Is the rising economic anxiety taking a toll on the housing industry… again? The answer depends on the data set you’re looking at. Housing starts fell nearly 5% last month vs. April’s tally, the Census Bureau reports. But newly issued building permits jumped by almost 8% in May to the highest level since September 2008. That’s a sign that housing starts will stay firm if not rise in the months ahead. As economist Richard Yamarone writes in The Trader’s Guide to Key Economic Indicators
Strategic Briefing | 6.19.12 | Staring At The Fiscal Cliff
Fiscal-Cliff Concerns Hurting Economy as Companies Hold Back
Bloomberg | June 19
Companies are starting to delay hiring and spending out of concern that Congress won’t reach a compromise in time to avoid automatic tax increases and budget cuts that would pull billions of dollars of purchasing power out of the economy. Faced with a so-called fiscal cliff of more than $600 billion in higher taxes and reductions in defense and other government programs in 2013, U.S. companies are pulling back, though the deadline for congressional action is more than six months away.
Estimating Recession Risk (One Monthly Data Set At A Time)
There are two basic ways to wrestle with recession risk. One is to forecast it, the other is to develop a high-confidence assessment of whether it’s stepping on the business cycle’s throat based on the data published so far. The world is awash with the former, and it comes with all the usual caveats, including a fair amount of error. That’s the nature of forecasting: accuracy is all over the place, and it’s up to the consumers of the outlooks to figure out who has the better prediction methodology. By contrast, calling the start of major downturns in the economy in the here and now, by using what we know rather than what we think will happen, is far less precarious (if the process is designed reasonably well).
Book Bits | 6.16.2012
● 2052: A Global Forecast for the Next Forty Years
By Jorgen Randers
Summary via publisher, Chelsea Green
Forty years ago, The Limits to Growth study addressed the grand question of how humans would adapt to the physical limitations of planet Earth. It predicted that during the first half of the 21st century the ongoing growth in the human ecological footprint would stop—either through catastrophic “overshoot and collapse”—or through well-managed “peak and decline.” So, where are we now? And what does our future look like? In the book 2052, Jorgen Randers, one of the co-authors of Limits to Growth, issues a progress report and makes a forecast for the next forty years. To do this, he asked dozens of experts to weigh in with their best predictions on how our economies, energy supplies, natural resources, climate, food, fisheries, militaries, political divisions, cities, psyches, and more will take shape in the coming decades…. The good news: we will see impressive advances in resource efficiency, and an increasing focus on human well-being rather than on per capita income growth. But this change might not come as we expect.
Industrial Production Weakens In May, But Annual Pace Remains Firm
Industrial production posted a slight loss in May, the Federal Reserve reports. That’s one more reason to worry about the business cycle in the wake of slower job growth and a deepening euro crisis in Europe. Nonetheless, today’s industrial production update falls well short of a fatal blow for thinking positively. Although industrial production declined last month, the retreat was marginal. In fact, one could argue that economic activity has held up surprisingly well so far in the face of so much bad news coming out of Europe.
Jobless Claims Rise Last Week. A Warning Sign Of Things To Come?
Today’s update on initial jobless claims doesn’t look good, but it isn’t a death blow either. In “normal” times, one might dismiss the latest numbers as noise. But in the current climate, with the potential for a deepening of the euro crisis, it’s hard to overlook even small bits of deterioration in economic news.
Strategic Briefing | 6.14.12 | Falling Oil Prices & The Economy
Economy’s Mixed Blessing: Commodity Prices Fall
The New York Times | June 13
“The world economy is in risk of a recession and on that possibility, commodity prices weaken,” said Allen L. Sinai, chief global economist for Decision Economics, a consulting firm. “Lower inflation comes with weakening economies.”
Oil is among the commodities that have fallen in price the fastest despite continuing tensions in the Middle East and the tightening sanctions on Iran. OPEC production has been soaring in recent months because of mushrooming crude exports from Iraq, an almost total resumption of exports from Libya since the fall of the Qaddafi dictatorship, and a concerted drive by Saudi Arabia to push up production. At a meeting in Vienna on Thursday, OPEC is expected to decide to keep production steady despite weakening prices.
Retail Sales Slump In May, Mostly Because Of Falling Gasoline Sales
U.S. retail sales slipped 0.2% in May. That’s the biggest monthly fall in two years, although quite a bit of the drop last month was due to a sharp decline in gasoline sales. Nonetheless, the revised data tell us that retail sales have fallen for two months in a row—the first back-to-back monthly declines since 2010. Looking at retail sales on a year-over-year basis is more encouraging, but the trend is still slipping on this front too.
Searching For Macro Clues On Google
Will Internet search trends offer early signals about the timing of the next recession? No one really knows, but the possibilities are intriguing. Several researchers in recent years have considered the idea that tracking Internet activity offers a window into the future.
A Year Later, Core Inflation Doesn’t Look So Rotten
Remember the attack on core inflation? Right about this time a year ago there was a wave of criticism aimed at the idea that core inflation—headline inflation less food and energy prices—is a useful predictor of overall pricing pressures. But a funny thing happened on the way to the lynching of core: the much-maligned concept for looking ahead turned out to be reliable… again.