Charting Bernanke's pessimism on the economy
Federal Reserve Chairman Ben Bernanke delivered a pessimistic outlook on the economy to the Senate and House, and the recent economic data reinforce that view. Compared to a year ago, growth in retail sales and business inventories is cooling, while industrial production growth is only slightly better, basically due to demand for autos.
Claims spike back up
There was a suspicion last week that the big drop in jobless claims two weeks ago was due to seasonal quirks with auto industry shutdowns. That suspicion was confirmed when the Labor Department reported a 34,000 jump in initial jobless claims. The four-week claims average, a more accurate barometer of labor-market trends which reduces seasonal volatility in the weekly data, fell 1,500 to 375,500.
Home builders are becoming more optimistic, with the one-month advance in July the strongest in close to a decade. However, the builder optimism is running ahead of the actual new homes that are being constructed -- potentially a sign that starts have further room to run, or more worryingly, that builders are getting a bit ahead of themselves.
Blip or bad turn for housing?
Sales of existing homes in June came in far below consensus with a drop of over 5%. That could represent just a one-month stumble, or it could represent another false start on the road to housing recovery.
The spring selling season
The chart above shows prices on a four-month average, to smooth out one-month differences and to give a picture of the spring selling season. The National Association of Realtor's median existing price jumped strongly this spring, but the NAR's chief economist says that is because the mix of homes being sold (more expensive ones), and not because of a corresponding climb in re-sale prices. Re-sale price gauges like the FHFA one shown above in green, which aren't as current, are pointing more toward stabilization.