The Leading Economic Index (LEI) published by the Conference Board increased 0.6% in September, echoing the trend that’s been unfolding with the release of individual indicators in recent weeks and summarized yesterday in a broad review of last month’s numbers via The Capital Spectator Economic Trend Index. But in the wake of this morning’s sharp jump in weekly jobless claims figures for last week, the generally positive numbers for last month carry less weight than they did yesterday. All will be resolved, for good or ill, when we see more data for October in the coming weeks. Meantime, there are some new questions, if only on the margins.
Weekly Jobless Claims: A Sharp Turn For The Worse
If you needed another reason to treat weekly jobless claims data with caution in the short term, today’s update aims to please. The unusually large drop reported previously (for the week through October 6) evaporated in today’s release, and then some. As I noted last week, any big change in the number du jour for this volatile series requires several weeks of corroborating data before it’s safe to make hard and fast conclusions. If that wasn’t obvious before, it is now.
Q3:2012 U.S. GDP Nowcast Update | 10.17.2012
The latest economic numbers have boosted our nowcasts for Q3 GDP, which is scheduled for official release from the government on October 26. Meantime, it’s getting easier to anticipate some improvement over Q2’s weak 1.3% growth.
U.S. Economic Trend Update | 10.17.12
The September data profile is nearly complete and the numbers provided so far reflect an economy that continues to grow. Of the 12 indicators published to date for The Capital Spectator Economic Trend Index (CS-ETI), 9 are trending positive. That’s a strong signal for assuming that recession risk was still low last month.
Housing Starts & New Permits Rise Sharply In September
The housing market reached what might be thought of as a new post-recession milestone last month, and for all the right reasons, the Census Bureau reports. The takeaway here: The idea that the economy is caught in a fatal swoon just took another blow with today’s numbers. What’s more, there’s reason to wonder if growth is set to pick up a bit for the economy overall, an outlook that’s supported by my latest nowcasts of Q3:2012 GDP (I’ll have an update later today). That’s also the message in the September profile for economic and financial data, as summarized by The Capital Spectator Economic Trend Index (I’ll update CS-ETI today as well). Today’s housing numbers certainly don’t offer any reason to think otherwise.
Industrial Production Rebounds In September
Industrial production rebounded in September after a steep decline in August. As the Federal Reserve noted when the August numbers were released, the sharp drop that month was probably due to the temporary effects of Hurricane Isaac. Today’s update appears to offer confirmation that the August retreat was a one-time problem rather than the start of a cyclical downturn. Indeed, industrial production continues to rise at a modest pace, advancing 2.8% on a year-over-year basis through last month. Today’s news brings one more positive contribution to the September economic profile, and one more reason for thinking that recession risk remains low.
September Retail Sales: Another Solid Increase
Retail sales posted another respectable advance in September, the Census Bureau reports. The 1.1% rise last month matches the previous gain, which was revised up. It’s been a number of years, in fact, since we’ve seen back-to-back 1%-plus gains in retail sales on a monthly basis. Today’s retail sales update is just one data point, of course, but it echoes the narrative that I’ve been discussing on these pages for some time: the economy continues to chug along, expanding modestly. That implies that recession risk remains low. (For a broad review of the data behind this view, see last week’s updates of The Capital Spectator Economic Trend Index and the Q3 GDP nowcast.)
Book Bits | 10.13.12
● Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else
By Chrystia Freeland
Article by author via The Atlantic
F. Scott Fitzgerald was right when he declared the rich different from you and me. But today’s super-rich are also different from yesterday’s: more hardworking and meritocratic, but less connected to the nations that granted them opportunity—and the countrymen they are leaving ever further behind.
What Does Consumer Confidence Imply For The Equity Risk Premium?
Estimating the equity risk premium—the return on stocks over a “safe” asset such as the 10-year Treasury or 3-month T-bill—is at the heart of investment research and portfolio analysis. “It is the ‘number’ that drives everything we do,” writes Aswath Damodaran, a finance professor at the Stern School of Business at NYU. The premium “depends strictly on expectations for the future because the investor’s returns depend only on the investment’s cash flows,” advise the authors of the CFA Institute’s Equity Asset Valuation
Can We Believe Last Week’s Big Drop In Jobless Claims?
Maybe not, some analysts warn. As reported earlier today, new filings for unemployment benefits declined last week to the lowest level since January 2008. On its face, the data suggests a big improvement in the dynamics of the labor market. But in the hours after the numbers were released, questions about the validity of the report have been flying far and wide.