A quick analysis of important economic data released over the past week
Elliott D. Pollack & Co.
Before I get to this week’s economic news, let me express my sorrow at the Friday events in Paris. My heart goes out to those who lost their lives so suddenly and senselessly at the hands of terrorists who put no value on life and, therefore, civilization. My sympathy goes out to the families and friends of those who died and to the French people. Those terrorists, who want to bring the dark ages back to the world, obviously need to be stopped literally at any cost. As the terrorists know, it is difficult for a free society, something they fear and hate the most, to flourish when these types of events take place. The rule of law is undermined to the point where freedom is compromised and people are in disarray. This is their intermediate goal. Hopefully, this wakes up the world and the U.S. government that seems to be struggling as to how we proceed. May God, whatever one conceives God to be, bless those who died well before their time.
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Last week’s data were “more of the same.” The economy is likely to continue to grow at subpar rates. Price increases will remain under control. Consumers remain fairly optimistic and housing continues its slow recovery. The major negative remains inventories. They remain out of line relative to sales. This still needs to be fixed. Such a fix usually is a drop off in production. This would slow things even further. But, any such drop off would be temporary.
Arizona Snapshot
Both enplanements and deplanements at Sky Harbor were up significantly in September. Enplanements were up 9.0% from a year ago and deplanements were up 7.3%. This is good news for tourism.
Monthly retail sales have been reported but the state has chosen to redo how taxable retail sales are calculated based on changes to construction contracting activities and has not recreated the historic series. As a result, analysis of this data still remains difficult at this time. Once enough of the new reporting has occurred, we will resume comments on this particular series.
Housing affordability in Greater Phoenix improved in the 3rd quarter according to the NAHB Housing Opportunity Index. The index is now at 70.9 compared to 68.3 a year ago. This indicates that 70.9% of the households in Greater Phoenix can afford the median price home. In Tucson, the index stands at 74.2, down from 75.9 a year ago.
U.S. Snapshot
The national Blue Chip consensus forecast of real GDP was unchanged over the past month. But, slower growth in the third quarter decreased the expected year over year growth rate to 2.4% in 2015 and 2.6% in 2016.
The University of Michigan consumer sentiment index for November was 93.1. This is up from 90.0 in October and 88.8 a year ago. The outlook for the jobs market appears to be improving and the relatively healthy performance of the stock market is also a likely factor. This should bode well for the upcoming holiday shopping season.
Retail sales were up 0.1% in September compared to a month ago and are up 1.7% over a year ago. Keep in mind that gasoline is a retail good and it has declined almost 21% in the past year. Thus, traditional retail sales are not as weak as they appear.
The total business inventories/sales ratio was 1.38 in September. This is up from 1.37 in August and 1.31 a year ago (see chart below). This suggests a slowdown is likely in those areas of manufacturing where inventories are high relative to sales. It also suggests some auto retailers will have their “sales” sign up this holiday season.
The median price of homes sold in the U.S. was flat in the third quarter when compared to the second quarter according to the National Association of Realtors.
