The Chicago Fed National Activity Index (CFNAI) posted a sharp rise in November, an indication that “economic activity increased” last month, the Chicago Federal Reserve reports. CFNAI’s three-month moving average moved higher as well, rising to -0.20 last month. That’s close to The Capital Spectator’s average econometric forecast for CFNAI of -0.26, which was published yesterday. A reading above -0.70 for CFNAI’s three-month average suggests that the economy is growing, which is also the message in today’s news on personal income and spending for November.
Monthly Archives: December 2012
Three Aces For November: Income, Spending & Durable Goods Orders
Today’s November updates for personal income and spending, along with fresh data on durable goods orders, offer another round of encouraging news on the side of growth. For those who argue that the economy is collapsing, today’s numbers offer a sharp rebuke. In fact, similarly robust numbers for November have been published for other indicators in recent weeks. Earlier this month I projected that the broad profile of economic activity in November was on track to improve over October, and today’s updates all but seal the deal. The main point is that the risk of a recession, based on the numbers in hand, continues to look like a low-probability event in the here and now. That’s been the message all along, and it remains the case today.
Personal Income & Spending: November 2012 Preview
Today’s personal income and spending update for November is widely expected to post a rebound after October’s disappointing results. The Capital Spectator’s average econometric forecasts for these indicators echo the market’s outlook: +0.3% for income and +0.4% for spending in today’s release. The gains are in line with market’s expectations. The release for this data hits the street later today at 8:30am eastern via the Bureau of Economic Analysis.
Chicago Fed Nat’l Activity Index: November 2012 Preview
Is the U.S. economy sinking into a new recession? Or has another downturn already started? Tomorrow’s November update of the Chicago Fed National Activity Index (CFNAI) may provide a quantitative answer. In the October reading, CFNAI’s three-month moving average slipped to -0.56, the closest to the red line of -0.70 since the Great Recession ended. A fall below -0.70 would be considered a sign of an “increasing likelihood that a recession has begun,” according to the Chicago Fed. No one can dismiss the risk, but The Capital Spectator’s average econometric forecast anticipates a rebound that moves CFNAI’s 3-month average away from the brink: -0.26, or up from -0.56 in October.
Jobless Claims Rise, But Remain Near 2012 Lows
Jobless claims increased by 17,000 last week to a seasonally adjusted 361,000. The pop isn’t surprising, nor is it particularly worrisome at this point. As I noted earlier today, before the report’s release, my average econometric forecast called for a gain to 361,000. That’s exactly what we got—a freak incident of specificity, no doubt. In any case, the higher level of claims looks like noise within the range that’s prevailed for much of this year. As a result, today’s number, despite what you might hear otherwise, is mostly a yawn.
Weekly Jobless Claims: 15 Dec 2012 Preview
Today’s update on weekly jobless claims (scheduled for release at 8:30am eastern) is widely expected to post an increase after last week’s drop to just over a five-year low. The Capital Spectator’s average econometric forecast sees a rise to 361,000 new filings for unemployment benefits last week (seasonally adjusted) vs. the previously reported 343,000.
Housing Starts Fall In November, But Outlook Remains Bright
Housing starts fell 3% last month, the Census Bureau reports. The retreat is the first monthly setback since July, although the drop isn’t a big surprise, as I discussed earlier today, before the numbers were released. More importantly, November’s red ink doesn’t appear particularly troubling in terms of the outlook because it doesn’t change the overall momentum profile. The annual trend in new housing construction continues to rise at a strong pace, largely because demographics and demand are again pushing homebuilding activity higher.
Housing Starts: November 2012 Preview
The November update on housing starts is scheduled for release today (8:30 am eastern) and a decline is widely expected vs. October’s 3.6% rise. The Capital Spectator’s average econometric forecast anticipates a 2.5% decrease. Another factor that implies that starts will fall in November is the relatively high level of new housing construction in October vs. the number of building permits issued in that month. The two series tend to track one another fairly closely through time and so any deviations between the pair don’t usually persist. In recent years, whenever starts exceeded permits, starts usually declined in the following month. In October, starts rose above the level of permits for the first time since April.
Barron’s Roundtable Vs. Mr. Market’s Asset Allocation
Mebane Faber has some fun thinking about an idea for an ETF that tracks the investment results published by the Barron’s Roundtable, an annual feature dispenses an array of portfolio recommendations. As Pundit Tracker notes, “following the investment picks of the annual Barron’s Roundtable has been a lucrative approach over the years. Since 2002, the average Roundtable return has been 11.5% versus -0.2% for S&P 500, with all but one of the members outperforming the index.”
Q4:2012 U.S. GDP Nowcast Update | 12.17.2012
Gross domestic product for the U.S. in the fourth-quarter is on track to rise by 1.5%, according to the average of The Capital Spectator’s five econometric “nowcasts”. That’s up slightly from the 1.2% average in our previous update on November 23. The improvement isn’t surprising, considering the recent round of upbeat economic reports, including the revivals in industrial production and retail sales numbers for November. Today’s GDP nowcast for Q4 reflects the latest fourth-quarter indicators, and the prevailing wind at the moment is blowing positive, albeit modestly so.