The Monday Morning Quarterback /A quick analysis of important economic data released over the last week
Elliot D. Pollack & Co.
Congrats to the U.S. economy. The country has now completely recovered all the jobs lost since January 2008. This is the longest amount of time it has taken to recoup jobs lost in a downturn since the 1930’s. There really is good news, though. Employment continues to increase nicely. The unemployment rate continues to decline. Even considering that the bulk of the decline is due to a decline in the labor force participation rate, the last four months have been the longest stretch of adding 200,000 jobs or more since September 1999-January 2000. Overall, it’s slow, but, it’s going in the right direction.
Arizona Snapshot
While Arizona weekly unemployment claims were down 33.9% from a year ago for the last week in May, the total level of claims has been stuck at the 40,700-41,000 level for quite some time. This does not bode well for unemployment in the near term.
Enplanements and deplanements at Phoenix Sky Harbor Airport were up again in April. The total of the two are now up 5.3% over a year ago. This is a good sign for tourism and travel.
The share of homes that are mortgaged that remain underwater continues to decline in both the state and Greater Phoenix. The state is now down to 20.1% as of the first quarter of 2014. This is down from 21.5% in the 4th quarter and 31.3% a year ago. Nationally, the 1st quarter was 12.7% compared to 13.3% in the 4th quarter and 19.7% a year ago. Thus, the state was over 11 percentage points higher than the U.S. a year ago but is less than 8 percentage points higher today. For Greater Phoenix, the 1st quarter was 20.6% compared to 22.1% in the 4th quarter and 32.5% a year ago.
U.S. Snapshot
Nonfarm employment advanced a seasonally adjusted 217,000 last month. As stated above, total U.S. payrolls now exceed the country’s previous peak level of employment set in January 2008. However, the makeup of jobs has shifted since the recession began. The share of Americans working in manufacturing, construction and for the government-typically good paying fields-has fallen, while more are working in the leisure and hospitality sector and other generally lower paying service jobs (see charts below).
The jobless rate, obtained from a separate survey or households, was unchanged at 6.3% in May, matching the lowest level since September 2008. However, the share of Americans participating in the labor force held steady near its lowest level since March 1978, at 62.8% in May.
The share of Americans out of work for more than 27 weeks declined in May, but remained historically high at 34.6%.
Household net worth continues to recover and now stands 10.8% above a year ago and 1.9% over last quarter.
Consumers used their credit cards heavily in April as outstanding revolving credit surged $8.8 billion for one of the largest gains on record. Revolving credit had been noticeably lagging non-revolving credit which also rose sharply in April, up $18.0 billion reflecting heavy vehicle financing and, as usual, government acquisition of student loans. Revolving credit grew at a 12.3% annual rate and now stands 2.4% above a year ago. Non-revolving credit grew at a 9.5% annual rate and now stands 8.2% above a year ago.
Both the ISM manufacturing and non-manufacturing indices were up in May and indicate continued economic growth.
Construction spending grew by 0.2% in April over March and now stands 8.6% above a year ago. The private sector was flat for the month, but now stands 11.7% over a year ago.
