ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
March 19th, 2018
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
The most significant news this week was not the data, most of which remained positive. It was the continued talk of tariffs and the potential retaliation by other countries that could result in a trade war of some type.
To be clear, some tariffs are justified if another country is overly subsidizing an industry in their country to an extent that the subsidies harm the ability of that industry in the U.S. to fairly compete. Most countries have some form of tariffs. But, generally not to the extent that they prove to be anti-competitive. Some countries, China comes to mind, may fail the test with some industries and, thus, domestic tariffs may be warranted. But, this should be considered only after careful analysis and only in specific cases.
A general across the board tariff is clearly not the way to go. It would result in higher prices to consumers and is a de facto tax increase. So far, the stock market does not seem to believe that a generalized tariff will be the result of the current situation. If the current situation does deteriorate into some type of trade war, it would not be healthy for an economy that is now running on all cylinders.
In last week’s news, consumer confidence reached a 14-year high, yet retail sales were modestly down. Industrial production was up. And in Greater Phoenix, housing permits had a very strong month as the annual spring pick up in new home activity appeared to arrive early this year.
U.S. Snapshot:
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The University of Michigan Consumer Sentiment index has been showing less strength over the last year than other confidence readings. But now the report, driven especially by the assessment of current conditions, is gaining momentum. The preliminary index for March jumped more than 2 points to 102.0. This is a 14-year high (see chart below).
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The consumer price index for all urban consumers (CPI-U) increased 0.2% in February on a seasonally adjusted basis after rising 0.5% in January. The index now stands 2.3% above a year ago. The index less food and energy (known as the base rate of inflation) was also up 0.2% (a 2.2% annualized rate) and now stands 1.9% above a year ago.
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Advance estimates of U.S. retail and food services sales for February were down 0.1% from January, but, now stand 4.0% above a year ago.
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Manufacturing and trade sales for January were down 0.2% from December, but, now stand 5.7% above a year ago. Inventories were up 0.6% for the month and now stand 3.7% aver a year ago. As a result, the manufacturing and trade inventories to sales ratio in January stood at 1.34. This is up from 1.33 in December but down from 1.37 a year ago.
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Industrial production rose 1.1% in February following a decline of 0.3% in January. Manufacturing production increased 1.2% in February, its largest gain since October.
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While total housing permits were down 5.7% in February when compared to January, single family permits were down only 0.6% for the month. Total permits are up 6.5% from a year ago and single family permits are up 4.6% from a year ago. The decline in single family
permits was due to bad weather in the Midwest.
Arizona Snapshot:
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According to data released by the Home Builders Association of Central Arizona, permit activity in Greater Phoenix had a strong February. There were 1,734 permits issued in the second month of the year. That’s a gain of 26.8% over last year’s 1,367. Year-to-date, permits are up 28.2%.
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According to the Greater Tucson MLS, total listings in the Tucson area continued to decline in February and now stand 3.3% below year earlier levels. Total sales are down 2.6% from a year ago, but, the median sales price is up 6.7% to $207,000.
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
480-423-9200
