{"id":1460,"date":"2019-02-21T11:58:01","date_gmt":"2019-02-21T16:58:01","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1460"},"modified":"2019-02-21T11:58:01","modified_gmt":"2019-02-21T16:58:01","slug":"%ef%bb%bfdecember-durable-goods-orders-january-existing-home-sales-february-philadelphia-fed-manufacturing-activity-and-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1460","title":{"rendered":"\ufeffDecember Durable Goods Orders, January Existing Home Sales, February Philadelphia Fed Manufacturing Activity and Jobless Claims"},"content":{"rendered":"\n


<\/strong><\/p>\n\n\n\n

KEY DATA:<\/strong> Durables: +1.2;\nEx-Transportation: +0.1%; Capital Spending: -0.7%\/ Existing Home Sales: -1.2%;\nPrices (Over-Year): +2.8%\/ Philadelphia Fed (Manufacturing): -21.1 points\/\nClaims: -23,000<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cWith housing and manufacturing slowing further,\nit appears the bloom is off the economic expansion rose.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  We are still one week from getting the first\nreading on fourth quarter 2018 GDP, but things are not looking up for the\nnumber.  <\/em><\/strong>In a report delayed by\nthe government shutdown, durable goods orders rose solidly in\nDecember.  However, much of that gain was\nderived from a 28.4% surge in nondefense aircraft orders.  The rest of the economy, excluding Boeing,\ndidn\u2019t do nearly as well.<\/em><\/strong>  Motor\nvehicle orders rebounded and demand for fabricated metals was up, but there\nwere negative signs on the computers, communications equipment, machinery,\nelectrical equipment and primary metals components.  But most troubling, the indicator of private\nsector investment spending, capital goods orders excluding aircraft and\ndefense, fell sharply again.  Whatever\nbusiness spending boom we got from the tax cuts looks like it has dissipated.<\/em><\/strong>  Also, backlogs are declining and inventories\nare growing faster than order books, which isn\u2019t a great sign for future\ncapital spending.  <\/p>\n\n\n\n

A second indicator of growing economic weakness was\nthe report by the National Association of Realtors that showed existing home\nsales continued to fade in January.<\/em><\/strong>  Yes, it was\nbitterly cold, but the slowdown has been going on for a year now and there is\nno indication that the latest data are anything but a continuation of that\ntrend.  Housing prices are rising slowly,\nfurther reinforcing the belief that the sector is soft.<\/em><\/strong>  Finally, despite the weakening demand,\ninventories remain well below healthy levels. \nIt is hard for buyers to find a house they want given the low level of supply.<\/p>\n\n\n\n

If the slowdown in housing and manufacturing were\nnot enough, the Philadelphia Fed\u2019s February report on regional manufacturing\nactivity turned negative for the first time in nearly three years.<\/em><\/strong>  However, we shouldn\u2019t read too much into this\nreport as the weather was brutal, hiring remained strong and the outlook for the\nfuture held up quite well.  <\/em><\/strong><\/p>\n\n\n\n

Finally, unemployment claims declined back to what\nare more normal levels last week.<\/em><\/strong> \nI had warned that the data were volatile due to the government shutdown\nand cold weather, and that looks to have been the case.  <\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  The\neconomy is coming off its tax-induced sugar high.  No surprise there, except it might be a\nlittle quicker than expected.  The\nbiggest concern is that the tax cuts didn\u2019t bring forth nearly the gains in\ncapital spending that many had hoped for.<\/em><\/strong>  Economists had warned that would likely\nhappen, but we still held out hope that the past, limited reactions to tax cuts\nby businesses would not be repeated this time. \nWell, this time was just not different. \nThe Fed, in the minutes of the January 29-30 meeting released\nyesterday, made it clear that it would be cautious going forward.  The members did remind everyone that\nincreases in rates could not be ruled out if there were a rebound in growth and\ninflation. <\/em><\/strong> Hardly anything new\nthere.  What was new was a clarification\nof the balance sheet normalization process. \nThe run down is likely to end later this year at a level above what was\nexpected.  The members want to build in\nsome flexibility, which makes sense, especially since this is new ground for\nthe Fed.  For investors, the data don\u2019t\npaint a picture of strong growth going forward. \nAgain, economists warned that the likelihood of an extended period of 3%\ngrowth was small and that too appears to be coming true.  I guess we can be right every once in a\nwhile.        <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Durables: +1.2; Ex-Transportation: +0.1%; Capital Spending: -0.7%\/ Existing Home Sales: -1.2%; Prices (Over-Year): +2.8%\/ Philadelphia Fed (Manufacturing): -21.1 points\/ Claims: -23,000 IN A NUTSHELL:  \u201cWith housing and manufacturing slowing further, it appears the bloom is off the economic expansion rose.\u201d WHAT IT MEANS:  We are still one week from getting the first reading … Continue reading \ufeffDecember Durable Goods Orders, January Existing Home Sales, February Philadelphia Fed Manufacturing Activity and Jobless Claims<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1460","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1460"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1460\/revisions"}],"predecessor-version":[{"id":1461,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1460\/revisions\/1461"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}