The Monday Morning Quarterback: A quick analysis of important economic data released over the last week
By Elliott D. Pollack & Co.
Arizona Snapshot:
Most of the latest information relates to the real estate market in Greater Phoenix. The news continues to be positive relative to a low baseline. The latest Arizona weekly unemployment claims data is mixed.
U.S. Snapshot:
National data remains mixed. The consensus forecast shows more of the same. Weekly unemployment claims are disappointing as is productivity and unit labor costs. Consumer credit shows consumers playing things close to the vest except for autos and student loans. Manufacturing is up, but, modestly.
Arizona
Total weekly unemployment insurance claims have been flat for the last several weeks. Even so, total claims are down 37.8% from a year ago compared to a decline of only 1.3% nationally. The national number is shocking. The Arizona data suggests slow growth.
The monthly ASU real estate data continue to tell a good story. While total sales were down 6.0% in 2012, given the declining inventory that is not a bad performance. Median housing prices continue to increase. This is good news as it shows a more balanced supply/demand situation. The excess supply of distressed property continues to be absorbed. It also causes fewer owners to be underwater and that will have a positive wealth effect which will benefit the economy as a whole. Overall, prices are up 33.9% over the last year. While the largest gains continue to be in distressed properties, non-distressed sales were up 15.5% over a year ago and new home prices are up 13.4% since December, 2011.
National
The latest U.S. Blue Chip consensus forecast shows that the consensus now predicts that real (inflation adjusted) GDP will register year over year growth of 1.9% in 2013 and increase by 2.4% on a 4th quarter/4th quarter basis. This is true despite the fact the real GDP was down slightly in the 4th quarter of 2012. Growth is still expected to be mediocre in 2013. As mentioned above, U.S. initial unemployment insurance weekly claims remain high. The gains made a month ago appear to have been transitory. In fact, claims are down only 1.3% from a year ago.
Nonfarm business sector labor productivity decreased at a 2.0% annual rate during the fourth quarter of 2012. The decrease in productivity reflects increases of 0.1% in output combined with a 2.2% increase in hours worked. This is not good news. Productivity is commonly linked to standard of living. Productivity must grow for our standard of living to grow. Unit labor costs in nonfarm businesses increased 4.5% in the 4th quarter of 2012. This is due to the combined effect of the 2.0% decrease in productivity and a 2.4% increase in hourly compensation. If this were to continue, it would create inflationary pressures.
The consumer continues to take on new debt at a steady and strong clip. But, whether it points to rising demand is more problematic. Consumer credit increased at an annual rate of 6.3%. But, the revolving side, which is the credit card side, to these totals isn’t always adding to the total. Revolving credit has been very flat, up a little bit one month and then down a little bit the next and is down $3.6 billion in the latest data. What is going up is non-revolving credit where vehicle sales come into play, and they have been very strong. But, this is also where student loans are tracked. And they continue to climb straight up without much monthly variation. Thus, aside from vehicles and student loans (how do you spell bubble), consumers aren’t taking on much debt, a factor that is limiting the contribution from the consumer sector.
Other data show that manufacturers’ new orders for durable goods were up for the month but are basically flat from a year ago and that orders for new orders for non-defense goods excluding aircraft are down 3.4% from a year ago. This is in line with the mediocre recovery. Fortunately, the Institute for Supply Management index for non-manufacturing, while down slightly from a month ago, shows that the non-manufacturing sector continues to expand.
