by Calculated Risk on 11/12/2019 10:43:00 AM

From Dodge Data Analytics: Dodge Momentum Index Moves Higher in October

The Dodge Momentum Index increased 6.9% in October to 152.6 (2000=100) from the revised September reading of 142.7. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. October’s increase was due entirely to a recovery in institutional planning projects, which had stepped back over the previous few months. Institutional planning moved 22.8% higher in the month while commercial planning lost 0.5%.

Despite the October increase, institutional projects entering planning remain 4.3% lower on a year-over-year basis compared to October 2018. Commercial projects meanwhile are 14.3% higher than October 2018 as several mega projects have entered the early stages of planning over the last several months. The overall Momentum Index is 6.7% higher than a year ago, although its level remains below the July 2018 peak.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 152.6 in October, up from 142.7 in September.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  After declining late last year, this index moved mostly sideways in 2019, and has increased recently.

by Calculated Risk on 11/12/2019 09:00:00 AM

CR Note: Most of this survey is noise, but there is some information, especially on the labor market and the "Single Most Important Problem".

From the National Federation of Independent Business (NFIB): October 2019 Report: Small Businesses Continue to Push the Economy Forward

The small business half of the economy continued its remarkable economic streak, posting a 0.6 point gain in October’s Optimism Index. The 102.4 reading was buoyed by eight of the 10 Index components advancing, as talk of a recession waned in October. The Uncertainty Index declined 4 points but remains historically high heading into an election year.
..
Twenty-five percent of the owners selected “finding qualified labor” as their top business problem, more than cited taxes or regulations. Reports of higher worker compensation rose 1 point to a net 30 percent of all firms – a historically high reading. Plans to raise compensation rose 4 points to a net 22 percent.
emphasis added

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index increased to 102.4 in October.

Note: Usually small business owners complain about taxes and regulations (currently 2nd and 3rd on the "Single Most Important Problem" list).  However, during the recession, "poor sales" was the top problem. Now the difficulty of finding qualified workers is a top problem.

by Calculated Risk on 11/11/2019 02:59:00 PM

During the recession, I wrote about the troubles in Las Vegas and included a chart of visitor and convention attendance: Lost Vegas.

Since then Las Vegas visitor traffic recovered to new record highs.

However, in 2018, visitor traffic declined 0.2% compared to 2017, but was still 7.5% above the pre-recession peak.

Convention attendance declined 2.2% in 2018 from the record high in 2017.  Here is the data from the Las Vegas Convention and Visitors Authority.  

Click on graph for larger image.

The blue bars are annual visitor traffic (left scale), and the red line is convention attendance (right scale).  2019 is estimated based on data through September 2019.

Convention attendance was up 3.3% in 2019 compared to the same period in 2018.

Visitor traffic was up 0.6% in 2019 compared to the first nine months of 2018.

Historically, declines in Las Vegas visitor traffic have been associated with economic weakness, so the slight declines over the last two years was concerning.

by Calculated Risk on 11/11/2019 11:53:00 AM

The following graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the October 2019 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand in May 2009, on a seasonally adjusted annual rate basis (SAAR). Then sales increased more than 2 1/2 times, and hit 479 thousand SAAR in June 2015.

Heavy truck sales declined again - mostly due to the weakness in the oil sector - and bottomed at 366 thousand SAAR in October 2016.


Click on graph for larger image.

Following the low in 2016, heavy truck sales increased to a new all time high in September 2019 (revised).

Heavy truck sales were at 536 thousand SAAR in October, down from 575 thousand SAAR in September, but up from 521 thousand SAAR in October 2018.

by Calculated Risk on 11/11/2019 09:06:00 AM

Special note: The expansion to the Panama Canal was completed in 2016 (As I noted a few years ago), and some of the traffic that used the ports of Los Angeles and Long Beach is probably going through the canal. This might be impacting TEUs on the West Coast.

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was down 1.4% in October compared to the rolling 12 months ending in September.   Outbound traffic was down 0.7% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year (February 5th in 2019).

In general imports have been increasing (although down this year), and exports have mostly moved sideways over the last 8 years - and also have moved down recently.

by Calculated Risk on 11/10/2019 06:55:00 PM

Thank you to all the veterans! Especially to my 97 years young father who flew a Corsair off the USS Bennington in the Pacific during WWII, and also served in Korea and Vietnam. And thanks to Uncle Jack (who passed away early this year) and Uncle Kenny. Thank you all.

Weekend:
• Schedule for Week of November 10, 2019

• Update on Yield Curve

Monday:
• Veterans Day Holiday: Most banks will be closed in observance of Veterans Day. The stock market will be open. No economic releases are scheduled.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 and DOW futures are down slightly (fair value).

Oil prices were down over the last week with WTI futures at $57.13 per barrel and Brent at $62.40 barrel.  A year ago, WTI was at $60, and Brent was at $69 - so oil prices are down about 5% to 10% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.62 per gallon. A year ago prices were at $2.67 per gallon, so gasoline prices are down sligthly year-over-year.

by Calculated Risk on 11/10/2019 12:04:00 PM

Back in August I wrote: Don't Freak Out about the Yield Curve

I noted that I wasn't even on recession watch!

First, here is a graph of the current yield curve, and the yield curve back on August 27, 2019.

Click on graph for larger image.

The current yield curve (blue) is upward sloping (longer duration notes and bonds yield more than short term bills and notes).

In August, the yield curve was inverted (red).

However - as I noted in August - the Fed was cutting rates this year.

Source: Daily Treasury Yield Curve Rates

And here is an updated graph of 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity from FRED.

Click here for interactive graph at FRED.

In mid-1998 the spread between the 10 year and the 2 year went slightly negative, and a recession didn't start until 2001 - over 2 1/2 years later. Of course the Fed cut rates in 1998 - just like the current situation.

by Calculated Risk on 11/09/2019 08:11:00 AM

The key economic reports this week are October CPI and Retail Sales.

For manufacturing, October industrial production, and the November New York Fed survey, will be released this week.

Fed Chair Jerome Powell will provide testimony to Congress on the Economic Outlook, on Wednesday and Thursday.

----- Monday, Nov 11th -----
Veterans Day Holiday: Most banks will be closed in observance of Veterans Day. The stock market will be open. No economic releases are scheduled.

----- Tuesday, Nov 12th -----
6:00 AM: NFIB Small Business Optimism Index for October.

----- Wednesday, Nov 13th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: The Consumer Price Index for October from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.2% increase in core CPI.

11:00 AM: NY Fed: Q3 Quarterly Report on Household Debt and Credit

11:00 AM: Testimony, Fed Chair Jerome Powell, The Economic Outlook, Before the Joint Economic Committee, U.S. Congress

----- Thursday, Nov 14th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 215,000 initial claims, up from 211,000 last week.

8:30 AM: The Producer Price Index for October from the BLS. The consensus is for a 0.3% increase in PPI, and a 0.2% increase in core PPI.

10:00 AM: Testimony, Fed Chair Jerome Powell, The Economic Outlook, Before the House Budget Committee, Washington, D.C.

----- Friday, Nov 15th -----
8:30 AM ET: Retail sales for October will be released.  The consensus is for a 0.2% increase in retail sales.

This graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 4.7% on a YoY basis.

8:30 AM: The New York Fed Empire State manufacturing survey for November. The consensus is for a reading of 5.0, up from 4.0.

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for October.

This graph shows industrial production since 1967.

The consensus is for a 0.4% decrease in Industrial Production, and for Capacity Utilization to decrease to 77.2%.

by Calculated Risk on 11/08/2019 12:42:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

A combination of a weak domestic manufacturing sector, feeble economic growth abroad that’s limiting exports, continued trade spats that are disrupting global supply chains, and general economic uncertainty are creating strong headwinds for U.S. rail volumes.

In October 2019, total U.S. rail carloads were down 8.4% from October 2018, their ninth straight decline. ... Intermodal won no prizes in October either: it was down 7.8%, its biggest percentage decline since January 2009.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows the year-over-year changes in U.S. Carloads.

Total carloads originated by U.S. railroads in October 2019 were down 8.4%, or 112,703 carloads, from October 2018. That’s the ninth straight yearover- year decline and the biggest percentage decline since March 2019. For the first ten months of 2019, total carloads were down 4.3%, or 497,121 carloads, from the same period last year. Year-to-date carloads were slightly lower in 2016, but other than that, 2019’s year-to-date total is the lowest since sometime prior to 1988, when our data begin.

The second graph is the year-over-year change for intermodal traffic (using intermodal or shipping containers):

U.S. intermodal originations in October 2019 were 7.8% lower than in October 2018, their ninth straight monthly decline — something that hasn’t happened since 2009 during the Great Recession. Year-to-date intermodal volume through October was down 4.5%, or 553,863 containers and trailers, from 2018.

by Calculated Risk on 11/08/2019 11:19:00 AM

From Goldman Sachs:

[O]ur Q4 GDP tracking estimate declined by one-tenth to +2.1% (qoq ar), and we increased our past-quarter GDP tracking estimate for Q3 by one-tenth to +2.1% (qoq ar, compared to +1.9% as originally reported). [November 4 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 0.7% for 2019:Q4. News from this week's data releases decreased the nowcast for 2019:Q4 by 0.1 percentage point. [Nov 8 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2019 is 1.0 percent on November 5, down from 1.1 percent on November 1. [Nov 5 estimate]

CR Note: These very early estimates suggest real GDP growth will be between 0.7% and 2.1% annualized in Q4.