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Thursday, April 28, 2011

Bunch of Economic Reports Today...

Running list (really for myself):

A) Not an economic release, but WalMart is perturbed:
Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.
"Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern.
Walmart is raising food prices and dropping electronics prices. This is an N_S_S comment, but the number of Walmart shoppers is so big in comparison to total shoppers that it is highly significant.

B) March ATA tonnage was reported as being up 1.7% after having dropped 2.7% in February. That's good, and it aligns well with diesel. For the quarter, tonnage was up 6.1% YoY.

C) Not an economic release, but Mark's "Real Core Retail Sales" graph shows what is happening, and it is happening mostly to Walmart shoppers. I don't think there is much Walmart can do to stem the trend. Its shoppers have less disposable income. And I know they have to raise food prices, but believe me, it is not going to help other sales segments.

D) Initial claims - defying predictions of a drop, SA initial claims rose to 429,000 this week, compared to last week's upwardly adjusted 404,000. Non seasonally-adjusted claims were static. Because the Easter/Passover was late, and because that affects school calendars, I suspect that the seasonal adjustment is a bit off. Also I did expect rising claims in April from the temporary impact of supply line disruptions flowing throw to auto assembly lines. Nonetheless, this will come as a shock to the market. The advance 4-week moving average for 4/23 is 408,500, which has a psychological significance for some.

E) GDP Q1 advance. Link to pdf. Headline 1.8%. I need to go through this thing very carefully before writing too much. I expected about 2.2 - 2.3%. I am expecting a range of bad news to impact investor sentiment over the next couple of weeks; the combination of claims and GDP is getting that off to a good start. (First note: the private economy was decent; a big drop in defense spending dropped government expenditures. However net the economy grew at a real level of 58.1 billion; 30 billion of that was in a private inventory build.) Private inventory builds generally subtract from future quarters. I think the economy is strong enough to carry this along through the second and into the third, but we'll see.

Hilarious note: In this summary article on jobless claims, the end refers to McDonald's hiring binge. As far as I can see, that was a publicity stunt:
Some companies are turning more optimistic about hiring. Oak Brook, Illinois-based McDonald’s Corp. (MCD), the world’s largest restaurant chain by revenue, sought as many as 50,000 workers in the U.S. during its National Hiring Day event on April 19.
I blinked and twitched! If that was meant to be a positive point, it wasn't!

Regarding first quarter, which WILL be revised: See Calculated Risk's post and his graph of the major components of gross private domestic investment. That drives the economy. The two-quarter (as currently known) contribution of GPDI is negative either way you look at it - nominal or real. We need industry to export. It's not negative enough to auger an immediate problem, though. Just slow growth this year.

F) Pending home sales. YoY down 11.5%. Remaining closest to last year's levels are the south and the west. An FHA premium increase took effect in April. It boosted apps before, and probably sales. The month over month calculated was up 5.1% on this report. I am not placing huge weight on it - I think only about half was structural. Still, it is sales season for most of the country.

Regarding inflation/price increases:
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 3.8 percent in the first quarter, compared with an increase of 2.1 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in the first quarter, compared with an increase of 1.1 percent in the fourth.
Wait, maybe that should be posted in red. The Fed wanted 4%, the Fed got nearly there. They'll wait until they get to about 3.6% on ex food and energy and then start running in circles screaming and holding their balls for comfort, because we're going to six or seven ex food and energy.

See, we start with WalMart and we end with WalMart.

Always Low Prices!

My word verification is "dring".

Depression has a familiar ring to it?
I don't think so. Just a prolonged period of the economic blahs.

Of course we could always spend our way into a Greece-like situation, when the ability to borrow runs out, depression shows up.

I'm hoping we stop.
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