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Author: Brian Lego

The Summertime Blues Continue

The Summertime Blues Continue

Consumer spending, or a lack thereof, has been one of the key missing elements to the economic recovery. Unfortunately, that trend continued in July as core retail sales (excluding autos and gasoline) slipped for the second time in the last three months. Of course, any rebound in consumer spending is going to be muted by the fact that households are: 1) saving a measurably higher percentage of their disposable incomes; and 2) working their way out from underneath a mountain of debt accumulated in Read more [...]
Is the Recovery Stuck in Neutral?

Is the Recovery Stuck in Neutral?

That might be the conclusion one could draw given what was contained in the July employment report. Excluding the loss of 143,000 temporary Census 2010 jobs, payrolls registered a meager net increase of 12,000 in July while June’s initial estimate for ex-Census employment was revised significantly lower to only +4,000. Of course, this isn’t the final story since both of these numbers could be revised, but the overall trajectory in net job growth for the past few months has not been particularly Read more [...]
Sifting for Gold

Sifting for Gold

Today’s first take on real GDP growth for 2010Q2 showed the U.S. economy expanded at an annualized rate of 2.4 percent and 3.2 percent in the past year. This is roughly in line with the average rate of real GDP growth during the post-WWII era, but given the fact that growth tends to be above-average during the earliest stages of a recovery it becomes easy to see why one cannot characterize this as a robust v-shaped rebound. Worse yet, the report also showed growth for prior quarters was revised Read more [...]
What’s next now that the punch bowl is empty?

What’s next now that the punch bowl is empty?

The bad news for the housing market continues to mount (see here, here and here). The dreaded payback effect from the homebuyer tax credit is causing sales to look particularly weak right now. However, the excess supply situation, which has been a big issue for several years already, will continue to hinder the market’s recovery as foreclosures pile up and shadow inventory begins to emerge. With that said, what are some factors that will bring the housing market back into balance? The first Read more [...]
Manufacturing a recovery, but still a ways to go

Manufacturing a recovery, but still a ways to go

The manufacturing sector’s rebound has been one of the major linchpins for the broader U.S. economic recovery. Indeed, manufacturing has been the only sector close enough to exhibit a textbook V-shaped recovery, although the current rebound doesn’t quite stack up to the sharp V-shaped recoveries we had back in the good ol’ days. Even with a sluggish reading for June 2010, manufacturing output has climbed nearly 9 percent since bottoming out a year ago and registered an annualized Read more [...]
Storm clouds on the horizon

Storm clouds on the horizon

Today’s jobs report doesn’t paint the picture of a robust economic recovery. After excluding the 225,000 net decline in Census 2010 workers, total payrolls increased by 100,000 during the month of June. Construction and financial activities remained sore spots, shedding nearly 40K on net while health care and temp services represented the strongest sectors in terms of new job creation. Although these recent gains in payrolls represent a significant improvement from the massive declines Read more [...]
It’s all about the inventories

It’s all about the inventories

The old adage of “what goes up must come down” is perhaps the most appropriate for the housing market’s behavior over the past year. Thanks to the federal homebuyer tax credit expiration last fall then its subsequent extension/expansion in the spring, getting a handle on market conditions for housing has been difficult. Nonetheless, the body of evidence points to some significant inventory problems that will prevent the market from returning to ‘normal’ anytime soon. Read more [...]
Taking a Breather

Taking a Breather

Today’s release of May retail sales data was greeted with boos as it showed the first outright monthly decline in consumer spending—and a sizable one at that—since last fall. As we’ve preached in earlier posts, interpreting a trend from one month’s worth of data is a mistake, particularly when subsequent revisions can change the picture significantly or seasonal adjustments can yield quirky estimates. Moreover, things like expiring federal tax rebate programs for homebuyers Read more [...]
Don’t Be Fooled!!

Don’t Be Fooled!!

The announcement of a net 431,000 new jobs being created during May certainly gives off the strong impression of a rapidly improving job market. Unfortunately, 411,000 of those jobs came via temporary workers tasked with performing work for the 2010 decennial Census, with the remaining 20,000 jobs added on net last month coming in the manufacturing, business services and healthcare sectors. These gains did more than offset the losses in construction, retail and financial services, but job growth Read more [...]
Less Bad is Still Not Good

Less Bad is Still Not Good

Despite some recent signs of improvement in the labor market and other macroeconomic indicators, the mortgage foreclosure problem continues to roll along. The Mortgage Bankers Association (MBA) reports that during the first quarter of 2010 mortgage delinquencies increased to account for 10.1 percent of all outstanding loans. The report does note some issues with seasonal adjustment factors for delinquencies and when examining the data on a non-adjusted basis borrowers appeared to be falling behind Read more [...]