January 2016

Q4 2015 GDP Comes in at a Paltry 0.7%

The initial Q4 GDP estimate is an ominous 0.7%.  Consumer spending was the only dimly lit bright spot,with changes in inventories removing 0.45 percentage points from GDP.  The trade deficit didn't help either as exports were less than imports and the end result was a -0.47 percentage point drain on Q4 real GDP.  Both government and fixed investment GDP contribution was next to nil.


December Durable Goods Horrific as New Orders Plunge -5.1%

The Durable Goods, advance report shows new orders just jumped off of a cliff in December.  New orders plunged -5.1% and even worse, November new orders was revised down to -0.5%.  Not to be outdone, December shipments is also horrific with a -2.2% drop.  Core capital goods new orders also plunged by -4.3%.  Without transportation new orders, which includes aircraft, durable goods new orders would have decreased by -1.2%.

Mortgage Delinquencies Rise in November; Mean Time in Foreclosure at Record 1061 Days

Last week the Mortgage Monitor for November (pdf) from Black Knight Financial Services reported that there were 697,944 home mortgages, or 1.38% of all mortgages outstanding, remaining in the foreclosure process at the end of November, which was down from 721,435, or 1.46% of all active loans that were in foreclosure at the end of October, and down from 1.81% of all mortgages that were in foreclosure in November of last year.

Industrial Production Down for Three Months in a Row

The Federal Reserve Industrial Production & Capacity Utilization report shows more malaise for the U.S. manufacturing sector.  The bad news is industrial production dropped by a hefty -0.4% for December.  Worse, November was revised downward 0.3 percentage points to a -0.9% monthly decline  October also was negative, a -0.2% decline, and September showed no change.

Trade Deficit a 43 Basis Point Hit to 4th Quarter GDP Despite A 5% Drop in November

Our trade deficit fell by 5.0% November, after rising by a revised 5.0% in October, as the net value of both our exports and imports decreased.  The Census report on our international trade in goods and services for November indicated that our seasonally adjusted goods and services trade deficit fell by $2.2 billion to $42.4 billion in November from a October deficit which was revised from $43.9 billion to $44.6 billion.

December Unemployment Report Belies Other Economic Metrics

The December unemployment report seems like nothing but good news.  The official unemployment rate did not change and is 5.0%.  The ranks of employed swelled and those not in the labor force shrank.  The labor participate rate ticked up a tenth of a percentage point to stand at a still very low 62.6%.  Overall, this month's CPS report belies some of the other ominous economic news.


November Construction Spending Down 0.4% After Significant Errors Found in Prior Data

With its release of November construction spending data, the Census revised all its construction data going back to January 2005, and admitted a large "processing error" that had caused all residential construction data to be misstated in the interim.

A Strategic Case for Donald Trump

I have previously made the policy case for why I believe conservatives should support Donald Trump. Briefly, the two main pillars of Trump’s campaign, support for immigration restriction and opposition to global “free” trade deals, are conservative in effect and in the most basic sense of the term, contrary to the protests of some free enterprise uber alles “conservative” ideologues.