Saturday, May 23, 2015

Schedule for Week of May 24, 2015

by Bill McBride on 5/23/2015 08:31:00 AM

The key reports this week are April New Home sales on Tuesday, the 2nd estimate of Q1 GDP on Friday, and March Case-Shiller house prices on Tuesday.

For manufacturing, the May Richmond and Dallas Fed surveys will be released this week.

----- Monday, May 25th -----

All US markets will be closed in observance of Memorial Day.

----- Tuesday, May 26th -----

8:30 AM: Durable Goods Orders for April from the Census Bureau. The consensus is for a 0.6% decrease in durable goods orders.

9:00 AM: FHFA House Price Index for March 2015. This was originally a GSE only repeat sales, however there is also an expanded index.

Case-Shiller House Prices Indices9:00 AM: S&P/Case-Shiller House Price Index for March. Although this is the March report, it is really a 3 month average of January, February and March prices.

This graph shows the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the February 2015 report (the Composite 20 was started in January 2000).

The consensus is for a 4.6% year-over-year increase in the Comp 20 index for March. The Zillow forecast is for the National Index to increase 4.2% year-over-year in March, and for prices to increase 1.0% month-to-month seasonally adjusted.

New Home Sales10:00 AM: New Home Sales for April from the Census Bureau.

This graph shows New Home Sales since 1963. The dashed line is the March sales rate.

The consensus is for an increase in sales to 509 thousand Seasonally Adjusted Annual Rate (SAAR) in April from 481 thousand in March.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for May.

10:00 AM: Regional and State Employment and Unemployment (Monthly), April 2015

10:30 AM: Dallas Fed Manufacturing Survey for May.

----- Wednesday, May 27th -----

7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, May 28th -----

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 270 thousand from 274 thousand.

10:00 AM: Pending Home Sales Index for April. The consensus is for a 0.8% increase in the index.

----- Friday, May 29th -----

8:30 AM: Gross Domestic Product, 1st quarter 2015 (second estimate). The consensus is that real GDP decreased 0.9% annualized in Q1, revised down from the 0.2% advance estimate.

9:45 AM: Chicago Purchasing Managers Index for May. The consensus is for a reading of 53.0, up from 52.3 in April.

10:00 AM: University of Michigan's Consumer sentiment index (final for May). The consensus is for a reading of 90.0, up from the preliminary reading of 88.6, and down from the April reading of 95.9.

Friday, May 22, 2015

ATA Trucking Index decreased 3% in April

by Bill McBride on 5/22/2015 04:01:00 PM

Here is an indicator that I follow on trucking, from the ATA: ATA Truck Tonnage Index Fell 3% in April

American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index fell 3% in April, following a revised gain of 0.4% during the previous month. In April, the index equaled 128.6 (2000=100), which was the lowest level since April 2014. The all-time high is 135.8, reached in January 2015.

Compared with April 2014, the SA index increased just 1%, which was well below the 4.2% gain in March and the smallest year-over-year gain since February 2013. ...

“Like most economic indicators, truck tonnage was soft in April,” said ATA Chief Economist Bob Costello. “Unless tonnage snaps back in May and June, GDP growth will likely be suppressed in the second quarter.”

Costello added that truck tonnage is off 5.3% from the high in January.

“The next couple of months will be telling for both truck freight and the broader economy. Any significant jump from the first quarter is looking more doubtful,” he said.

Trucking serves as a barometer of the U.S. economy, representing 68.8% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled just under 10 billion tons of freight in 2014. Motor carriers collected $700.4 billion, or 80.3% of total revenue earned by all transport modes.
emphasis added
ATA Trucking Click on graph for larger image.

Here is a long term graph that shows ATA's For-Hire Truck Tonnage index.

The dashed line is the current level of the index.

The index is now up only 1.0% year-over-year.

Yellen: Expect Rate Hike in 2015, Several Years before Fed Funds Rate "back to normal" level

by Bill McBride on 5/22/2015 01:18:00 PM

From Fed Chair Janet Yellen: The Outlook for the Economy

[I]f the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. To support taking this step, however, I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term.

After we begin raising the federal funds rate, I anticipate that the pace of normalization is likely to be gradual. The various headwinds that are still restraining the economy, as I said, will likely take some time to fully abate, and the pace of that improvement is highly uncertain. If conditions develop as my colleagues and I expect, then the FOMC's objectives of maximum employment and price stability would best be achieved by proceeding cautiously, which I expect would mean that it will be several years before the federal funds rate would be back to its normal, longer-run level.

Having said that, I should stress that the actual course of policy will be determined by incoming data and what that reveals about the economy. We have no intention of embarking on a preset course of increases in the federal funds rate after the initial increase. Rather, we will adjust monetary policy in response to developments in economic activity and inflation as they occur. If conditions improve more rapidly than expected, it may be appropriate to raise interest rates more quickly; conversely, the pace of normalization may be slower if conditions turn out to be less favorable.
emphasis added

Key Measures Show Low Inflation in April

by Bill McBride on 5/22/2015 11:54:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.2% annualized rate) in April. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.2% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.1% (1.2% annualized rate) in April. The CPI less food and energy rose 0.3% (3.1% annualized rate) on a seasonally adjusted basis.
Note: The Cleveland Fed has the median CPI details for April here.

Inflation Measures Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.2%, the trimmed-mean CPI rose 1.7%, and the CPI less food and energy rose 1.8%. Core PCE is for March and increased 1.35% year-over-year.

On a monthly basis, median CPI was at 2.2% annualized, trimmed-mean CPI was at 2.2% annualized, and core CPI was at 3.1% annualized.

On a year-over-year basis these measures suggest inflation remains below the Fed's target of 2% (median CPI is slightly above 2%).

The key question for the Fed is if these key measures will move back towards 2%.

BLS: CPI increased 0.1% in April, Core CPI increased 0.3%

by Bill McBride on 5/22/2015 08:32:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index declined 0.2 percent before seasonal adjustment.

The index for all items less food and energy rose 0.3 percent in April and led to the slight increase in the seasonally adjusted all items index.
emphasis added
I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI. This was at the consensus forecast of a 0.1% increase for CPI, and above the forecast of a 0.1% increase in core CPI.

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