The Monday Morning Quarterback, a quick analysis of important economic data released over the past week
Elliott D. Pollack & Co.
While it was a big week for decisions from the Supreme Court, it was less exciting in the economic realm. The news released last week was mostly good. The latest data available shows that the 1st quarter was not as weak as originally expected. Corporate profits, while declining, stayed strong. Personal income and consumer spending were also strong in May. Consumer confidence improved. In addition, single-family home sales were up. In Arizona, lodging occupancy was up. Overall, it was not a bad week.
Arizona Snapshot
Statewide lodging occupancy in May was 63.0% compared to 61.4% a year ago. This was composed of a 2.4% gain in demand and a 0.2% decline in supply.
According to George Hammond, director of the University of Arizona’s Economic and Business Research Center, a $1 per gallon drop in gas prices would free up $2.67 billion for households to save or spend on other priorities. The result on a per capita basis, given George’s calculations, would be $317 for the state, $320 in the City of Phoenix and $350 in Tucson. That’s quite a nice “gas dividend” and has certainly helped the consumer.
U.S. Snapshot:
Corporate cash flow was down very modestly in the 1st quarter (down 6.4% at an annual rate) but up 3% over a year ago. It remains at a very high level in both absolute terms and as a percent of GDP.
The consumer came to life in May, boosted by a 0.5% rise in personal income with wages and salaries up 0.5% as well. Personal outlays surged 0.9% due to spending on autos and retail goods.
Disposable personal income grew by 0.5% in May and is now up 3.8% over a year ago.
The personal savings rate stood at 5.1% in May, down from 5.4% in April but flat compared to a year ago.
June optimism is strong with the University of Michigan Sentiment index now up to 96.1. This is up from 90.7 in May and 82.5 a year ago.
After a sizable downward revision in the April data, new orders for durable goods declined again in May. But, the entire decline was skewed by a 49% drop in aircraft orders where sizable month to month swings are the norm. New orders excluding aircraft rose 0.4% in May after a 0.3% slip in April.
New home sales rose 2.2% in May to an annual rate of 546,000. This is considered to be a very positive sign.
