The Monday Morning Quarterback /A quick analysis of important economic data released over the past week
Elliott D. Pollack & Co.
Mostly good news this week on the national front. Some not so good, but, that is expected to be temporary. Not too much to report about Arizona. The issue we discussed a few weeks ago about how the U.S. labor force participation rate affects what the Fed now considers the full employment level of unemployment may be rearing its head sooner than anticipated as the unemployment rate is now below 6.0% and the level of initial unemployment claims continues to suggest further improvement in the unemployment situation. We still believe that the Fed will be cautious in raising rates.
U.S. Snapshot:
There are fewer and fewer workers drawing unemployment benefits. That points solidly to an improving labor market and suggests a continued improvement in the unemployment rate is likely.
U.S. job growth rebounded in September. Nonfarm payrolls grew a seasonally adjusted 248,000 last month. This is the fastest pace since June. Labor Department revisions showed stronger job growth as they revised both July and August upward.
The jobless rate slipped to 5.9% last month. This is the lowest rate of unemployment since July 2008. Unemployment, nearly 5 years after peaking at 10.0%, is approaching the 5.2%-5.5% range the Fed considers full employment. September’s unemployment rate is where officials projected it would be at year end 2014. Muddying the waters, though, are the still high rate of underemployed (now 11.8% compared to a range of 8%-10% in the last expansion) and the continued decline of the labor force participation rate (now at a 35 year low).
Personal income in August was up 4.3% over a year ago and 0.3% over July. Personal consumption expenditures were up 4.1% over a year ago and 0.5% over July.
The Conference Board measure of consumer confidence reversed course in September and declined from 93.4 in August to 86.0.
Sales of cars and light trucks fell 6.3% in September compared to an extraordinarily strong August. The September sales number was 16.3 million units compared to an expectation of 16.8 million units.
The ISM’s Manufacturing Index indicated that the manufacturing sector expanded for the 16th consecutive month in September and that the overall economy grew for the 64th consecutive month. The index did decline to 56.6 from 59.0 in August, but, any reading of 50 or above indicates expansion.
The ISM’s Non-Manufacturing Index indicated that the non-manufacturing sector expanded in September for the 56th consecutive month. This index was also weaker than in August, but, only slightly so.
Construction spending unexpectedly reversed course in August and declined 0.8% from July. Construction spending is still up 5.0% from a year ago.
Nationally, there were 45,000 foreclosures in August according to CoreLogic. This compared to 58,000 a year ago and 44,510 in July.
Arizona Snapshot:
Arizona personal income in the second quarter of 2014 now stands 4.2% higher than a year ago and was up 1.4% from the first quarter. This compares to 4.1% and 1.5% nationally for the same time periods.
