Hiring Plans a sign of Recovery
February 11, 2011
The United States economic recovery is gaining strength as reported by industry economists as more firms are showing positive higher plans over what was seen in the last ten years.
A survey presented by the National Association for Business Economics showed that economists are more hopeful concerning overall economic growth, the job market, and demand for products and services by several measures that have not been seen since the start of the Recession.
The survey that decisions made by businesses are “being driven by the fundamentals of an improving economy,” stated Shawn DuBravac, an economist with the Consumer Electronics Association who analyzed the findings.
The survey, which is provided quarterly, includes views of 84 economists for private companies and trade groups who are NABE members. The data is compiled by a broad industry group. Many of the results are expressed as Net Rising Index, or NRI, which is the percentage of panelists reporting better outlooks taking away the percentage whose outlook is bleaker.
Economists that saw hiring by their companies increased over the next 6 months was 42 percent with 7 percent expecting lay offs. The NRI of 35 was the highest during the 12 years that the question has been asked.
On the other hand, more layoffs were anticipated in the transportation, utility, information, and communications sectors.
That confidence followed increased hiring by the economists’ firms during the quarter that ended on Dec. 31. Around one-third of those that took the survey said hiring had improved at their companies, compared with only 6 percent who said workers were laid off. The NRI of 28 represented a 10-point increase over the previous quarter.
All major industry groups saw an increase in demand for their products and services, which was the sixth straight quarter for positive results. Demand grew slightly less than in the previous quarter, but has held pretty steady since last spring, explained the NABE.
This survey was conducted from December 17 thru January 5.
Retail Sales Increased
February 4, 2011
The monthly composite index of manufacturing activity as reported by the Institute for Supply Management increased to 57 in the month of December after seeing 56.6 in the month of November. Any reading higher than 50 is a sign of expansion making this the 17th straight month of seeing expansion.
Total construction spending increased 0.4 percent to $810.2 billion in the month of November after seeing a 0.7 percent rise in the month of October. Economists had believed a rise of 0.1 percent would be seen in the month of November.
Retail sales increased 0.4 percent for the week that ended on January 1 as reported by the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 3.6 percent.
Factory orders increased 0.7 percent in the month of November to a seasonally adjusted $424.5 billion after seeing a fall of 0.7 percent in the month of October. Not including the volatile transportation sector, orders increased 2.4 percent.
The Mortgage Bankers Association announced its seasonally adjusted composite index of mortgage applications for the week that ended on December 31 increased 2.3 percent, while refinancing applications rose 3.9 percent and purchase volume decreased 0.8 percent.
The Institute for Supply Management announced that the monthly composite index of non-manufacturing activity increased to 57.1 in the month of December from 55 in the month of November. Any reading higher than 50 is a sign of expansion making this the 12th straight month of seeing expansion in the services sector which is the fastest pace seen since May of 2006.
First unemployment claim benefits increased by 18,000 to 409,000 for the week that ended on January 1, while continuing claims for the week that ended on December 25 decreased by 47,000 to 4.1 million. The unemployment rate decreased to 9.4% in the month of December from 9.8 percent in the month of November.
Upcoming reports on the economic calendar
January 11 – wholesale trade
January 13 – wholesale inflation
January 14 – consumer inflation
January 14 – retail sales
What Does Taxes, Deficits and Debts Mean for the Economy?
January 28, 2011
The Deficit
A budget deficit is when the government spends more money than it collects in revenue like tax revenue. Deficits are not something that is bad every time. Some people borrow money to further their education or to purchase a home; governments issue bonds, which is borrowing money.
The main difference is the government can borrow forever, as they will create an income forever as the government does not grow older and will not retire. As the economy grows, the revenue the government receives will grow, so the government can support growing deficits.
Generally, a deficit of fewer than three percent of gross domestic product is known to be reasonable as the economy normally grows at about this pace. On the other hand, the United States had a budget deficit of 8.9 percent of gross domestic product in 2010 for the fiscal year that ended in September. This may have been better when looking at the ten percent of gross domestic product seen in 2009. The sad news is that the deficit is predicted to remain high during the next ten years.
Federal Debt
The deficit is not the same as the federal debt but when the United States has a deficit, the debt also increases. The debt is nothing more than the total of all the past deficits. The problem is high debt levels make individuals and companies that lent money via purchasing United States Treasuries very anxious about the ability to repay principal and interest. Due to this, investors may begin asking for higher interest rates, which will compensate for the risk involved with higher deficits and debt. This is the same thing that occurred in Greece and a few other European countries. Some European countries have proclaimed “belt tightening” policies to bring spending under control and, in some cases, have raised taxes. Other countries have also announced plans that are similar to this one in order to reduce deficits to bring them to acceptable levels prior to the market forcing the issue.
According to the International Monetary Fund, net United States federal government debt that does not include the debt the government holds itself is predicted to increase to around 85 percent of gross domestic product in 2015 from 59 percent in 2009. This would be the highest level seen since the 1940’s at the time when debt increased due to the spending during World War II. Even though it is believed that there will not be a quick increase in the tax rates, many are still concerned about the size of the deficit and the rising debt. The United States has had deficits for the majority of its history; the levels seen today are abnormally high. Many believe that the policymaker need to address the large deficit as well as the stock, growing debt and bond markets which have been almost avoided at this time, which may happen eventually.
Does the Market worry about Deficits and Debts?
High debt levels and deficits have been problems in the past, but this time the market is pretty much ignoring the issues. The long-term trend in the market has been practically unaffected when the level of debt has increased and decreased. The one thing you must remember is that over time government policies can make a difference.
Over the next few years, the deficit as well as debt will more than likely be issues of importance in the United States along with other countries. Congress will address tax policies when that occurs, but you must also know that the size of the deficit and debt can be resolved. There have been high debt levels and high deficits in the past but long term plans to reduce these issues to better levels takes changes that are not normally too popular according to analysts. Even when the discussions are opened are how to handle these issues, the implementation can take years to begin and to see any improvement.
Investors need to be prepared to see possible cutbacks in government benefits and tax increases in the future as a way to help combat the United States deficit. Even though, there are those that are worried, these issues have created an opportunity to find quality investments without the high prices.
Retail Sales Increase Again In December 2010
January 21, 2011
According to the ICSC-Goldman Sachs index, retail sales increased one percent for the week that ended on December 25. Retailers saw an increase of 4.8 percent on a year over year basis, which is the highest rate seen since April.
On a non-seasonally adjusted basis according to the Standard & Poor’s/Case-Shiller 20-city housing price index decreased 1.3 percent in the month of October after seeing a 0.8 percent decline in the month of September. On a year-over-year basis, prices decreased 0.8 percent when compared with the month of October in 2009.
The consumer confidence index decreased to 52.5 in the month December from an upward 54.3 in the month of November. The index was benchmarked at 100 in 1985, the year chosen, as there was no peak or trough in the confidence of consumers.
First unemployment claims benefits decreased by 34,000 to 388,000 for the week that ended on December 25, was the lowest level seen since July of 2008. Continuing claims for the week that ended on December 18 increased by 57,000 to 4.13 million.
The National Association of Realtors announced that its pending home sales index, which is a forward-looking indicator based on signed contracts, increased 3.5 percent for the month of November after a 10.1 percent rise was seen in the month of October. On a year-over-year basis, pending sales are down 2.4 percent.
Economic Calendar for the Future:
January 3 – construction spending
January 4 – factory orders
January 7 – consumer credit
Retail Sales Up
January 14, 2011
Retails sales increased 1.7 percent for the week that ended on December 18 as reported by the ICSC-Goldman Sachs index. For the year over year basis, retailers have seen sales increase 4.2 percent which is the highest seen since the middle of the year.
The seasonally adjusted composite index of mortgage applications, as reported by the Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications decreased 18.6 percent for the week that ended on December 17, while refinancing applications fell 24.6 percent, and purchase volume decreased 2.5 percent.
The Commerce Department reported the gross domestic product, which is the total output of goods and services produced in the United States rose at an annual rate of 2.6 percent during the third quarter of 2010, than the two percent increase that was reported earlier.
Existing home sales increased 5.6 percent in the month of November to a seasonally adjusted annual rate of 4.68 million units up from 4.43 million units seen in October. The inventory of unsold homes on the market fell 4 percent to 3.71 million, which is a 9.5-month supply at the current sales pace, going down from a 10.5-month supply seen in the month of October.
New home sales increased 5.5 percent in the month November to a seasonally adjusted annual rate of 290,000 units from seeing 275,000 units in the month of October. Economists had believed to see a pace of 300,000 units.
Durable goods orders, which are products that should last three or more years, decreased 1.3 percent in the month of November after a decrease of 3.1 percent was seen in the month of October. Not including volatile transportation-related goods, orders showed a monthly increase of 2.4 percent.
First unemployment claims decreased by 3,000 to 420,000 for the week that ended on December 18, while continuing claims for the week that ended on December 11 decreased by 103,000 to 4.06 million.
Economic Calendar reports to watch for:
December 28 – housing price index
December 30 – pending home sales
Pending Home Sales Increased
December 11, 2010
The 20-city housing price index according to the Standard & Poor’s/Case-Shiller on a non-seasonally adjusted basis decreased 0.7 percent in the month of September after seeing a 0.2 percent decline in the month of August. On a year-over-year basis, prices increased 0.6 percent when compared with September of 2009.
The consumer confidence index increased to 54.1 in the month of November after seeing a revised 49.9 in the month of October.
This was the highest level seen in five months. The index was benchmarked at 100 in 1985, which was chosen, as it was a year that was neither a peak nor a trough in consumer confidence.
The monthly composite index of manufacturing activity as stated by the Institute for Supply Management decreased to 56.6 in the month of November after reaching 56.9 in the month of October. Any reading above 50 signals growth. This was the 16th straight month of growth.
Total construction spending increased 0.7 percent to $802.3 billion in the month of October, after seeing a revised 0.7 percent rise in the month of September. Economists had believed they would see a decline of 0.4 percent in the month October.
The National Association of Realtors reported that its pending home sales index, which is a forward-looking indicator based on signed contracts, increased 10.4 percent in the month of October after seeing a decline of 1.8 percent in the month of September.
The monthly composite index of non-manufacturing activity as reported by the Institute for Supply Management increased to 55 in the month of November from 54.3 in the month of October. Any reading above 50 signals growth. This was the 11th straight month of growth.
First claims for unemployment benefits rose by 26,000 to 436,000 for the week that ended on November 27, continuing claims for the week that ended on November 20 increased by 53,000 to 4.27 million. The unemployment rate increased to 9.8 percent in the month of November from 9.6 percent in the month of October.
Economic Calendar reports upcoming
December 9 – wholesale trade
December 10 – consumer sentiment
New Home Sales Decreased
December 10, 2010
According to the ICSC-Goldman Sachs index, for the week that ended on November 20 retail sales decreased 0.6 percent. On a year over year basis, retailers saw sales increase 2.8 percent.
The gross domestic product with is the total output of services and good created in the United States rose to an annual rate of 2.5 percent during the third quarter of 2010. This comes after a 1.7 percent pace of growth that was seen in the second quarter of 2010.
The sales of existing homes decreased 2.2 percent in the month of October to a seasonally adjusted annual rate of 4.43 million units from 4.53 units seen in the month of September. The inventory of homes that have not sold on the market decreased 3.4 percent to 3.86 million which is a 10.5 month supply at the sales pace seen currently which is down from the 10.6 month supply seen in the month of September.
The seasonally adjusted composite index of mortgage applications as reported by the Mortgage Bankers Association for the week that ended on November increased 2.1 percent, refinancing applications fell 1 percent, and purchase volume increased 14.4 percent.
Durable good orders for items that will last three years or more decreased 3.3 percent in the month of October after seeing a rise of 5 percent in the month of September. Not including volatile transportation goods, orders that were posted fell 2.7 percent.
New home sales decreased 8.1 percent for the month of October to a seasonally adjusted annual rate of 283,000 units from a 307,000 units in the month of September. Economists speculated a pace of 314,000 units.
First claims for unemployment decreased by 34,000 to 407,000 for the week that ended on November 20, which is the lowest seen since the month of July in 2008. Continuing claims for the week that ended on November 13 decreased by 142,000 to 4.18 million.
What to look forward to on the economic calendar:
November 30 – housing price index
December 1 – construction spending
December 2 – pending home sales
Retail Sales Increased
December 3, 2010
In October, retail sales increased 1.2 percent after seeing a 0.7 percent increase in the month of September. This was the largest increase seen in 7 months. Economists had believed that retail sales would increase 0.7 percent in the month of October.
Total business inventories rose 0.9 percent in the month of September to $1.4 trillion which is the highest seen since the March of 2009. Total business sales increased 0.5 percent in the month of September after seeing a 0.3 percent increase for the month of August.
Producer price index that tracks the price inflation of wholesale increased 0.4 percent for the month of October which was the same as was seen in the month of September. Core prices which does not include fuel and food decreased 0.6 percent for the month of October which is the highest seen since July of 2006. For the year, wholesale prices are up 4.3 percent.
Industrial production at the nation’s utilities, mines, and factories stayed the same in October after a rise in September of 0.1 percent. Economists expected to see an increase of 0.3 percent. Capacity utilization remained the same at 74.8 percent for the month of October.
Consumer prices increased to a seasonally adjusted 0.2 percent in the month of October after an increase of 0.1 percent in the month of September. For the year, the seasonally adjusted consumer prices are up 1.2 percent.
The construction of new apartments and single family homes decreased 11.7 percent in the month of October to a seasonally adjusted annual rate of 519,000 unites. Single family starts decreased 1.1 percent whereas multifamily start decreased 43.5 percent while applications for new building permits increased 0.5 percent to reach an annual rate of 550,000 units.
First claims for unemployment benefits increased by 2,000 to 439,000 for the week that ended on November 13, continuing claims for the week that ended on November 6 decreased by 48,000 to 4.295 million which is the lowest seen since the beginning of the recovery.
What to look forward to on the economic calendar:
November 23 – existing home sales
Construction Spending Increased
November 19, 2010
The monthly composite index of manufacturing activities as reported by the Institute for Supply Management was 56.9 for the month of October after seeing a 54.4 for the month of September. Economists believed the figure would have been at 54.5. All readings above 50 are a sign of expansion. This was the 15th month in a row that expansion was seen.
Construction spending increased 0.5 percent to $801.7 billion for the month of September after seeing a decrease in August of 0.2 percent. Economist had thought a 0.5 percent decrease would be seen in the month of September.
The seasonally adjusted composite index of mortgage applications as reported by the Mortgage Bankers Association for the week that ended on October 29 decreased 5 percent, refinancing applications fell 6.4 percent, and purchase volume increased 1.4 percent.
In September, factory orders increased 2.1 percent to be at a seasonally adjusted amount of $420 billion after a decrease in the month of August of 0.5 percent. The increase was due to an increase in the demand of commercial aircraft of 15.8 percent. Not including volatile transportation sector orders increased 0.4 percent.
the monthly composite index of non-manufacturing activity as reported by the Institute for Supply Management reported increased to 54.3 in the month of October after seeing 53.2 in the month of September. All readings above 50 are a sign of expansion.
The National Association of Realtors stated pending homes sales index, which is look at signed contracts for the future, decreased 1.8 percent in the month of September after a 4.4 rise in the month of August. On a year-over-year basis, pending sales are down close to twenty five percent.
First claims for unemployment benefits increased by 20,000 to 457,000 for the week that ended on October 30, while continuing claims for the week that ended on October 23 decreased by 42,000 to 4.34 million, which is the lowest level since the recovery began. Non-farm payroll employment rose by 151,000 in the month of October, which is quite a bit higher than the anticipated, which was 60,000.
Economic Calendar reports upcoming
Home Sales Increased in September
November 12, 2010
Home sales increased ten percent for existing homes in the month of September to reach a seasonally adjusted annual rate of 4.53 million in the month of Augusts. The inventory of homes on the market unsold decreased 1.9 percent to 4.04 million which is a 10.7 month supply at the sales pace we are now seeing which is down from the 12 month supply we saw in the month of August.
New home sales increased 6.6 percent in the month September to a seasonally adjusted annual rate of 307,000 units from a rate of 288,000 units seen in the month of August. Economists had believed a pace of 300,000 units would have been seen.
According to the Standard & Poor’s/Case-Shiller 20-city housing price index for a seasonally adjusted basis decreased 0.3 percent in the month of August after a 0.2 percent decrease in the month of July. On a year-over-year basis, prices increased 1.7 percent when compared with August of 2009.
The seasonally adjusted composite index of mortgage applications as reported by the Mortgage Bankers Association for the week that ended on October 22 increased 3.2 percent, while refinancing applications rose 3 percent and purchase volume increased 3.9 percent.
Durable goods orders, which are items that are expected to last longer than three years, increased 3.3 percent in the month of September after seeing a 1 percent fall in the month of August. Orders not counting volatile transportation related goods saw a decline of 0.8 percent.
The Commerce Department reported the gross domestic product, which is the total output of goods and services produced in the United States, rose at an annual rate of 2 percent during the third quarter of 2010.
First claims for unemployment benefits decreased by 21,000 to 434,000 for the week that ended on October 23, while continuing claims for the week that ended on October 16 decreased by 122,000 to 4.35 million, which is the lowest level seen since the recovery began.
Economic calendar reports to look forward to include:
November 1 – construction spending
November 3 – factory orders
November 5 – pending home sales