ELLIOTT D. POLLACK
FOR IMMEDIATE RELEASE
August 28th, 2017
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
It was a pretty quiet week for economic data. So, I thought I’d take advantage of this break in the action to discuss where we are in the economic cycle.
To put it mildly, the current expansion is no spring chicken. At 98 months, it is the third longest recovery/expansion on record. The longest is 120 months (March 1991-March 2001). The second longest is 106 months (February 1961-December 1969). And even that one was marked by what was called a “growth recession” from 1966-1967.
One of the strange circumstances of this cycle is that the slow growth (not a good thing since it kept people unemployed longer than necessary) has taken a long time for the economy to get back to its potential. In fact, real GDP is now back to within $83 billion of where it should be. At its worst point, it was $935 billion below its potential. It has been a very slow process this time, mainly because of the strain on the financial system combined with anti-growth economic policies.
The good news is that even though the cycle is old, expansions don’t die of old age. They die because an economy becomes vulnerable to exogenous shocks or asset bubbles or a sharp tightening in credit markets. At the present time, despite some headwinds (auto sales, trade deficit), none of those events appear to be in play at the moment. Most indicators suggest that the cycle will continue upward for the next several quarters at least.
In addition, depending on how much of Trump’s economic policies get through congress, there could be a “Trump bump” due to personal and corporate tax cuts (the latter being the most important), reduced regulation and increased infrastructure and military spending in the near term. These could help the period after they become law. How much? No one knows because no one knows what, if anything, will actually pass. But, the outlook at the moment continues to be favorable. That’s good news for a cycle that’s up there in years.
Manufacturers’ new orders were down for the month in July but were up compared to a year ago. Compared to June, they were down 6.8%. Compared to a year ago, they were up 4.1%.
goods excluding aircraft (aircraft order patterns are erratic), orders were up 0.4% for the month and stand 3.5% higher than a year ago.
30-year mortgage rates fell slightly for the week of August 24. The rate stood at 3.86% compared to 3.89% a week earlier and 3.92% a month ago. A year ago, rates were 3.43%.
New single family homes fell to 571,000 in July. In June, they stood at 630,000 and a year ago they stood at 627,000. Over that time, the median price of a new single family home increased 6.3%.
Statewide lodging performance improved in July. Occupancy stood at 61.0% compared to 60.2% a year ago. Demand stood 2.1% higher than a year ago while supply increased 0.8% from a year ago.
The number of people who enplaned at Sky Harbor in July increased 1.1% from a year ago while the number of people who deplaned in July increased 0.5% from a year ago.
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