ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
October 15th, 2018
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
The stock market didn’t like something last week. What exactly “it” was is really not specifically known. Many are pointing to a delayed reaction to the strength in the economy which will cause rates to continue to rise. Or it could easily have be something else entirely. Market fluctuations happen.
The first economics text book I ever used in college was written by Paul Samuelson. One of his famous quotes basically said that the stock market had predicted nine of the last five recessions. It was obviously tongue in cheek. But, an examination of historic data suggests that it really is true. There have been 36 corrections (a decline of 10% or more) in the stock market since the end of World War II. There have been 11 bear markets (a decline of 20% or more). Of those 36 corrections, 12 were followed by a recession. Meaning 24 were not. Of the 11 bear markets, 4 were related to recessions and 7 were not. Thus, even though in my opinion the stock market is very generously valued relative to history, there is no way to determine whether it is predicting anything negative for the economy or not at this point.
Moving to the data, the consensus of economic forecasters think that the economy will continue to grow next year but at a slightly slower rate than it will this year. Consumer prices are up but still under control. Wholesale trade and inventories continue to rise. And apartment rents continue to increase in both Greater Phoenix and in Greater Tucson.
U.S. Snapshot:
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The forecast for GDP growth remained the same in October according to the Blue Chip Forecast. The panel is forecasting growth of 2.9% this year and 2.6% in 2019.
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Preliminary Consumer Sentiment Index results came in 1.1 below September’s level of 100.1 and 100.7 from a year ago. The level of 99.0 is still above the 98.5 average of 2018.
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The consumer price index continued to increase in September, but is closer to the Fed’s long term inflation target of 2%. The “all items” index increased 2.3% over a year ago. This is lower than August’s annual growth rate of 2.7%. All items less food and energy continued to grow at 2.2% for the second month in a row.
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Wholesale inventories were up 1.0% over July and 5.3% over a year ago. The inventories to sales ratio remained unchanged (1.26) and below last year’s level of 1.30.
Arizona Snapshot:
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Apartment rents continue to climb in both Greater Phoenix and Greater Tucson according to Berkadia. Rents were up 4.8% in Greater Phoenix and 5.8% in Greater Tucson compared to last year.
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
