by Calculated Risk on 8/13/2010 09:59:00 AM

From Reuters: Consumer Sentiment Edges Up in August, More Than Expected

The slight pickup in sentiment follows a drop in July to the lowest level since November, the data from Thomson Reuters/University of Michigan's Surveys of Consumers showed.

The survey's preliminary August reading on the overall index on consumer sentiments rose to 69.6 from 67.8 in July ...

Click on graph for larger image in new window.

Consumer sentiment is a coincident indicator - and this is further evidence of a sluggish economy.

Interesting - the survey's one-year inflation expectations increased to 2.8% even with very low measured inflation.

This was a big story last month when consumer sentiment collapsed to the lowest level since late 2009. Even with the slight increase, this is still at the levels of late last year.

by Calculated Risk on 8/13/2010 08:30:00 AM

On a monthly basis, retail sales increased 0.4% from June to July (seasonally adjusted, after revisions), and sales were up 5.5% from July 2009. Retail sales increased 0.2% ex-autos.

Click on graph for larger image in new window.

This graph shows retail sales since 1992.

This is monthly retail sales, seasonally adjusted (total and ex-gasoline).

Retail sales are up 8.1% from the bottom, but still off 4.5% from the pre-recession peak.

The second graph shows the year-over-year change in retail sales (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 4.8% on a YoY basis (5.5% for all retail sales). The year-over-year comparisons are easy now since retail sales collapsed in late 2008.

Here is the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for July, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $362.7 billion, an increase of 0.4 percent (±0.5%)* from the previous month, and 5.5 percent (±0.5%) above July 2009. Total sales for the May through July 2010 period were up 5.9 percent (±0.3%) from the same period a year ago. The May to June 2010 percent change was revised from -0.5 percent (±0.5%)* to -0.3 percent (±0.2%).

This was close to expectations.

by Calculated Risk on 8/12/2010 11:01:00 PM

From Paul Krugman: Paralysis at the Fed

Ten years ago, one of America’s leading economists delivered a stinging critique of the Bank of Japan, Japan’s equivalent of the Federal Reserve, titled "Japanese Monetary Policy: A Case of Self-Induced Paralysis?" With only a few changes in wording, the critique applies to the Fed today.

At the time, the Bank of Japan faced a situation broadly similar to that facing the Fed now. The economy was deeply depressed and showed few signs of improvement, and one might have expected the bank to take forceful action. But short-term interest rates — the usual tool of monetary policy — were near zero and could go no lower. And the Bank of Japan used that fact as an excuse to do no more.

That was malfeasance, declared the eminent U.S. economist: “Far from being powerless, the Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution and its defensive response to criticism.” He rebuked officials hiding “behind minor institutional or technical difficulties in order to avoid taking action.”

Who was that tough-talking economist? Ben Bernanke ...

Here is a link to the 1999 paper by Bernanke - it is interesting reading.

by Calculated Risk on 8/12/2010 06:52:00 PM

From the WSJ: Greek Recession Deepens

The Greek economy contracted sharply in the second quarter ... The national statics service Ellsta said Thursday that second-quarter gross domestic product fell 1.5% on a quarterly basis, weaker than forecasts of a 1% drop and the 0.8% fall in the first quarter.

Jobs data for May, meanwhile, revealed persistently high unemployment, which ticked higher to 12% from 11.9% in April.

GDP is reported on a quarterly basis (not annualized). In the U.S. that would be reported as a 6% decline.

From Bloomberg: Spanish Crisis Threatens Second Front as Catalonia Rates Rise

Catalonia, which accounts for a fifth of Spanish gross domestic product, has been shut out of public bond markets since March and the extra yield it pays over national government debt has almost tripled this year. Galicia, in the northwest, has asked to freeze payments of debt it owes the central government and the Madrid region postponed a bond sale last month.

Spain’s regions, which borrowed at similar rates to the central government before the global credit crisis started in 2007, are key players in Zapatero’s drive to get his budget in order and push down the country’s borrowing costs. They control around twice as much spending as the state, employ more than half of all public workers and piled on debt during the recession.

From the WSJ: Irish Banks Rattling Nerves Again

Earlier this week, Ireland received European Commission approval for an additional €10 billion ($13 billion) in capital for state-owned Anglo Irish Bank, on top of the €14.3 billion the government has already injected into the bank. On Wednesday, Bank of Ireland, 36%-owned by the government, reported a pretax first-half loss nearly twice as big as its loss a year earlier.

The combination of events has made it more expensive for Ireland to borrow and driven the country's credit-default insurance costs 36% higher since the start of the month, to levels last seen just ahead of the European banking stress tests.

by Calculated Risk on 8/12/2010 03:26:00 PM

Here is a look at European bond spreads from the Atlanta Fed weekly Financial Highlights released today (graph as of Aug 11th):

Click on graph for larger image in new window.

From the Atlanta Fed:

Peripheral European bond spreads (over German bonds) narrowed between the June and August FOMC meetings, though they were rising over the past week.

Between the June and August FOMC meetings, the 10-year Greece-to-German bond spread has narrowed by 50 basis points (bps) (from 8.01% to 7.51%) through August 10, though it has risen by 12 bps in the past week. Similarly, with other European peripherals’ spreads, Portugal’s is lower by 54 bps during the period, and Spain’s is lower by 37 bps, though both are up from the week prior.

As of today, the Greece-to-German spread has widened to 7.98% (peaked at over 8%) and the Ireland-to-German spread has increased to 2.88%.

Note: The Atlanta Fed data is a couple days old. Nemo has links to the current data on the sidebar of his site.

by Calculated Risk on 8/12/2010 01:02:00 PM

Hotel occupancy is one of several industry specific indicators I follow ...

From HotelNewsNow.com: STR: Economy segment leads weekly occupancy gains

Overall, the industry’s occupancy increased 6.7% to 70.2%, average daily rate rose 1.6% to US$99.13, and revenue per available room increased 8.4% to US$69.57.

The following graph shows the four week moving average for the occupancy rate by week for 2008, 2009 and 2010 (and a median for 2000 through 2007).

Click on graph for larger image in new window.

Notes: the scale doesn't start at zero to better show the change. The graph shows the 4-week average, not the weekly occupancy rate.

On a 4-week basis, occupancy is up 6.9% compared to last year (the worst year since the Great Depression) and 4.0% below the median for 2000 through 2007.

Just over half way back to normal, and almost back to the levels of 2008 (the occupancy rate started to fall off in the 2nd half of 2008).

NOTE: The supply of rooms in the survey is up just over 2% from last year. The increase in the occupancy rate is from an increase in demand - although this is still fairly weak (the 2nd half of 2008 was weak for hotels).

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com