Pollack: Good news, bad news



& Company


December 9, 2019

The Monday Morning Quarterback 

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

It was another typical week on the economic data front.  Good news from the consumer and housing.  Not so good news for capital goods.  But, overall, the picture of continued but slower growth in the economy remains intact.

First, the good news.  The jobs market beat expectations and employment growth from the last two months were revised upward.  The unemployment rate declined and is at a 50-year low.  Wages continue to grow faster than the rate of inflation. Consumer sentiment rose to the high end of the favorable range of the last three years and consumers appear unconcerned about impeachment proceedings. Consumer credit remains under control and the ISM’s non-manufacturing index remains at levels that signal continued expansion.  And Thanksgiving weekend sales, based on surveys, indicate a positive start to the holiday sales season.  In addition, for the first time since records have been kept (this dates back to the 1940’s) the U.S. was a net exporter of oil and oil products for an entire month. While it was not a large number, it shows how far we have come towards energy independence. 

On the other side of the coin, the ISM manufacturing index is slightly below levels that indicate expansion.  And while October factory orders were positive over September, they were modestly down from a year ago. 

So, overall, the data was positive on the national level.

As for Greater Phoenix, the housing data continued to show a tightening of the single family market.

U.S. Snapshot:

 Employment grew by 266,000 in November.  This beat expectations of 180,000.  In addition, September and October data was revised upward by a total of 41,000 jobs.  Given the expectations for slower growth in the first half of 2020, gains in employment should be below 200,000 per month over that period.

The unemployment rate in November dropped to 3.5%.  This is one of the lowest levels in 50 years.  In October, unemployment was 3.6%.  In November 2018, it was 3.7%.

Wages were up 0.2% last month and now stand 3.1% above year earlier levels.  Thus, wages continue to grow faster than the rate of inflation.

The University of Michigan Consumer Sentiment Index rose to 99.2 in December.  This compares to 96.8 in November and 98.3 a year ago.  The index now stands at levels not seen since the Clinton administration.

Consumer credit rose at a 5.5% annual rate in October and stood 4.8% above year earlier levels.  Revolving credit, mostly credit cards, was up at a rapid 8.8% annual rate in October and stood 3.8% above a year ago while non-revolving credit was up 4.3% at an annual rate (October over September) and stood 5.1% over year earlier levels.

According to the ISM’s manufacturing index, manufacturing contracted modestly in November.  The index for the month was 48.1 compared to 48.3 in October and 58.8 in November 2018.  Any reading below 50 suggests manufacturing is contracting.  Any reading above 50 suggests expansion.

Manufacturers’ new orders in October, following two consecutive months of decline, increased 0.3% over September.  But, orders are down 1.2% from year earlier levels.  That’s the fifth decline in the past six months.  Thus, new orders for capital goods (non-defense not including aircraft), a proxy for business spending, is not doing well.  But, it is not doing poorly either.

The ISM’s non-manufacturing index for November stood at 53.9 compared to 54.7 in October and 60.4 a year ago.  Again, results above 50 suggest expansion in the non-manufacturing sector.

Construction spending in October was up 1.1% from a year ago but was down 0.8% from September.  Private sector spending was down while public construction was up from a year ago and modestly down from last month.

In September, the U.S. was a net exporter of oil and oil products for the first complete month since data has been kept (starting in the 1940’s).  While there are technical reasons why we will continue to import certain types of oil, the march to oil independence continues to move forward.

Arizona Snapshot:

The supply/demand situation for resale housing in Greater Phoenix continues to tighten.  In November, the number of active listings declined a modest 0.1% from October but was down 16.6% from a year ago.  On the demand side, resales rose to 7,199 in November compared to 6,638 a year ago.  The result of higher demand and lower supply was that prices rose 7.9% over the past year compared to less than 2% inflation.

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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December 2019