ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
June 11th, 2018
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
The most important economic news was not contained in the data reviewed herein. It was the seemingly utter lack of progress and disarray that came out of the G-7 summit in Canada. The industrialized world looked like it took another step towards a “trade war” (notice almost everyone’s lack of clarity as to exactly what that means). Generally, an increase in tariffs hurts countries and their citizens. It tends to raise prices (a de facto tax on those goods on which there is, after a tariff, a higher cost) and lowers employment (because the goods shipped out of the country cost more, demand is lower). The argument by the imposing country is that there will be more domestic production and so employment will actually rise. All of this depends on how significant the tariffs are and where you are in the business cycle. So, the devil is in the details.
Some tariffs, because the product on which there is a tariff goes into other products and, therefore, the impact on an individual item may be very small, may or may not cause significant harm. Other products, such a certain types of agricultural products where the tariff is direct, will feel the full brunt of the increase in price. Across the board tariffs will cause harm. For example, the Smoot-Hawley tariffs of 1930 are generally blamed as being ONE of the reasons, along with bad fiscal and monetary policy at exactly the wrong time, that a bad recession turned into a worldwide depression. Right now, that just isn’t in the cards. The tariffs are not across the board. The tariffs are specific and not all that large. And, fiscal and monetary policies are both expansive. Politicians from various countries sounding like a bunch of 4 year olds to try to impress their own country’s media outlets doesn’t really tell you anything.
It is still early in the game and we have a President who likes to negotiate by playing hard ball as a starting position. But, that same President is not likely to do much that really hurts American jobs. So, whether this is still a gambit to get other countries to level the playing field on certain aspect of international trade or it is a miscalculation remains to be seen. Keep in mind, though, that America’s trade deficit for goods last month was $68,265,000,000. We imported $209,513,000,000 and exported $141,248,000,000. It is the jobs lost to other countries by the huge gap that Trump is concerned about. It’s turning into a cliff hanger. Tune in next week for the next exciting episode……….
U.S. Snapshot:
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Consumer credit expanded at more moderate rates in April. Revolving credit (mainly credit cards) increased at a 2.6% annual rate for the month and now stand 5.0% above a year ago. Non-revolving credit (mainly auto debt and student loan debt) grew at 3.0% at an annual rate and now stands 4.8% above a year ago. The key takeaway from the report is that the increase in consumer credit was the lowest since September 2017.
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Nonfarm business sector labor productivity increased 0.4% during the 1st quarter. This reflected a 2.7% increase output and a 2.3% increase in hours worked. Productivity is up 1.3% from a year ago.
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Unit labor costs, the increase in labor costs per unit of output, were up 2.9% in the 1st quarter. This reflected a 3.3% increase in hourly compensation and a 0.4% increase in productivity.
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New orders for manufactured goods in April declined 0.8% for the month but stand 7.4% above year earlier levels. Inventories remain in line with orders as the new orders inventories to shipments ratio remained at 1.35.
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The ISM non-manufacturing index increased to 58.6 in May. That compares to 56.8 in March and 57.1 a year ago. Any reading of 50 or above indicates that the non-manufacturing sector is expanding. May was the 100th consecutive month of expansion for the non-manufacturing sector.
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Interest rates on 30-year fixed rate mortgages averaged 4.54% for the week ending June 7. This compares to 4.55% a month earlier.
Arizona Snapshot:
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According to the Cromford Report, active listings of homes in Greater Phoenix continue to decline. This is an indication that the single family housing market continues to get tighter. Active listings in May were 21,762 compared to 22,383 in April and 24,756 a year ago.
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Cromford also stated that the median sales price for a resale home in Greater Phoenix was $262,900. That’s up 9.5% from $240,000 a year ago.
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.
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Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251
480-423-9200
