ELLIOTT D. POLLACK
& Company
FOR IMMEDIATE RELEASE
December 18th, 2017
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
This week’s economic data gave us some early Christmas presents. Top on the list was that the FED increased the FED Funds rate for the third time this year. This is an indication that the FED believes that the economy is growing at an acceptable pace that allows it to continue adding “bullets” to their gun. The “bullets” are higher interest rates that will allow the FED to lower interest rates the next time there is a recession (At the present time, a recession does not appear eminent. But, at some point in the future, the FED will need the ability to fight one. Interest rates are their primary weapon.). In their discussion of current economic events, the FED was quite happy about the condition of the economy and its near term prospects. They expect the rate of growth to modestly accelerate, inflation to say under control, and unemployment to reach sub-4% sometime in 2018.
The other bit of good news is that November retail sales were up strongly over October and were well above last year’s numbers. Manufacturing and trade sales were also doing well, as were industrial production and capacity utilization.
Not much local news other than the Southern Arizona housing market continues to do well.
U.S. Snapshot:
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The Federal Reserve increased the FED funds rate by 25 basis points to 1.25-1.50% range. It was the third increase this year. In its release of the information, the FED indicated that the economy was doing well and was not out of control at all. They were pleased with the rate of economic growth as well as the relatively subdued rate of increase in wages and the level of inflation. They expect the rate of growth in economic activity to modestly accelerate next year and that the pattern of increasing rates will continue.
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Advance estimates of U.S. retail and food sales for November (seasonally adjusted) were strong. November results were 0.8% above October’s. They were up a solid 5.8% over a year ago. This is very good news going into the heart of the holiday sales season and suggests that retailers will do well.
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The combined value of trade sales and manufacturers’ shipments for October (seasonally adjusted) were up 0.6% over September and were up 6.5% over a year ago. This is a strong performance. In addition, the inventories to sales ratio for manufacturing and trade declined to 1.35 from 1.39 a year ago. This is a sign that inventories remain under control. This is good news.
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Consumer prices (CPI-U) remain under control. While they rose at a relatively high 0.4% in November, they remain 2.2% above
year earlier
levels. In addition, all items less food and energy, known as the base rate of inflation, was up a modest 0.1% over October and 1.7% over a year ago. These are good numbers.
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Industrial production in November grew by 0.2% over October and now stands a solid 3.4% over a year ago (see chart below). At the same time, capacity utilization increased a modest 0.1% over October and 2.1% over a year ago (see chart below). This measure of economic activity remains a positive indicator at the present time.
Arizona Snapshot:
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The median price of a home sold in Greater Tucson in November was $207,527. That’s up 12.2% from 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.
For more information, contact –
Elliott D. Pollack & company
7505 East Sixth Avenue, Suite 100
Scottsdale, Arizona 85251
480-423-9200
