{"id":1600,"date":"2019-09-19T13:03:58","date_gmt":"2019-09-19T17:03:58","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1600"},"modified":"2019-09-19T13:03:58","modified_gmt":"2019-09-19T17:03:58","slug":"august-existing-home-sales-leading-indicators-and-september-philadelphia-fed-manufacturing-index","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1600","title":{"rendered":"August Existing Home Sales, Leading Indicators and September Philadelphia Fed Manufacturing Index"},"content":{"rendered":"\n

KEY DATA:<\/strong>  Sales: +1.3%; Over-Year: +2.6%; Prices\n(Over-Year): +4.7%\/ LEI: 0%\/ Phila. Fed: -4.8 points; Jobs: +12.2 points; Expectations:\n-11.8 points<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cAll signs point to continued but sluggish\neconomic growth. \u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  The Fed cut interest rates again yesterday but\nthe small reduction is not likely to do much. Consider one of the major \u201cinterest sensitive\u201d\nsectors, housing.  The National Association of\nRealtors reported that existing home sales rose a touch in August, led by a\nsolid increase in demand in the Northeast. <\/em><\/strong> The level was the highest in seventeen\nmonths.<\/em><\/strong>  Sales gains were\nmoderate in the Midwest, modest in the South but down in the West.  Both single-family and condo purchases\nimproved at nearly the same pace.  As\nfor prices, they were up at a decent but hardly excessive pace.  <\/em><\/strong>Basically, the housing market is\nneither a major positive or negative for growth.<\/p>\n\n\n\n

Will the economy pick up from its more moderate pace\nin the near future?  The Conference\nBoard\u2019s Leading Economic Index doesn\u2019t point to that.  For the second time in three months, the\nindex was flat.<\/em><\/strong>  The report itself said it best:\n\u201cThe recent trends in the LEI are\nconsistent with a slow but still expanding economy\u2026\u201d.  <\/em>So don\u2019t look for any major\nreacceleration in growth anytime soon, but a recession is not likely to take\nhold in the near future either. <\/p>\n\n\n\n

The manufacturing sector has been coming back\nrecently and the Philadelphia Fed\u2019s manufacturing survey supported that view.<\/em><\/strong>  Yes, the overall index indicated that general\nbusiness conditions in the Mid-Atlantic region moderated a touch in August into\nSeptember, but the details of the report were generally good.  Orders still expanded solidly, backlogs\nbuilt and hiring and hours worked were up. \nHowever, optimism continues to fade. <\/em><\/strong> The expectations index level was in the range\nwe saw in 2007, also when the economy was slowing.  <\/p>\n\n\n\n

Jobless claims rose modestly last week but the level\nremains extraordinarily low.  MARKETS AND FED\nPOLICY IMPLICATIONS:<\/strong>  I read\nthe FOMC statement and listened to Fed Chair Powell\u2019s press conference but the\ntruth of the matter is I am not sure the Fed knows what it is doing or what it\nshould do.  Housing is stable to up and that\nis actually just fine.  We don\u2019t want\nanother bubble to form.  Given the lack\nof supply and changing demographics\/tastes, the sector is not in bad shape. And\nsmall changes in rates will do little to change that.<\/em><\/strong>  It\u2019s just that too many people want the hare\nrather than tortoise.  The\nmarkets want lower and lower rates so growth can accelerate.  That the lower rates may be creating major\nrisks is not something investors tend to spend a lot of time thinking about.<\/em><\/strong>  If the future mattered, would we have had the\ncot.com or housing bubbles?  Feeding\nthe beast is the greatest investor concern and a 25 basis point cut will not do\nmuch to stave off hunger pains.<\/em><\/strong>It\nwill also not do much to \u201cinsure\u201d the economy doesn\u2019t go into recession if the\ntrade war\u2019s impacts worsen. <\/em><\/strong> The\nidea that the Fed is taking out insurance with such a modest move is a\njoke.  And then there is the 2020\nelection.  Janet Yellen got fired for\nkeeping rates too low for too long.  The\nsame person who fired Yellen wants to fire Powell because he is not keeping\nrates at Yellen\u2019s level.  And people want\npoliticians to run the Fed.  Just what we\nneed.  Anyway, the data are at least\nconsistent.  They point to continued\ntrend-level growth and no need for the Fed to do anything.  <\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  Sales: +1.3%; Over-Year: +2.6%; Prices (Over-Year): +4.7%\/ LEI: 0%\/ Phila. Fed: -4.8 points; Jobs: +12.2 points; Expectations: -11.8 points IN A NUTSHELL:  \u201cAll signs point to continued but sluggish economic growth. \u201d WHAT IT MEANS:  The Fed cut interest rates again yesterday but the small reduction is not likely to do much. Consider one … Continue reading August Existing Home Sales, Leading Indicators and September Philadelphia Fed Manufacturing Index<\/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":[1],"tags":[],"class_list":["post-1600","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1600","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=1600"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1600\/revisions"}],"predecessor-version":[{"id":1601,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1600\/revisions\/1601"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}