April’s consumer prices, new housing construction, existing home sales, et al

  there were three widely followed reports on April data this week; the consumer price index from the Bureau of Labor Statistics, the New Residential Construction report from the Census Bureau, and the report on existing home sales from the National Association of Realtors….we also saw the release of two regional Fed manufacturing indexes for May; the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest composite index at 6.7 for May, down slightly from 7.5 in April and indicating an ongoing modest expansion in the region, and the Kansas City Fed manufacturing survey for May, covering a region that includes western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, and which reported its broadest composite index fell to -13 in May, down from -7 in April and -4 in March, indicating a deepening regional contraction, as every sub-index remained negative…in addition, the Chicago Fed released their National Activity Index (CFNAI) for April, which is a weighted composite index of 85 different economic metrics, and which rose to –0.15 in April from –0.36 in March, while the index for March was revised from -0.42 to -0.36…the CFNAI index is constructed so a zero value indicates economic growth at the historical trend rate, so the negative readings for the past 4 months indicate growth below trend…

Consumer Prices up 0.1% in April, Down 0.2% Year over Year

consumer prices managed a small gain in April despite lower prices for groceries, clothing, and gasoline…the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that seasonally adjusted prices rose 0.1% in April after rising 0.2% in both March and February while falling in each of the 5 months prior to that…the unadjusted CPI-U, which was set with prices of the 1982 to 1984 period equal to 100, rose to 236.599 in April from 237.433 in March, a reading 0.20% lower than the 237.072 reading from April of last year…since the drops in food and energy prices were the major drags  on the index in April, core prices, which exclude food and energy, rose by 0.3% in April, as the unadjusted core index rose to 241.802, a level 1.81% ahead of its year ago reading…  

the seasonally adjusted energy price index fell by 1.3% in April after rising a total of 2.1% over the prior two months; nonetheless, energy prices are still 19.4% lower than they were in April a year ago…prices for energy commodities were 1.9% lower while the index for energy services fell 0.5%…energy commodity price decreases included a 1.7% drop in the price of gasoline, the largest component, and a 8.4% drop in fuel oil prices, while prices for other fuels, including propane, kerosene and firewood, averaged a 0.8% increase…within energy services, the index for utility gas service, down every month so far this year, fell by another 2.6%, leaving gas priced 16.3% below a year ago, while the electricity price index was unchanged after falling 1.1% in March…energy commodities are now priced 31.2% below their year ago levels, with gasoline down 31.7%, while the energy services price index is now 1.2% lower than last April…   

the seasonally adjusted food index was statistically unchanged after falling 0.2% in March as prices for food at home fell 0.2% and prices for food away from home rose 0.2%…among food at home categories, prices for dairy and related products fell  0.8% on a 1.4% drop in milk prices, prices for the meat, poultry, fish, and egg group fell 0.7% on a 2.5% drop in pork prices, and prices for cereals and bakery products fell 0.3% on a 1.1% drop in bread prices and 2.4% lower priced cookies…meanwhile, the fruit and vegetable index rose 0.2% on a 1.2% increase in prices for canned fruits and vegetables, while fresh vegetables fell 0.3%…in addition, beverages and beverage materials were 0.5% higher on a 1.6% increase in prices for roast coffee, while the index other foods at home rose 0.1%….the itemized list for prices of over 100 separate food items is included at the beginning of Table 2, which gives us a line item breakdown for prices of more than 200 CPI items overall

among the seasonally adjusted core components of the CPI, which rose by 0.3% in April,  the composite of all commodities less food and energy commodities rose by 0.1%, while the composite for all services less energy services rose by 0.3%…higher prices for commodities suggests lower real consumption of them in April in light of last week’s flat retail sales report, with the caveat that gasoline and food retail sales will be adjusted separately with their appropriate price change index… otherwise, noteworthy price increases in April included a 2.6% increase in prices for women’s outerwear, 2.5% higher prices for window coverings, 1.9% higher prices for hospital services, 1.8% higher lawn and garden services, 1.8% higher prices for recreational vehicles, and 1.5% higher priced liquor at bars; meanwhile, men’s outerwear was 4.5% cheaper, TVs were priced 2.6% lower, prices for photography equipment fell 1.9%, telephone hardware fell 1.4% and airfare prices fell 1.3%….In April, only beef prices, 10.2% higher than last year, show an annual double digit gain, while televisions, down 16.2%, telephones, down 13.4%, personal computers, down 10.0% and the aforementioned energy components have all seen their prices fall by more than 10% over the past year…

New Housing Starts Jump 20%, New Permits up 10% in April

the April report on New Residential Construction (pdf) from the Census Bureau estimated that the widely watched count of new housing starts were at a seasonally adjusted annual rate of 1,135,000 in April, which was 20.2 percent (±14.4%) above the revised March estimate of 944,000 annually and 9.2 percent (±10.6%)* above the April 2014 rate of 1,039,000…while reported April housing starts were the most in over 7 years, the asterisk indicates that the Census does not yet have sufficient data to determine whether housing starts rose or fell since last year, but since the month over month starts is clearly outside of the error margin, we can be pretty certain that new home starts in April were higher than the depressed levels of March, which was itself revised higher…as a result, year to date total housing starts are now 5.5% higher than the same months of 2014….the annual rates given here are extrapolated from a survey of a small percentage of permit offices visited by Census field agents, which estimated that 103,600 housing units were started in April, up from 78,800 in March, of which 69,200 were single family houses and 33,300 were units in apartment buildings with 5 or more units…unadjusted March housing starts were revised up from 77,400, and February starts were revised down from the previously revised 63,600 to 61,900…

just as the depressed levels of housing starts in February and March was due to abnormally poor weather conditions, it appears that the weather in April was more conducive to construction than normal as well….April housing completions were at a seasonally adjusted annual rate of 986,000, which was 20.4 percent (±14.1%) above the revised March estimate of 819,000 and 19.4 percent (±15.2%) above the completions level in April of last year…that there was an unusually high level of seasonally adjusted completions of housing that had been started in earlier months during April like indicates that weather was especially conducive to construction, especially in terms of completing those completions which had been delayed since February, when there was an unusual drop in completions…since homes under construction only rose by 1.5% in April to an annual rate of 853,000, it appears that the increase in completions may have at least in part contributed to freeing up builder’s resources, allowing for the increase in new starts…

as we’ve noted previously, the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new construction trends than the volatile and often revised starts data… in April, Census estimated new permits were issued at a seasonally adjusted annual rate of 1,143,000, which was 10.1 percent (±2.2%) above the revised March rate of 1,038,000 and was 6.4 percent (±2.1%)  above the estimate of April in last year….those estimates were extrapolated from the unadjusted estimates which showed 105,000 new permits issued in April, which was up from the estimated  91,300 new permits issued in March, so in addition to the across the board increase in construction activity, there was also a substantial increase in those planning new home construction…

Existing Home Sales Fell 3.1% in April

the National Association of Realtors (NAR) reported that existing home sales fell a seasonally adjusted 3.1% in April, as they project 5.04 million homes would sell over a year if April sales were extrapolated over an entire year, a rate 6.1% higher than the annual rate projected in April of a year ago… the NAR press release, which is titled Existing-Home Sales Lose Momentum in April, is in easy to read plain English, so there’s no point in our restating what they already report…however, since the report is entirely seasonally adjusted and at a meaningless annual rate, we’d also want to look at the raw data overview (pdf), which shows that 445,000 homes actually sold in April, up 9.9% from 405,000 in March and up 5.5% from the 422,000 homes that sold in April last year, with double digit increases over March in every region except the South, where home sales were 5.3% ahead of last month’s total…that same pdf indicates that the median home selling price for all housing types was $219,400 in April, up from $210,700 in March, and 8.9% higher than the $201,500 median home sales price in April of last year, while the average home sales price was $264,500, up 3.2% from the $256,300 average in March, and up 5.5% from the $250,700 average sales price of April a year ago…for additional information on this report, Bill McBride has two posts, first with a summary of the data, and the then with a brief commentary, and both with multiple graphs… 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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May 23 graphics

Santa Barbara coast map:

May 23 Santa Barbara spill map

more job creation by the oil industry:

May 23 job creation by oil industry

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April retail sales, industrial production and producer prices, March business inventories and job openings

the release of the first few monthly reports for April this week, namely on retail sales from the Census Bureau, on Industrial production and Capacity Utilization from the Fed, and the producer price index from the Bureau of Labor Statistics, all point to a weak start to the 2nd quarter…the week also saw the release of March business inventories, which provides us with the last missing pieces of the first quarter data, and the March Job Openings and Labor Turnover Survey (JOLTS), providing some details behind the weak employment report before last week’s on April’s jobs…we also saw the release of the first regional Fed manufacturing survey for May, the Empire State Manufacturing Survey from the New York Fed, which covers New York and northern New Jersey, and which reported its broadest business index rose to 3.1 from a negative 1.2 in April, indicating a resumption of sluggish growth….

March Revisions Once Again More than the Monthly Change in April Retail Sales

seasonally adjusted retail sales fell by four thousand dollars in April, which is about as statistically insignificant as we’ve seen, but enough to say that sales have now failed to increase in 4 out of the last 5 months…the Advance Retail Sales Report for April (pdf) from the Census Bureau estimated that our total seasonally adjusted retail and food services sales were at $436.8 billion for the month, which was virtually unchanged (±0.5%)* from the March sales of the same amount, and just 0.9% (±0.9%)* above sales in April of last year (with the asterisks indicating that Census data is insufficient to determine with relative certainty whether sales rose or fell in April or even from a year ago)…March’s sales were revised down from the originally reported $441.4 billion, but because February sales were revised down from $437.6 billion to $431.0 billion in a benchmark revision, the reported percentage increase from February to March rose from 0.9% to 1.1%…estimated unadjusted sales in March, extrapolated from surveys of a small sampling of retailers, indicated actual sales fell 2.8%, from $401,097 million in January to $389,679 million in February, but were up 1.2% from the $384,985 million of sales in February a year ago…

we’ll again include the table of monthly and yearly percentage changes in sales by business type taken from the Census pdf, as you’re all familiar with this view…..the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business type from March to April in the first sub-column, and then the year over year percentage change for those businesses since last April in the 2nd column; the second pair of columns gives us the revision of last month’s March advance monthly estimates (now called “preliminary”) as revised in this report, likewise for each business type, with the February to March change under “Feb 2015 revised” and the revised March 2014 to March 2015 percentage change in the last column shown…for reference, here is what those March percentage changes looked like before this month’s revision….

April 2015 retail table

as you can see from the above table, weak automotive sales, down 0.4% to $89,768 million, pulled overall April sales down a bit, but even without automotive sales, retail sales only increased by 0.1%…gas stations sales once again were an anomaly, reported down 0.7% even though gasoline prices were up 15%…other major negatives were department stores sales, down 2.2%, which dragged general merchandise sales down to a 0.5% decrease, and furniture stores, where sales slumped 0.9%…on the other hand, both drug stores and online (non-store) sales rose by 0.8%, and sales at bars and restaurants rose by 0.7%…for a much more in depth and visual take on this April retail report, Robert Oak covers it with 6 FRED graphs and 3 of his own…

left unmentioned in web wide coverage on this report were the revisions to March sales, shown in the 2nd pair of columns above…comparing that data to our copy of sales as originally reported last month, we find that sales at car dealers, which were originally reported as up 2.8%, have been revised to show March growth of 3.1%…as we expected, sales at gas stations were revised from a decrease of 0.6% to an increase of 0.4%, although with a 3.9% increase in gas prices we frankly expected a greater revision…other large upward revisions included sales at department stores, which were originally reported 1.4% higher, are now seen to have been 2.7% higher, and sales at specialty stores, such as sporting goods, book and music stores, which were originally reported as up 0.2%, are now seen to have increased 1.4%…other upwards revisions of less than 0.5% were seen by furniture stores, building material and garden supply stores, groceries, non-store retailers, and bars and restaurants…. meanwhile, sales at miscellaneous stores, first reported up 1.7%, have been revised to barely growing in March at 0.1%, while sales at electronics and appliance stores were revised 0.4% lower, sales at clothing stores were revised 0.3% lower, and drug store sales were unrevised…

Industrial Production Falls Again in April on Weaker Drilling and Utility Output

industrial production fell for the 5th month in a row in April, as mild weather reduced normal utility usage and oil operations continued to be shuttered while manufacturing was flat…the Fed’s G17 release on Industrial production and Capacity Utilization for March showed that seasonally adjusted industrial production fell 0.3% in April after the March 0.6% decrease was revised from to 0.3% and the February 0.1% increase was revised to a decrease of the same magnitude, still leaving it 1.9% ahead of a year ago….the industrial production index, which was set with 2007 production being equal to 100.0, fell to 105.2 in April, after the March index was revised from 105.2 to 105.5, February’s index was revised from 105.9 to 105.8, and January’s index was revised from 105.8 to 105.9…..the manufacturing index, which accounts for roughly 70% of the industrial composite, was unchanged in April after rising a revised 0.3% in March and falling 0.2% in February, while the manufacturing index was at 101.5 after the March manufacturing index was revised from 101.2 to 101.5…the mining index, which is dominated by oil and gas drilling, fell 0.7% in April after falling a revised 0.1% in March, while it still remains 1.2% higher than a year ago with a April index reading of 129.3…the utility index, meanwhile, fell 1.3% in April after falling 5.4% in March and rising 4.9% in February as our prior abnormal weather, the major reason for the fluctuation in this index, returned to more normal levels…

production for most major market groups was down in April, as production of consumer goods fell 0.3% as a 0.7% decrease in output of consumer non-durables outweighed a 1.0% increase in production of consumer durables, and as production of business equipment fell 0.4%, production of defense and space equipment fell 0.3%, and output of intermediate materials fell 0.2%…only the production of construction materials, which increased by 0.3%, and production of business supplies, which was up 0.1%, saw small gains…further details for industrial production by market group, including the changes for each of the last 6 months, 3 quarters and 3 years, can be found on Table 1 and Table 4 of the report, with table 1 showing the percentage change from the prior month, quarter or year, and table 4 giving the index and subindex values for the same…

as you know, this report also gives us capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which fell from 78.6% in March to 78.2% in April…seasonally adjusted capacity utilization for manufacturing industries was down 0.1% to 77.2% after manufacturing utilization for March was revised up from 77.1% to  77.3%…capacity utilization for mining fell from 84.9% in March to 84.0 in April as drilling rigs continued to be shut down weekly while utilities were operating at 78.8% of capacity during April, down from 79.8% in March, as utilities are now operating well below their 43 year average of 85.9%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and a handful of other special categories……

April Producer Prices Down 0.4, 1.3% for the Year

the Producer Price Index for April from the Bureau of Labor Statistics now indicates that producer prices have fallen by 1.3% from a year earlier, the most negative year over year reading in the short history of this new series, as the seasonally adjusted producer price index for final demand fell 0.4% in April, after rising 0.2% in March but falling 0.5% in February, 0.7% in January, 0.2% in December, and 0.3% in November…lower prices for energy were once again a factor, but core prices for goods and prices for most services were also lower in a nearly across the board decline…

the index for final demand for goods, aka ‘finished goods’, fell by 0.7%, after rising by 0.2% in March and falling for the 8 months prior to that, as the index for wholesale energy prices fell by 2.9% as gasoline prices fell 4.7% and wholesale diesel fuel prices fell 12.0% in an energy group that was down across the board, with gasoline, diesel, heat-oil and LP gas all down by around 40% over the past year (see table 4)…the price index for final demand for foods was also 0.9% lower, with producer pork down 9.0% and wholesale egg prices falling by 25.3% over the month (see table 4)…and even the index for final demand for core goods fell by 0.1% in April, as 2.2% higher prices for machine tools were offset by a decrease of 2.9% in wholesale prices for industrial chemicals…

in addition, the index for final demand for services fell by 0.1% after rising by 0.1% in March and falling 0.5% in February, as the margins for final demand for trade services fell by 0.8% and the index for final demand for transportation and warehousing services slipped 0.1%, while the index for final demand for services less trade, transportation, and warehousing services rose 0.2%…the largest increase among the services was a 7.6% increase in margins for passenger car rentals, while margins at gas stations fell 5.1% in the greatest decrease…

this report also showed the price index for processed goods for intermediate demand fell by 1.1% in April, the 10th consecutive price drop, leaving intermediate processed goods 7.8% lower priced than a year ago….that included a 3.4% decrease in prices for intermediate energy goods, a 1.7% drop in the index for processed foods and feeds, and a 0.5% decrease in the price index for processed goods for intermediate demand less food and energy…however, the price index for intermediate unprocessed goods rose by 0.9%, on a 1.7% increase in the price of crude energy materials and a 0.5% in the index for unprocessed foodstuffs and feedstuffs, while the index for other raw materials was unchanged…that followed drops of 8.9%, 3.9% and 1.7% in the first 3 months of this year, so this raw materials index remains 26.6% lower than a year ago…

finally, the price index for services for intermediate demand rose 0.5% in April, as a 0.1% decrease in the index for trade services for intermediate demand was offset by a 0.1% increase in the index for transportation and warehousing for intermediate demand and a 0.7% increase in prices for intermediate services less trade, transportation, and warehousing…over the 12 months ended in November, the price index for services for intermediate demand has risen 1.8%…

March Business Inventory Growth Less Than Estimated

following the release of retail sales report, Census released the composite Manufacturing and Trade Inventories and Sales report for March, which is covered in the media as the “business inventories” report, and is important in this case because the BEA estimated the inventories that are included here when computing first quarter GDP…according to the Census, total manufacturer’s and trade inventories were estimated to be at a seasonally adjusted $1,786.2 billion at the end of March, 0.1% (±0.1%) higher than February’s revised inventories, and up 2.9 percent (±0.9%) from March a year earlier…February’s inventories were revised from the originally reported $1,790.2 billion to $1,784.9 billion in the annual benchmark revision of April 30th…seasonally adjusted inventories of manufacturers were estimated to be valued 0.2% lower than February at $650,961 million, inventories of retailers were estimated to be 0.3% higher and valued at $561,156 million, and inventories of wholesalers were estimated to be valued at $580,618 million at the end of March, up 0.1% from February…ex the benchmark revisions, there was a 0.1% increase from the original estimates of February retail inventories, and a 0.1% decrease to a 0.2% increase in February wholesale inventories, ie a virtual wash…

in the technical note explaining the advance estimate of first quarter GDP, the BEA notes that they assumed that wholesale and retail inventories had increased and that nondurable manufacturing inventories had decreased in March in computing that estimate…while the BEA had the direction in each of those changes in private inventories correct, their estimate implied a significantly larger magnitude than this report indicates…for instance, for retail inventories excluding autos they penciled in an 0.8% increase, vs the 0.1% increase that’s shown for that metric in this report…since a $30.3 billion growth to an inflation adjusted $110.3 billion added 0.74 percentage points to the 1st quarter’s growth rate, we can expect to see that reduced by the $3.4 billion difference here, plus or minus any inflation adjustment..

Job Openings Slip while Hiring and Firing Increases in March

the March Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics estimated that seasonally adjusted job openings fell by 150,000 to 9,994,000 at the month end, down from the revised 14 year high set in February…job openings as a percentage of the employed labor force slipped back to 3.4% from 3.5% in February, but was still higher than the 3.0% ratio of a year ago…the decrease in openings was concentrated in retail, where job openings fell 48,000 to 495,000 and in health care, where openings fell 58,000 to 760,000 (see table 1) …like most BLS releases, the press release for report is very readable and also refers us to the associated table for the data cited, linked at the end of the release…

this JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in March, seasonally adjusted new hires totaled 5,067,000, up 56,000 from the 5,011,000 hired or rehired in February, as the hiring rate as a percentage of all employed remained unchanged at 3.6%, but was up from the 3.4% hiring rate in March a year earlier (details are in table 2)…..total separations also rose, from 4,793,000 in February to 4,983,000 in March, as the separations rate as a percentage of the employed rose from 3.4% to 3.5%, but was also up from 3.3% a year ago (see table 3)…it’s worth noting that this March report lags the current data, and recent weeks have indicated the lowest percentage of new unemployment claims in the history of the weekly data…subtracting the 4,983,000 total separations from the total hires of 5,067,000 would imply an increase of 84,000 jobs in March, virtually equal to the revised payroll job increase of 85,000 for March reported by the BLS establishment survey last week

breaking down the seasonally adjusted job separations, the BLS finds that 2,783,000 quit their jobs in March, up from the revised 2,720,000 who quit their jobs in February, while the quits rate, a widely watched as an indicator of worker confidence, rose from 1.9% to 2.0% of total employment (see table 4)….in addition to those who quit, another 1,793,000 were either laid off, fired or otherwise discharged in March, up from the 1,688,000 discharges in February, which also increased the discharges rate from 1.2% to 1.3% of all those who were employed during the month….meanwhile, other separations, which includes retirement and death, were at 407,000 in March, up from 385,000 in February, for an ‘other separations’ rate of 0.3%, which was unchanged…both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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May 16 graphics

April retail sales:

April 2015 retail table

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April employment, March international trade, factory orders and wholesale trade reports, Mortgage Monitor, et al

in addition to the Employment Situation Summary for April from the Bureau of Labor Statistics, this week also saw the release of the March Report on International Trade and the full report on March factory orders, shipments and inventories, and the March wholesale trade report, all from the Census Bureau, and the G-19 on March consumer credit from the Fed…in addition, BLS released the 1st quarter report on labor productivity, which indicated that business sector labor productivity decreased at a 1.9% annual rate over the quarter, as output declined at a 0.2% rate and hours worked rose at a 1.7% rate, and the Institute for Supply Management (ISM) released its April Non-Manufacturing Report On Business, wherein their NMI (non-manufacturing index) rose 1.3%, from 56.5 percent in March to 57.8% in April, indicating an ongoing expansion in the services industries…we also had the release of the Mortgage Monitor for March (pdf) from Black Knight Financial Services, which we’ll also look at briefly today.. 

April Jobs Report nets 184,000 Additional Jobs; Unemployment Rate Falls to 5.4%

the report on the Employment Situation Summary for April from the BLS was better than the March report, but otherwise we’re hard pressed to see anything encouraging here…the April establishment survey indicated that nonfarm payroll employment increased by a seasonally adjusted 223,000 jobs, while the increase in nonfarm payroll employment for March was revised from 126,000 to 85,000 jobs and the February count was revised from 264,000 to 266,000, hence resulting in a reported net addition of 184,000 seasonally adjusted jobs with this release, and a 191,000 average over the past three months, about 70,000 jobs a month lower than the payroll increases we were seeing over the prior 12 months…the unadjusted establishment data indicates that there were actually 1,178,000 non-farm payroll jobs added in April, as seasonal hiring in construction, maintenance and leisure and hospitality picked up, so the headline jobs number includes a large seasonal adjustment downward.…seasonally adjusted payroll jobs increased in most major sectors, with the exception of the exploitative industries, where there were 15,000 fewer jobs, mostly in oilfield support, and durable goods manufacturing, where payroll jobs fell by 1,000 on a reduction of 5,200 by machinery manufacturers…

the personal employment data extrapolated from the April household survey was consistent with the establishment survey totals, in that the count of the employed rose by 192,000 and those counted as unemployed fell by 26,000, lowering the unemployment rate a notch to 5.4%….the count of those who reported they were working part time but wanted full time work also fell by 125,000, and hence the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, also fell by 0.1% to 10.8%…the labor force grew by 166,000 and with an increase of 186,000 in the working age population, the labor force participation rate ticked up from 62.7% in March to 62.8% in April….however, that increase was statistically insufficient to change the employment to population ratio, which remained at 59.3%, the same as in March…of some note, this survey also showed that for the first time in 7 years the unemployment rate for black Americans fell below 10%, as it dropped from 10.1% in March to 9.6% in April…

the BLS employment situation press release itself is very readable, so you can get further details from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page….thus, when you encounter a line such as ” The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours. (See tables B-2 and B-7.)”  you can quickly open Table B-2 and Table B-7 where you will find average weekly hours and hours of overtime for both all employees and for non-supervisory by industry sector, where you’d see that average includes workweeks of 46.2 hours for those in “mining and logging” down to an average of 25.0 hours for those working in leisure and hospitality sectors..

March trade deficit increases 43%; should have minimal impact on 1st quarter GDP

our March trade deficit surged to the highest level in nearly 7 years as the ending of the west coast dock strike allowed ships that had been sitting offshore to unload…the March report on our international trade in goods and services showed that our seasonally adjusted goods and services deficit rose by $15.5 billion, or 43%, to $51.4 billion in March from a revised February deficit of $35.9 billion, which had itself fallen by $6.8 billion from January while the strike was underway…our March exports rose $1.6 billion to $187.8 billion on a $1.5 billion increase to $127.1 billion in our exports of goods and an increase of $0.2 billion to $60.8 billion in our exports of services, while our imports rose $17.1 billion to $239.2 billion on a $16.4 billion increase to $197.6 billion in our imports of goods, while our imports of services rose $0.8 billion to $41.6 billion… adjusting for inflation based on chained 2009 prices, our 1st quarter our trade deficit increased by $20.9 billion to $173.1 billion as adjusted exports fell from $371,029 million to $356,499 million and adjusted imports rose from $523,254 million to $529,625 million (see exhibit 10, pdf)…that is both a larger decrease in real exports and a larger increase in real imports than was estimated by the BEA in reporting on 1st quarter GDP last week

the BEA press release provides a good overview of what transpired during the month, but to get the details on trade we have to view the full release and tables (55pp pdf) which is linked to on the sidebar and where over 200 line items of exports and imports are listed…there, in exhibit 7, we see that the major reasons for the March increase in our exports were a $1,471 million increase in our exports of capital goods, led by a $490 million increase in our exports of civilian aircraft, while we also exported $12,282 million in autos and automotive products, a $792 million increase, $332 million more of foods and feeds (due to a $337 increase in our nut exports), and $317 million more industrial supplies (due to a $511 million increase in our exports of non monetary gold)…offsetting that was a $1,699 million dollar decrease to $16,141 million in our exports of consumer goods, led by a $577 million decrease in our exports of pharmaceuticals…

on the import side of the ledger (exhibit 8), we find our imports of consumer goods rose by $9,013 million to $54,164 million on a $1,677 increase in imports of cell phones and similar household electronics, a $1,293 increase in imports of synthetic textiles, and a $981 million increase in our imports of furniture and similar household goods..in addition, our imports of cotton apparel and household goods, footwear, pharmaceutical preparations, toys, games, and sporting goods, televisions and video equipment. other consumer nondurables, non textile apparel and household goods, household appliances cookware, cutlery, tools, and camping apparel and gear all also rose by more that $250 million each, which almost certainly does not indicate an increase in consumption of consumer goods by that much, but rather just an offloading of ships…in addition, our imports of capital goods rose by $3,980 million to $52,047, our imports of auto rose by $2,666 million to $28,851 million, and our imports of foods and feeds rose by $726 million to $11,027 million, probably all as a result of the ending of the strike…on the other hand, our imports of industrial supplies fell by $167 million to $42,617 million on decreases of $822 million in crude oil imports and $422 million of natural gas imports, while imports of industrial supplies likely impacted by the strike rose…

since this $51.4 billion trade deficit was largely unexpected (economists surveyed by Bloomberg were expecting a trade deficit of $42.0 billion), there were widespread revisions of estimates of first quarter GDP, with economists at J.P. Morgan Chase and Deutsche Bank both cutting their first-quarter GDP growth estimates to show a 0.5% contraction, as did economists at Goldman Sachs, while Macroeconomic Advisers estimated a 0.4% contraction for the 1st quarter, and economists polled by the Wall Street Journal estimated decreases of 0.4 to 0.7% percentage points in first quarter GDP…however, since imports subtract from GDP because they represent production for consumption or investment in the quarter that was not produced domestically, we would suggest that the hit to GDP from this report should be trivial, as we expect most of the increase in imports should be included in wholesale inventories, or in retail inventories which will be released next week…that being the case, there should be an offsetting increase in inventories which will add to GDP by nearly as much as the increase in imports subtracts…however, reducing that record stockpile will likely have a major negative impact on 2nd quarter growth…

Value of March Factory Orders Up 2.1%, Value of Shipments Up 0.5%, Inventories Up 0.2%

the Full Report on Manufacturers’ Shipments, Inventories, & Orders for March (pdf), also from the Census Bureau, reported that the widely watched new orders for manufactured durable goods rose in March by a seasonally adjusted increased $9.6 billion or 2.1% to $476.5 billion, about in line with expectations after the Advance report on durable goods showed a 4.0% increase two weeks earlier…this followed a revised decrease of 0.1% in February and a 0.7% decrease in January, as new orders are now running 4.8% lower than they were in 2014, largely due to lower prices for refinery products, primary metals and commodity foodstuffs…it should go without saying that the transport sector drove the March increase, as volatile orders for commercial aircraft were up 30.6% from February and orders for defense aircraft rose 103.0%; excluding transports, the value of new orders was up just $68 million to $396,116 million, which Census reports as statistically unchanged…

the value of factory shipments rose by $2.3 billion or 0.5% to $482.2 billion, the second increase after February’s 0.4% rise, following 5 months of decreases, which were down in part due to lower prices for shipments from refineries and mills…shipments of transportation equipment, which have been up three of the last four months, drove the increase, rising $3.2 billion or 4.3% to $78.0 billion…without transportation equipment, the value of all other shipments fell by 0.3% and are running 5.3% below last year’s pace, which again is mostly a price issue, although shipments of most kinds of machinery were also lower….most March factory shipments have already been reflected in one or another component of 1st quarter GDP, and there’s no easy way to determine if any of these itemized factory shipments imply a revision to the aggregate GDP totals…

however, when reporting on aggregate inventories for the advance GDP report, the BEA assumed a decrease in inventories of non-durables, while they incorporated report data from the March advance report on durable goods, which was released two weeks ago and unrevised with this report….the aggregate value of March factory inventories, which have been down for 3 out of the last 4 months largely on lower prices, fell by $1.1 billion or 0.2% to $649.1 billion, following the statistically insignificant $0.2 billion increase in February…inventories of March durables were unrevised from the advance report, up $0.3 billion or 0.1% to $413.1 billion, while the value of inventories of non-durable goods, which have been down 10 months in a row, fell another $1.5 billion or 0.6% to $236.1 billion…a 3.6% drop in inventories at refineries was responsible for two-thirds of that drop, and the rest was due to lower priced food products and chemical inventories…

finally, the value of unfilled orders was up for the first time in 4 months, increasing $1.0 billion or 0.1% to $1,157.3 billion, on the heels of a 0.5% decrease in February…as you might guess, orders for transportation equipment drove the increase, with a 0.4% increase to $567,325 million in the order book for commercial aircraft accounting for more than the overall increase…without transports, the factory order books fell by 0.2% in March to $422,908 million, but remained up 3.5% since last year…including the 13.2% year over year increase in unfilled orders for commercial aircraft, unfilled orders remain valued 7.5% higher than a year ago, with only defense aircraft, shipbuilding and oilfield equipment seeing less orders on their books than last year…

March Wholesale Sales fall 0.2%, Wholesale Inventories Rise 0.1%

for the fourth month in a row, the Wholesale Trade, Sales and Inventories Report (pdf) from the Census Bureau indicated that wholesales sales fell in March from the prior month, against a March producer price index that showed most prices, other than for foodstuffs, were increasing… seasonally adjusted sales of wholesale merchants were estimated at $441.6 billion in March, down 0.2 percent (+/-0.7%) from the revised February level of $442.5 billion and down 4.0 percent (+/-1.4%) from the wholesale sales of March last year….moreover, the February preliminary estimate was revised downward $1.4 billion or 0.4%, leaving March wholesale sales 4.2% lower than December…March wholesale sales of durable goods rose by 1.3% percent (+/-1.1%) from February and were up 2.5 percent (+/-1.9%) from a year ago, with wholesale sales of electrical and electronic goods rising 3.2% and wholesale sales of autos and parts up 2.5%…meanwhile, wholesale sales of nondurable goods were down 1.5% (+/-0.7%) from February and were down 9.6 percent (+/-1.4%) from last March, as wholesale sales of raw farm products fell 7.0% and wholesale sales of petroleum and petroleum products fell 5.5%, mostly on lower prices…

this release also reported that seasonally adjusted wholesale inventories were valued at $574.5 billion at the end of March, 0.1% (+/-0.4%)* higher than the revised February level of $573.7 billion and 5.1% (+/-1.2%) above the value of wholesale inventories last March, while February’s preliminary inventory estimate was revised down by $0.3 billion or 0.1%…the value of wholesale durable goods inventories were up 0.5 percent (+/-0.4%)  from February and up 7.4 percent (+/-1.6%) from a year earlier, as wholesale inventories of electrical and electronic goods rose 1.5% and are now 11.5% above a year ago….the value of wholesale inventories of nondurable goods was down 0.4% (+/-0.5%)* from February but were still 1.5 percent (+/-1.6%) higher than last March, as the value of wholesale inventories of petroleum and petroleum products fell 4.3% from last month while inventories of raw farm products were down 2.6%, again mostly due to lower prices…the closely watched inventory to sales ratio of merchant wholesalers was unchanged at 1.30, and although it was up from the inventory to sales ratio of 1.19 in March of last year, that was at a time when the higher sales of petroleum products vis a vis inventories counted as a much larger percentage of the overall ratio..  

March Consumer Credit Up a 7.4% Rate, Most in 8 Months

the Fed’s G.19 Release on Consumer Credit for March indicated that total seasonally adjusted consumer credit outstanding increased by $20.2 billion to $3,363.3 billion, or at a 7.4% annual rate, the most in 8 months… the revolving credit portion of the aggregate, which would mostly be credit card debt, rose by $4.3 billion, or at a 5.9% annual rate, to $889.4 billion, after falling at a 3.3% rate in February, while non-revolving credit, which includes loans for cars and college tuition but not borrowing for real estate, rose at a by $19.2 billion to $2,458.6 billion, an annual growth rate of 7.9%….February’s credit expansion was revised lower to show growth at a 5.3% rate, down from the 5.6% rate originally reported, with revolving credit falling at a 1.4% rate and non-revolving credit increasing at an 8.5% rate…

Foreclosure Starts Jump 18% in March as Seriously Delinquent Mortgages Average a Record 542 Days

the Mortgage Monitor for March (pdf) from Black Knight Financial Services (BKFS, formerly LPS Data & Analytics) reported that there were 782,155 home mortgages, or 1.55% of all mortgages outstanding, remaining in the foreclosure process at the end of March, which was down from 799,956, or 1.58% of all active loans that were in foreclosure at the end of February, and down from.2.13% of all mortgages that were in foreclosure in March of last year…these are homeowners who had a foreclosure notice served but whose homes had not yet been seized, and the March “foreclosure inventory” remains the lowest percentage of homes that were in the foreclosure process since late 2007… new foreclosure starts, however, rose to 94,138 in March, the 2nd highest level since December 2013. up from 79,740 in February and up from the 88,113 foreclosures started in March a year ago… 

in addition to homes in foreclosure, March BKFS data showed that 2,379,512 mortgages, or 4.70% of all mortgage loans, or were at least one mortgage payment overdue but not in foreclosure, down from 5.36% of homeowners with a mortgage who were more than 30 days behind in February, and down from the mortgage delinquency rate of 5.52% a year earlier…of those who were delinquent in March, 970,782 home owners, or 1.92% of those with a mortgage, were considered seriously delinquent, which means they were more than 90 days behind on mortgage payments, but still not in foreclosure at the end of the month…thus, a total of 6.25% of homeowners with a mortgage were either late in paying or in foreclosure at the end of March, and 3.47% of them were in serious trouble, ie, either “seriously delinquent” or already in foreclosure at month end…

as you know, the Mortgage Monitor is a mostly graphics presentation that covers a wide range of mortgage servicing issues….today we’ll just include that part of the Mortgage Monitor table showing the monthly count of active home mortgage loans and their delinquency status, which comes from page 15 of the pdf….the columns here show the total active mortgage loan count nationally for each month given, number of mortgages that were delinquent by more than 90 days but not yet in foreclosure, the monthly count of those mortgages that are in the foreclosure process (FC), the total non-current mortgages, including those that just missed one or two payments, and then the number of foreclosure starts for each month the past year and for each January shown going back to January 2008….in the last two columns, we see the average length of time that those who have been more than 90 days delinquent have remained in their homes without foreclosure, and then the average number of days those in foreclosure have been stuck in that process because of the lengthy foreclosure pipelines…notice that the average length of delinquency for those who have been more than 90 days delinquent without foreclosure is rising again and is now at a record 542 days, while the average time for those who’ve been in foreclosure without a resolution is off its record high but still nearly three years at 1003 days…   

March 2015 LPS loan counts and days delinquent table 2

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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May 9 graphics

loan counts, days delinquent table:

March 2015 LPS loan counts and days delinquent table 2

May 1st oil inventories:

May 1 2015 oil inventories

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1st quarter GDP, March income and outlays, et al

this week we’ll review the advance report on 1st quarter GDP, which was released on Wednesday, and the March report on Personal Income and Spending, which was released on Thursday…other reports released this week included the S&P/Case-Shiller Home Price Indices for February, which showed national home prices increased 0.1% month over month and 4.2% since a year ago, the first quarter Employment Cost Index, which increased 0.7% from year end, the Census report on Construction Spending for March, which saw private construction spending fall by 0.3 percent (±1.0%)* and public construction spending fall by 1.5 percent (±2.3%)*, the Ward’s Automotive report on light vehicle sales for April, which estimated that vehicle sales were at a seasonally adjusted annual rate of 16.46 million in April, down 3.7% from the 17.05 million sales rate of March but up 4.9% from the sales rate last year, and 4 diffusion indexes for April manufacturing…those included the Texas area manufacturing survey from the Dallas Fed, who saw their general business activity index tick up to –16 from -17.6 in March, still indicating an ongoing recession in Texas area manufacturing, the Richmond Fed November Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, which reported its broadest composite index at −3, following last month’s reading of −8, indicating a mild ongoing contraction, the private Chicago Purchasing Managers Index (PMI) from the ISM-Chicago (pdf) which reported a PMI of 52.3 in April, up from 46.3 in March, and indicating a return to mild expansion after 2 months of contraction, and the national ISM Manufacturing Purchasing Managers Index for April, which was unchanged at a barely expansionary reading of 51.5..

Economy Avoids 1st Quarter Contraction by Building Inventory

the first report on GDP for this year indicated that we eked out marginal growth at a 0.2% annual rate as exports and investment fell, imports and inventories rose, and the increase personal consumption expenditures was the weakest in a year… the Advance Estimate of 1st Quarter GDP from the Bureau of Economic Analysis indicated that the real output of goods and services produced in the US grew at a 0.2% annual rate over the output of the 4th quarter of this year, when our real output grew at a 2.2% real rate…as is always the case with an advance estimate, the BEA cautions that the source data is incomplete and also subject to revisions, which have now averaged +/-0.6% in either direction for nominal GDP, and +/- 0.6% for real (inflation adjusted) GDP before the third estimate is released, which will be two months from now…also note that March trade and inventory data have yet to be reported, and that BEA assumed an increase in imports and in exports, that wholesale and retail inventories had increased and that nondurable manufacturing inventories had decreased in March…

while we cover the details below, remember that the press release for GDP reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that what actually occurred over the 3 month period, and that they only use the prefix “real” to indicate that the change has been adjusted for inflation using prices chained from 2009, and then calculate all percentage changes in this report from those nonsense 2009 dollar figures, which we think would be better thought of as a quantity indexes…given the misunderstanding evoked by the press release, all the data that we’ll use in reporting the above comes from the pdf for the 1st estimate of 1st quarter GDP, which is linked to on the sidebar of the BEA press release, which also offer links to just the tables on Excel and other technical notes…specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually and quarterly since 2012, table 2, which shows the contribution of each of the components to the GDP figures for those months and years, table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components, and table 4, which shows the change in the price indexes for each of the components, and which is used to convert current dollar figures into units of output represented by chained dollar amounts…

although personal consumption expenditures, which accounts for over 68% of GDP, fell at nearly a 0.2% rate in current dollars, an inflation adjustment indicating an annualized price decrease of over 2.0% was applied to those, and hence real personal consumption expenditures, which we should think of as representing the quantity of goods and services consumed, rose at a 1.9% annual rate in the 1st quarter and added 1.31 percentage points to the final GDP tally…consumer spending for durable goods fell at a rate of more than 1.7% in the quarter, but durable goods prices fell at a 2.8% rate, so real durable goods produced for consumers rose at a 1.1% rate and added 0.09 percentage points to GDP growth…similarly, spending for non-durable goods fell at an 11.8% rate in the first quarter in current dollars, but an inflation adjustment indicating non-durable prices fell at an annualized 11.5% rate means that the actual quantity of non-durables produced and consumed only fell by 0.3% and subtracted just 0.04 percentage points from the change in GDP…on the other hand, personal outlays for services rose at a 4.3% annual rate in current dollars, but prices for services were increasing at a 1.5% rate, so real services delivered in the quarter really rose at a 2.8% annual rate and added 1.26 percentage points to the change in GDP..

the other components of the change in GDP are computed in the same manner; ie, the actual increase in current dollar spending for the quarter is adjusted with an inflation factor for that component, giving the real units of goods or services produced in the quarter, and then those changes are converted to an annualized figure by compounding them 4 times…hence, real gross private domestic investment, which had grown at a 3.7% annual rate in the 4th quarter, grew at a 2.0% annual rate in the 1st quarter; however, all of that investment growth in the 4th quarter came from a buildup of inventories, as real growth in fixed investment actually fell at a 2.5% annual rate…of that, real non-residential fixed investment fell at a 3.4% rate primarily because real investment in non-residential structures fell at a 23.1% rate; that is most certainly due to a near 50% pullback in the number of drilling rigs in use in the quarter; by itself, that took .75 percentage points off the change in GDP…meanwhile, investment in intellectual property grew at 7.8% rate and added 0.30% as private research and development rose at a 12.4% rate and accounted for 2/3rd of the intellectual property contribution, while investment in equipment rose by just 0.1% as and contributed nothing, statistically, to the change in GDP…in addition, residential investment grew at a 1.3% rate in the 1st quarter, down from the 3.8% growth it saw in the 4th quarter, and added 0.4 percentage points to GDP…for an easy to read table as to what’s included in each of those investment categories, see the NIPA Handbook, Chapter 6, page 3..

as mentioned, it was growth in inventories that bailed out investment and GDP, as real private inventories grew by an inflation adjusted $110.3 billion in the 1st quarter after they grew by an adjusted $80.0 billion in the 4th quarter, and as a result the $30.3 billion greater inventory growth added 0.74% to the 1st quarter’s growth rate, in contrast to the $2.2 billion decrease in inventory growth in the 4th quarter that subtracted 0.10% from that quarter’s GDP…since greater inventories indicate that more of the goods produced goods during the quarter are still ‘sitting on the shelf”, their increase by $30.3 billion means real final sales of GDP were lower by that much, and hence real final sales of GDP fell by 0.5% in the 1st quarter, compared to the real final sales increase at a 2.3% rate in the 4th quarter, when the change in inventories was slightly negative…

although current dollar values of both exports and imports were down significantly, in part due to the west coast dock strike, both had large inflation adjustments, as crude oil & raw material imports and agricultural commodities and refined fuels exports were all priced lower…hence, while the value of our exports fell at a 16.5% annual rate, an inflation adjustment of 10% at an annual rate reduced the real decrease of our goods and services exported to 7.2%, which subtracted .96 percentage points from GDP…meanwhile our imports, which shrunk at an annual rate of 14.9% in dollar terms, were adjusted for import prices that were declining at a 16.4% rate in the quarter, so hence our real imports grew at a rate of 1.8%….as you’ll recall, exports add to gross domestic product because they represent that part of our production that was not consumed or added to investment in our country, while imports subtract from GDP because they represent either consumption or investment that was not produced here, and that it’s the quarter over quarter change in each that affects the quarterly change in GDP…hence the 1.8% increase in real imports subtracted .29 percentage points from GDP, and combined with the .96 point hit from the 7.2% decrease in real exports, meant that the 1st quarter increase in our trade deficit shaved 1.25 percentage points off of GDP, almost as much as the 1.31 percentage points that all of our real personal consumption expenditures added during the quarter…

finally, real consumption and investment by governments decreased at a 0.8% annual rate, even though federal government consumption and investment rose at a 0.3% rate over the quarter, because state and local consumption and investment fell at a 1.5% rate…..note that federal government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of goods or services…inflation adjusted federal spending for defense fell at a 0.7% rate and subtracted 0.03 percentage points from GDP growth, while real non-defense federal consumption and investment grew at a 1.9% rate and added 0.05 percentage points to GDP..meanwhile, state and local government investment and consumption expenditures, which fell at a 1.5% annual rate, subtracted 0.17 percentage points from the quarter’s growth rate, as real state and local consumption spending rose at a 0.7% rate while real state and local investment fell at a 11.5% rate

in our FRED bar graph below, each color coded bar shows the real change, in billions of chained 2009 dollars, in one of the major components of GDP over each quarter since the beginning of 2012…in each quarterly grouping of seven bars on this graph, the quarterly changes in real (ie, inflation adjusted) personal consumption expenditures are shown in blue, the changes in real gross private investment, including structures, equipment and intangibles, are shown in red, the quarterly change in private inventories is in yellow, the real change in imports are shown in green, the real change in exports are shown in purple, while the real change in state and local government spending and  investment is shown in pink, and the real change in Federal government spending and investment is shown in grey…those components of GDP that contracted in a given quarter are shown below the zero line and subtract from GDP, those that are above the line grew during that quarter and added to GDP; the exception to that is imports in green, which subtract from GDP, and which are shown on this chart as a negative, so that when imports shrink, they will appear above the line as an addition to GDP, and when they increase, as they have in the recent quarter, they’ll appear below the zero line…you can see the only significant contributions to GDP in the 1st quarter came from personal consumption and inventories, while the other components save the nearly unchanged federal contribution subtracted from growth…

1st qtr 2015 advance GDP

Personal Income Barely Up in March While PCE Rises 0.4%

while personal consumption expenditures (PCE) for March, which were included in the GDP report we just reviewed, are probably the most important metric we get from the March report on Personal Income and Outlays from the BEA, this report also gives us personal income data, disposable personal income, which is income after taxes, our monthly savings rate and the PCE price index, the inflation gauge the Fed targets….it is also probably the least understood and most misreported of the monthly economic reports, which is largely due to the NIPA-related manner in which the press release from the BEA reports on it…to start with, all the dollar amounts referenced by this report are seasonally adjusted and at an annual rate; so the nominal monthly dollar changes, which are not reported, are actually on the order of one twelfth of the reported amounts… however, the percentage changes are expressed as a month over month change and are confusingly used within the report as if they refer to the annualized amounts, making for a difficult report to unpack and report on correctly… 

hence, when the opening line of the press release for this report tell us “Personal income increased $6.2 billion, or less than 0.1 percent, and disposable personal income (DPI) increased $1.6 billion, or less than 0.1 percent in March“, they mean that the annualized figure for personal income in March, $15,133.0 billion, was $6.2 billion (or less than 0.1%) greater than the annualized  personal income figure of $15,126.8 billion for February; while the actual data for personal income in February and March are not given…similarly, annualized disposable personal income, which is income after taxes, rose by less than 0.1%, from an annual rate of an annual rate of $13,315.8 billion in February to an annual rate of 13,317.4 billion in March…the contributors to the increase in personal income, listed under “Compensation” in the press release, are also annualized amounts, all of which can be seen in the Full Release & Tables (PDF) for this release…so when the press release says, “Wages and salaries increased $16.3 billion in March” that really means wages and salaries would rise by $16.3 billion over an entire year if March’s seasonally adjusted increase were extrapolated over an entire year…so you can see what’s written in this press release is misleading, and often leads to media reports that parrot those lines the same way the BEA wrote it… 

personal consumption expenditures (PCE) are reported in the same manner, such that they rose at an annual rate of $53.4 billion to $12,160.5 billion annually in March, or 0.4%, from the annual rate of $12,107.1 billion in February…however, when used for the GDP report, the monthly personal consumption expenditures are adjusted with the price index for PCE, which is the BEA’s chained type price index based on 2009 prices equal to 100…in table 9 of the pdf for this report we see that that price index rose to 108.646 in March, from 108.460 in February, an increase of 0.17%, which the BEA rounds to 0.2% when reporting on it…hence, we find that real personal consumption expenditures, or PCE after the inflation adjustment, rose by 0.27%, which the BEA rounds to a increase of 0.3%….using the same PCE price index, disposable personal income can be adjusted to show that real disposable personal income, or the purchasing power of disposable income, fell by 0.2% in March, after an increase of 0.3% in February..

with disposable personal income down and personal consumption expenditures up, it only goes to reason that personal savings would have decreased for the month…to arrive at the figures for that, the BEA takes total personal outlays, which is the sum of PCE, personal interest payments, and personal current transfer payments, and subtracts that from disposable personal income, to show personal savings at a $702.6 billion annual rate in March, down from the $758.6 billion that we would have ‘saved”’ in February had February’s savings been extrapolated for a year…this left the personal savings rate, or personal savings as a percentage of disposable personal income, at 5.3% in March, down from the savings rate of 5.7% in February…

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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