by Calculated Risk on 6/26/2014 08:34:00 AM

The DOL reports:

In the week ending June 21, the advance figure for seasonally adjusted initial claims was 312,000, a decrease of 2,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 312,000 to 314,000. The 4-week moving average was 314,250, an increase of 2,000 from the previous week's revised average. The previous week's average was revised up by 500 from 311,750 to 312,250.

There were no special factors impacting this week's initial claims.

The previous week was revised up from 312,000.

The following graph shows the 4-week moving average of weekly claims since January 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 314,250.

This was close to the consensus forecast of 313,000.  The 4-week average is now at normal levels for an expansion.

by Calculated Risk on 6/25/2014 08:23:00 PM

First, according to Mortgage News Daily, 30 year mortgage rates have fallen to 4.13% today, down from 4.18% yesterday, and down from 4.59% a year ago. 

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 313 thousand from 312 thousand last week.

• Also at 8:30 AM, Personal Income and Outlays for May. The consensus is for a 0.4% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.2%.

• At 11:00 AM, the Kansas City Fed manufacturing survey for May.

by Calculated Risk on 6/25/2014 02:09:00 PM

From Merrill Lynch:

In the final release of 1Q GDP, growth was revised down significantly to -2.9% qoq saar from -1.0% previously. This was a big disappointment ...

The downward revision owed to two primary factors: weaker consumer spending on healthcare and a wider trade deficit. Updated data on healthcare spending contributed to a 1.2pp downward revision to GDP growth ... The large change to healthcare spending was due to the BEA significantly overestimating the impact of the Affordable Care Act (ACA).

The other major moving part was in net exports, largely due to a wider services trade deficit. ... This equates to an additional 0.6pp drag on GDP growth.
...
We caution against reading too much into the weakness, as it is clear that special factors during the quarter distorted growth. The severe winter weather weighed heavily on consumption, fixed investment and trade. Furthermore, there was a notable inventory drawdown that amounted to a 1.7pp drag on growth, following two strong quarters of inventory build in 3Q and 4Q of 2013. Despite the deeper contraction in this final release, we are not revising 2Q GDP growth. We continue to expect a 4.0% rebound in the second quarter, and the recent data suggest that we are headed in that direction. However, uncertainty around this number remains elevated: there could continue to be special factors at play stemming from the weakness in 1Q. Moreover, benchmark GDP revisions, released with the first estimate of 2Q GDP in July, could alter the trajectory.

Assuming 4.0% growth in 2Q and solid 3.0% growth in 2H, growth will still only average 1.7% this year. It certainly was not the start of the year we were hoping for.
emphasis added

by Calculated Risk on 6/25/2014 11:17:00 AM

The Department of Transportation (DOT) reported:

Travel on all roads and streets changed by 1.8% (4.6 billion vehicle miles) for April 2014 as compared with April 2013.

Travel for the month is estimated to be 254.9 billion vehicle miles.

Cumulative Travel for 2014 changed by 0.0% (0.3 billion vehicle miles).

The following graph shows the rolling 12 month total vehicle miles driven.

The rolling 12 month total is still mostly moving sideways ...


Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 77 months - 6+ years - and still counting.  Currently miles driven (rolling 12 months) are about 2.3% below the previous peak.

The second graph shows the year-over-year change from the same month in the previous year.

 In April 2014, gasoline averaged of $3.74 per gallon according to the EIA.  That was up from April 2013 when prices averaged $3.64 per gallon.

Of course gasoline prices are just part of the story.  The lack of growth in miles driven over the last 6+ years is probably also due to the lingering effects of the great recession (high unemployment rate and lack of wage growth), the aging of the overall population (over 55 drivers drive fewer miles) and changing driving habits of young drivers.

With all these factors, it might take a few more years before we see a new peak in miles driven.

by Calculated Risk on 6/25/2014 08:35:00 AM

From the BEA: Gross Domestic Product: First Quarter 2014 (Third Estimate)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 2.9 percent in the first quarter of 2014 according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2013, real GDP increased 2.6 percent....

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, real GDP was estimated to have decreased 1.0 percent. With the third estimate for the first quarter, the increase in personal consumption expenditures (PCE) was smaller than previously estimated, and the decline in exports was larger than previously estimated ...

The decrease in real GDP in the first quarter primarily reflected negative contributions from private inventory investment, exports, state and local government spending, nonresidential fixed investment, and residential fixed investment that were partly offset by a positive contribution from PCE. Imports, which are a subtraction in the calculation of GDP, increased.

Here is a Comparison of Third and Second Estimates. PCE growth was revised down from 3.1% to 1.0%. Ouch!