by Calculated Risk on 4/14/2015 08:40:00 AM

On a monthly basis, retail sales increased 0.9% from February to March (seasonally adjusted), and sales were up 1.3% from March 2014.

From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $441.4 billion, an increase of 0.9 percent from the previous month, and 1.3 percent above March 2014. ... The January 2015 to February 2015 percent change was revised from -0.6 percent to -0.5 percent.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline increased 1.0%.

Retail sales ex-autos increased 0.4%. 

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales ex-gasoline increased by 4.3% on a YoY basis (1.3% for all retail sales).

The increase in March was below consensus expectations of a 1.0% increase.

by Calculated Risk on 4/13/2015 07:52:00 PM

Excerpts from a research note from BofA on March retail sales: "Farewell winter blues"

There is finally good news to report on the US consumer. Spending on BAC credit and debit cards was up sharply in March, following a string of weak reports. Our measure of core retail sales - ex-autos and gasoline sales - increased 0.9% mom on a seasonally adjusted basis in March. This is a notable improvement from the past three months of essentially no growth. If we include gasoline station sales, the swing is even more dramatic given the significant adjustment in gasoline prices. ...

As always when analyzing economic data, we have to be careful not to overreact to just one report. The gain in March follows several months of weak data, making the comparisons more favorable. Moreover, the early Easter holiday might have sent people shopping in late March. The weather is also an important factor; ... the regions with the harshest winter weather showed the largest declines in February and strongest gains in March.

We are hopeful that the gain in March is the beginning of a healthier trajectory for consumer spending. As we have been arguing, all signs point to a solid consumer backdrop. ... Households have repaired their balance sheets and animal spirits have improved with consumer confidence trending higher. We are therefore holding to our core view that consumer spending will accelerate into 2Q, providing much-need support to GDP tracking.

Tuesday:
• At 8:30 AM ET, the Producer Price Index for March from the BLS. The consensus is for a 0.2% increase in prices, and a 0.1% increase in core PPI.

• Also at 8:30 AM, Retail sales for March will be released. The consensus is for retail sales to increase 1.0% in March, and to increase 0.7% ex-autos

• At 9:00 AM, NFIB Small Business Optimism Index for March.

• 10:00 AM: Manufacturing and Trade: Inventories and Sales (business inventories) report for February. The consensus is for a 0.2% increase in inventories.

by Calculated Risk on 4/13/2015 04:52:00 PM

An interesting piece from Josh Lehner at the Oregon Office of Economic Analysis Economic Drags and the Outlook. The introduction:

So far in early 2015, the U.S. economic data flow has been relatively lackluster, including the disappointing March jobs report. As such, now is a good time to take a step back and mark one’s economic beliefs to market, to borrow a phrase from Brad DeLong. As detailed below, there are clear reasons for both near-term economic optimism over the next year or two and longer-term pessimism over the extended horizon.

First the good news. The biggest weights on the recovery were household debt and the nature of the cycle with housing and government being the largest drags. While these issues were holding back the recovery in recent years, these weights have clearly lifted. Household debt, relative to personal income, has declined considerably since 2007 and is effectively flat the past 2+ years. These trends are widespread across states, with few still deleveraging in 2013 according to the latest NY Fed data. One can argue whether or not this is the appropriate amount of household debt, but progress has clearly been made and the deleveraging cycle appears to be over, at least in aggregate. This bodes well for near-term growth.

There is much more in the post (Note: I'm more optimistic than Josh for the longer term - I'll write why soon).

by Calculated Risk on 4/13/2015 11:59:00 AM

Some excerpts from a quarterly report from CBRE: U.S. Commercial Real Estate Sees Positive Start to 2015

The U.S. commercial real estate market showed continued strength across all property types in the first quarter of 2015 (Q1 2015), according to the latest analysis from CBRE Group, Inc.
...
Office Market
Q1 2015 marked the 12th consecutive quarter of office vacancy rate declines. The trend remains broad-based across U.S. office markets. Vacancy fell in 41 of the 62 markets, rose in 18, and remained unchanged in three. Absorption of office space in the quarter was 9.5 million sq. ft. Suburban markets drove the overall improvement with a decline of 20 bps to 15.4%. Performance in downtown markets was mixed; vacancy increases in several large metros pushed the downtown rate up 10 bps during the quarter, to 11.2%.
...
Industrial Market
The industrial real estate recovery has now continued for 19 quarters, the longest uninterrupted stretch of declining availability since CBRE began tracking industrial market activity in 1980. The start of 2015 saw the vast majority of markets continue to improve—41 reported declines in availability, while four remained unchanged and 12 recorded increases.
...
Retail Market
Retail availability remained unchanged between Q4 2014 and Q1 2015. However, availability at year end 2014 was 50 bps below its year-earlier rate and is now 180 bps below the post-recession peak of 13.3%. 34 of the 62 markets tracked had availability decline in Q1 2015, while 28 recorded flat or increasing rates. Forty-three markets have improved upon their rates from one year ago.
...
Apartment Market
Preliminary data shows that apartment demand continued to grow in Q1 2015, with the multifamily housing vacancy rate declining to 4.5%, a 40 bps drop from a year earlier. This represents a continuation of a persistent downward trend in national vacancy rates that began several years ago. The market is very tight and apartment demand remains strong as the vacancy rate pushes closer to its 20-year vacancy low of 3.7%.

by Calculated Risk on 4/13/2015 10:03:00 AM

Another update:

This is the fourth year in a row with little rain or snow in the mountains. California is the largest agricultural state, and an ongoing drought could have an impact on food prices - and on the economy.


This graphic shows the National Weather Service 7 day precipitation forecast for the U.S.

California will be dry for at least another week.

Here are a few resources to track the drought. These tables show the snowpack in the North, Central and South Sierra. Currently the snowpack is about 8% of normal for this date.

And here are some plots comparing the current and previous years to the average, a very dry year ('76-'77) and a wet year ('82-'83). 2014-2015 is the driest year on record.

For Pacific Crest Trail and John Muir Trail hikers, I recommend using the Upper Tyndall Creek sensor to track the snow conditions. This is the fourth dry year in a row along the JMT, and the concern this year is lack of water - not too much snow on the passes.