Pollack: The economy keeps rolling along


& Company


August 14th, 2017

The Monday Morning Quarterback

A quick analysis of important economic data released over the last week

The economy continues to move in a positive direction at a moderate rate. The Blue Chip panel modestly revised its forecast for 2017 downward while expectations for 2018 remained the same. Business costs for labor as well as inflation overall remained under control. This is another sign that the tightening labor market has not caused significant labor cost inflation.  Credit use was less than expected.

Overall, the economy continues to be rolling along despite the almost total lack of cooperation on the part of the two major political parties and the lack of any advancement of the Trump economic and tax agendas so far.  Without the advancement of at least some major portions of the agenda (at least major corporate tax relief), any hope for improving from the current rate of economic growth will evaporate. This means that slow growth would continue until this expansion runs its course. That would be a significant missed opportunity to improve the competitive position of the U.S. Time will tell.

U.S. Snapshot:

  • Labor markets continue to be strong.  Initial claims for unemployment insurance continue to decline (see chart below).  The 4-week moving average of initial claims is 8.2% below year ago levels and 0.4% below week ago levels. The overall level of claims is at record lows.
  • The Blue Chip forecast panel slightly reduced real GDP expectations for 2017 from 2.2% to 2.1%.  the decline resulted from the fact that while the pace of economic growth in the second half of this year still is predicted by the consensus to surpass that registered in the first half, the first estimate of Q2 growth came in short of the consensus expectations. Expectations for 2018 remain the same at 2.4%.
  • Nonfarm business sector labor productivity increased 0.9% along with an increase in output of 3.4% and hours worked of 2.5% in the second quarter of 2017. Year over year growth in productivity was 1.2% reflecting a 2.7% growth in output and a 1.5% growth in hours worked.
  • Consumer prices remain in check and reflect a rate lower than the FED’s goal of 2.0%.  Over the last year, the CPI-U is up 1.7%.  In July, the CPI-U was up 0.1% from June.  All items less food and energy were also up 1.7% over the year and 0.1% over last month.
  • Though growth in consumer credit in June came in lower than expected, the component for revolving credit posted another sizable increase.  This component, which is where credit card debt is tracked, has been on the rise this year, raising the question whether financial firms are beginning to lend to less qualified borrowers.  Whether or not gains here are good for credit quality, they are a plus for short term consumer spending.

Arizona Snapshot:

  • In Greater Phoenix, single family listings continue to decline.  In July, listings were down 8.4% from a year ago and 3.2% from a month ago.  Median listing prices were up 4.3% from a year ago.  Over that period, the number of homes sold through the multiple listing service was up 2.9%.
  • In Greater Tucson, single family listings were also down from a year ago.  Listings in July were down 3.8% for the year and 0.2% from June. For the year, the median sales price is up 6.6%.  Thus, the single family housing markets in both Phoenix and Tucson continue to tighten.

About EDPCo

Elliott D. Pollack & Company (EDPCo) offers a broad range of economic and real estate consulting services backed by one of the most comprehensive databases found in the nation. This information makes it possible for the firm to conduct economic forecasting, develop economic impact studies and prepare demographic analyses and forecasts. Econometric modeling and economic development analysis and planning are also part of our capabilities. EDPCo staff includes professionals with backgrounds in economics, urban planning, financial analysis, real estate development and government. These professionals serve a broad client base of both public and private sector entities that range from school districts and utility companies to law firms and real estate developers.  

For more information, contact –

Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251

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