Bi-Weekly Economic Review

Economic Reports Scorecard

The economic data calendar has been light the last two weeks but the tone of the data has generally improved. On the whole though I find it hard to discern a big change in the US economy. The two manufacturing surveys were bright spots in the ongoing manufacturing recession. Empire State and Philly Fed both were much better than expected and flipped from negative to positive. More importantly, the strongest parts of the survey were for new orders. There were even some positive hints in the Industrial Production report although the overall report was still negative. The manufacturing part was up though and that is a good sign.

It is hard to get too excited by those small glimmers though with inventory/sales ratios still climbing. Wholesale inventories were up 0.3% in January while sales were down 1.3% and the inventory/sales ratio ratcheted up 2 ticks to 1.35. Total business inventories, reported this week, were also higher by 0.1% but sales fell 0.4% and the ratio jumped to 1.4, a reading comparable to October/November of 2008. About the best that can said about these inventory numbers is that they are for January leaving some hope that they may have already started to improve. Hope is the right word since retail sales for February weren’t all that great either, down 0.1% with January revised from positive to negative (+0.2 to -0.4). The ex gas and autos number was up 0.3% but one does wonder how many things one can remove from the number and still have something that provides anything like meaningful information.

Indeed, the fact that auto sales aren’t helping anymore certainly isn’t good news as that sector has been a big part of what growth we’ve had. Shale was another piece of the growth puzzle, one that is now kaput. Housing, which has been another positive may also be showing signs of aging as starts were up and ahead of estimates but permits were a big miss to the downside. Permits have flattened out over the last few months making me wonder what the builders know that I don’t. Even the JOLTS report, which has been a consistent positive surprise, managed to disappoint. Job openings were way up but from a very negatively revised previous number. Again, though, January data so there is hope…. Overall, the trend of the economy hasn’t changed much, growing at around 2% and not, so far, getting worse or better.