How Is The Real Estate Economy?
One thing that may boost consumer spending is if employment picks up. Some economists believe that companies have become understaffed in a bid to ge...
One thing that may boost consumer spending is if employment picks up. Some economists believe that companies have become understaffed in a bid to get ahead of the curve and that there will be a rapid recovery. On the other hand, the real estate and automobile industry have fundamental issues that can’t be quickly remedied – 1.8m excess housing units were built during the bubble – and in this, combined with a lack of finance to individuals and businesses, is likely to see a steady rather than a “V” shaped recovery. If you take a look back at where we were in July, you will see that we have not advanced that far, and that the real estate cycle is not heading to a boom.
-ISM Manufacturing (July 1st): The June ISM increased to 44.8 from 42.8 in May. The index continues to creep back towards the 50 mark. Production increased to 52.5 and supplier deliveries rose to 50.6. New orders slipped back to 49.2 from 51.1, while employment rose to 40.7 from 34.3. S&P500 +0.44%.
-0.6%and unfilled orders -0.2%. Orders less-transportation were +0.8% higher after -0.2%. This tells us the real estate cycle will remain on the down swing.
- Producer Price Index (July 14th): Producer prices increased +1.8% in June following +0.2%. Excluding food & energy prices increased +0.5% after -0.1%. The all-items PPI is now -4.6% lower than a year ago, while they are +3.3% higher than last year. This was the result of a +6.6% rise in energy costs and +1.1% in food prices.
- Consumer Price Index (July 15th): The CPI rose +0.7% in June after +0.1%. The core rate increased +0.2% following +0.1%. The CPI is now -1.2% lower annually, while it is up +1.7% on a year ago. It was anticipated to have increased +0.6% in the month. S&P500 +2.96%.
They are now -1.2% lower than a year ago. There has also been a slight broadening out in the components of the leaders where growth is being driven by more than just the financial components. S&P500 +1.14%.
- Beige Book (July 29th): “Reports from the 12 Federal Reserve Districts suggest that economic activity continued to be weak going into the summer, but most Districts indicated that the pace of decline has moderated since the last report or that activity has begun to stabilize, albeit at a low level.”
-0.6% was expected. Excluding transportation, orders increased +1.1%, while excluding defence, they fell -0.7%. Orders are now -26.7% lower than a year ago. S&P500 -0.46%.
From where I sit it looks like we had a long way to go in July, and we still do.
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