Tags: economy | growth | home sales | indicators

There's Widespread Growth Despite Lack of Economic Boom

There's Widespread Growth Despite Lack of Economic Boom

By    |   Thursday, 20 August 2015 01:04 PM

  • INDICATOR: July Existing Home Sales and Leading Indicators, August Philadelphia Fed Survey and Weekly Claims
  • KEY DATA: Home Sales: +2%; Prices: +5.6%/ LEI: -0.3%/ Phila. Fed: 2.6 points/ Claims: +4,000
  • IN A NUTSHELL: “This may not be a booming economy, but the growth is widespread.”

WHAT IT MEANS: Lots data were released today and for tended to point to a solid economy. Existing home sales rose moderately in July. The Northeast was down a little, demand was flat in the Midwest and sales rose nicely in the West and South.

There were no major changes that raise questions about the data. Prices may have decelerated for the second consecutive month, but the year-over-increase remains solid.

The Conference Board’s Leading Economic Index declined about having posted large increases in the previous two months. The index does diverge periodically from the trend and the two consecutive months of large 0.6% increases may have overstated future potential growth. This report points to decent, though not great growth during the remainder of the year.

As for the manufacturing sector, the Philadelphia Fed’s Manufacturing Outlook Index rose in August. Orders remained strong and firms started hiring again and are working their employees even longer.

That is a trend we are seeing across the economy. Looking forward, optimism improved for the third consecutive month, though the increases have been modest. It looks like whatever soft spot the manufacturing sector was going through is pretty much gone.

Weekly jobless claims edged up but that is not a concern. The level is still so low that we are likely to see August job growth once again in the 225,000 to 250,000-range. We are also likely to get another tick down in the unemployment rate

Today’s numbers are not market-movers. Yesterday’s Fed minutes are something that investors are likely puzzling over. To me, and most economists, the Fed members are heavily leaning toward moving in September.

Not surprisingly, they didn’t come out and send a clear message that a hike is coming in September, but by indicating that “most (members) judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point,” they signaled they are pretty close.

What will get them there? Probably another good jobs report and/or inflation data that point to a movement toward the Committee’s goals.

Will they get that before the September meeting? I still think so. What are investors thinking? They are totally confused. Some say that doing nothing would help the markets while other argue it would be an admission of economic weakness.

If the Fed raises rates, some argue it will end the world as we know it while others argue that it will be a non-event or it could signal that the economy can stand on its own. In other words, investors are confused, which is never good for markets.

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This may not be a booming economy, but the growth is widespread.
economy, growth, home sales, indicators
Thursday, 20 August 2015 01:04 PM
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