The Monday Morning Quarterback: A quick analysis of important economic data released over the last week
Elliott D. Pollack & Company
The consensus forecast of year-over-year real GDP growth for 2012 stayed about flat while the forecast for 2013 fell for the fourth consecutive month. Consumer credit was up but at a rate that was below expectations. This reflects continued consumer caution. Total consumer credit outstanding was up at a 3% annual rate in June over May. Revolving credit was down in June and now stands 0.7% above year earlier levels. Non-revolving consumer credit, mainly for purchases of autos and light trucks, was up at a 7.2% annual rate in June over May. It now stands 7.4% over June, 2011. Productivity grew in line with expectations. Unit labor costs grew at a 1.7% annual rate. This was higher than expectations and, if it continues, will result in lower corporate profits or higher prices.
Initial claims for unemployment insurance were lower than expected. This is good news. But, the absolute level of initial claims has been mostly flat over the past few months. This is disappointing for this stage in the cycle. The trade balance was better than anticipated. Money supply growth as measured by M1 and M2 remains rapid by historic standards. M1 is now 16.0% above year earlier levels. This is about the same rate of increase as May on a year-over-year comparison. M2 in June was up 9.3% above June 2011. In May, M2 was up 9.7% year-over-year.
June’s home sales in Greater Phoenix were 4.7% below May’s total and down almost 16% when compared with this time last year. The reduction was entirely due to a large decline in sales of distressed units. Single-family home prices changed only slightly between May and June of this year. However, the data confirms a very significant recovery in prices compared to a year ago. Over the last year, the median price of a home sold was up over 29% from $116,000 to $150,000. On a per square foot basis, prices were up over 21% from a year ago. The lowest point in overall prices now appears to have been in September, 2011. However, the underlying data shows that there is much more to the story than just the headlines. For example, while all home sales prices are up 29.3% over the last year, new home sales prices are up just 1.5%, non-distressed property prices are actually down 1.1%, Bank Owned Sales prices were up 26.9%, GSE REO sales prices were up 36.1% and prices of properties subject to trustee sales to third parties were up 31.9%. Thus, it appears to be a shift in the supply/demand characteristics of distressed properties that have caused the overall increase in prices. It has yet to affect the non-distressed market.