ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
December 14th, 2015
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
Last week’s data provided another great snapshot of the trends occurring in the U.S. economy. There are signs of short term volatility in many of the new releases but still solid relative to a year ago. Household net worth is fluctuating on a short term basis due to stock market movements but still higher than last year. The improvements have allowed household debt to increase and retail sales to continue to improve.
According to the Blue Chip survey, 2016 growth is expected to be driven primarily by consumer spending. Expectations are for continued improvements in the labor market, increases in disposable personal income, and more favorable lending standards.
U.S. Snapshot:
- The national Blue Chip consensus forecast of real GDP showed little movement over the past month. An upward revision of Growth by the Bureau of Economic Analysis increased the expected year over year growth rate slightly to 2.5% in 2015. However, expectations slipped slightly down to 2.5% (from 2.6%) for 2016.
- Initial weekly unemployment insurance claims are actually higher. This week resulted in 13,000 more claims from the previous week but still represents a 2.4% decline from one year ago. This suggests that labor markets are healthy but may be experiencing some tempering from what has been a very solid labor market.
- The U.S. government’s budget deficit has been increasing in the first two month’s into fiscal 2016. Causes of the increase have been tied mainly to higher Medicare expenses (up 8.7%). Compared to the same time last year, the deficit is up by a considerable 12.6%. The Treasury has also reported increases in Social Security expenses (up 4.3%) and defense spending (up 2.7%). Receipts are also 2.9% higher than the same period last year, mostly due to increases in individual income taxes (up 5.3%).
- Household net worth is down from the previous quarter by 1.4%. This reflects the volatility in the stock market during that time period. Net worth is still positive on a year over year basis by 2.9%.
- Household debt increased at a 1.5% annualized rate in the third quarter. This reflects a 7.2% growth pace in consumer credit and mortgage borrowing at a 1.6% pace.
- The latest University of Michigan consumer sentiment index shows an uptick of 5 tenths from the final November reading. There is optimism for the holiday shopping season but it is tempered by caution related to the long term jobs outlook.
- Retail sales were up 0.2% in November compared to a month ago and are up 1.4% over a year ago.
- The manufacturing inventories/sales ratio was 1.38 in October. This is up from 1.37 in September and 1.31 a year ago.
- Gasoline prices average $2.159 for the first week in December. This is down 0.3% from a month ago and a whopping 22.0% from a year ago.
- 37,000 foreclosures occurred in October which represents a 27.1% decline from a year ago. For reference, prior to the housing market crash, completed foreclosures averaged 21,000 per month.
Arizona Snapshot:
- Arizona unemployment claims came in at just over 28,200 for the first week in December. This is up on a week over week basis but, overall, down by 9.6% from a year ago.
- Real GDP growth for the state in the second quarter was reported at a 3.2% annualized rate. This represents a 2.2% increase from the year prior and a 0.8% increase from the previous quarter.
- The single family market showed month over month declines in sales for the month of October but still 6% higher than sales activity over the previous year. This trend is true of both new home sales and resales.
- Total residential listings are down 8.8% from a year ago and were reported at just over 25,000 listings for the month of November. At the current pace of sales, this represents a 4.7 month supply of homes.
- Greater Tucson is also showing a decline in listings compared to a year ago (down 12.4%). Compared to recent sales, total listings represents a 5.6 month supply of homes.
