal with not seasonally adjusted data for the report does not break down credit reported with seasonal adjustments.

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Unemployment Rate 4.9% As Labor Force Drops

November 5, 2016

The October 2016 unemployment report shows yet more monthly distorted unemployment figures.  The unemployment rate ticked down by -0.1% to 4.9% as almost half a million, 425 thousand more, were considered no longer part of the labor force.  Those employed dropped by -43,000 and those unemployed declined by -152,000.  Both the labor participation rate and the civilian to employment ratio ticked down a tenth of a percentage point.  This report reverses any progress from last month’s unemployment statistics and once again there is a feeling of static, that there is no actual progress with the real unemployment picture.

This article overviews and graphs the statistics from the Employment report Household Survey also known as CPS, or current population survey.  The CPS survey tells us about people employed, not employed, looking for work and not counted at all.  The household survey has large swings on a monthly basis as well as a large margin of sampling error.  This part of the employment report is not about actual jobs gained, as reported by businesses, but people and their labor status.
Those employed number 151,925,000, a monthly decrease of -43 thousand.  From a year ago, the ranks of the employed has increased by 2.728 million.  This is still a solid annual gain.

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Factory Orders Up But Durable Goods Decreased For September

November 4, 2016

The Manufacturers’ Shipments, Inventories, and Orders report shows factory new orders increased by 0.3% for September.  That’s after August new orders rose by 0.4%.  Durable goods new orders by themselves was revised down to -0.3% for September, but increased 0.2% in August.  Transportation new orders were the worse, with a -1.1% decline.  The year to date in comparison to the same time period in 2015, new orders are down -2.3% while just durable goods new orders have had a -0.4 year to date change.  Inventories for the month had no change but are down -1.9% for the year.  The Census manufacturing statistical release is called Factory Orders by the press and covers both durable and non-durable manufacturing orders, shipments and inventories.

Within transportation equipment, motor vehicles bodies & parts new orders increased by 2.6%.  Aircraft new orders increased 21.1% in nondefense and declined in defense by -47.6%.  Ships and boats new orders decreased by -17.8%.  There are other categories of transportation equipment not listed in the report, so don’t blame it all on volatile aircraft, and the increase in autos & parts is a saving grace.
Core capital goods new orders decreased by -1.3%.  The previous month showed a 1.2% increase.  Core capital goods are capital or business investment goods and excludes defense and aircraft.

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ADP Employment Report Disappoints With 147,000 Private Sector Jobs

November 2, 2016

ADP’s proprietary private payrolls jobs report gives a monthly gain of 147,000 private sector jobs for October 2016.  The reason was a loss of 15,000 construction jobs as well as manufacturing and education.  September’s ADP report was revised upward significantly, from 154,000 to 202,000.  Overall, it is possible this report indicates the pace of job growth is slowing, rarely a good thing.  This report does not include government, or public jobs.  The official BLS employment report will be released on Friday.

ADP’s reports in the service sector alone job gains were 165,000 private sector jobs.  The goods sector lost -18,000 jobs.  Within the goods sector, construction was hammered with a -15,000 job loss, natural resources & mining lost -2,000 and manufacturing shed yet another -1,000.  Within the services sector, professional/business services jobs grew by 69,000.  Trade/transportation/utilities gained 17,000 jobs.  Financial activities payrolls added 18,000 jobs.  Education and health services was low with a gain of 22,000 jobs, yet within this total, health care and social assistance added 34,000 jobs.  This means that education probably lost a significant number of positions.

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Q3 GDP Comes In At 2.9%

November 1, 2016

The GDP initial estimate reports a solid 2.9% economic growth for the third quarter.  Trade exports and private inventories accelerated in Q3.  Consumer spending was home hum, although durable goods consumer spending dramatically increased.  Residential investment declined for the quarter.  While a nice report, GDP is always revised and this is just the initial release.  We don’t believe Q3 GDP is the knock out some in the press are proclaiming.

As a reminder, GDP is made up of: where Y=GDP, C=Consumption, I=Investment, G=Government Spending, (X-M)=Net Exports, X=Exports, M=Imports*.  GDP in this overview, unless explicitly stated otherwise, refers to real GDP.  Real GDP is in chained 2009 dollars.
The below table shows the GDP component comparison in percentage point spread from Q4 to 2016 Q1.  If one recalled Q4 initially came in at 0.7%, yet don’t expect a repeat revision performance.  There are always two revisions after the initial quarterly GDP report release.  There will also be annual revisions in July going back three years.

Comparison of Q3 2016 and Q2 2016 GDP Components

Component

Q3 2016

Q2 2016

Spread

GDP

+2.91

+1.42

+1.49

C

+1.47

+2.88

-1.41

I

+0.52

-1.34

+1.86

G

+0.

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