Thursday, March 31, 2011

USA & Global Economy: Expansion Continued in March (GDP Charts) *Monthly Economic Review*

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USA and Global Economy: Monthly Economic Review


USA & Global Economy: Expansion Continued in March

The immediate concern for both the USA and Global economy continues to be high oil prices as a result of the Arab revolutions. As noted last month, the current economic expansion will be at risk if high oil prices persist into spring.

Although the Arab democracy movements, EU sovereign debt crisis, the Japan natural disaster, and USA deficits and increasing debt continue, both the USA and Global economy expanded onwards. Of course, all is not well:
1) the USA financial system continues with problems and weaknesses, including a foreclosure fiasco and crisis
2) the USA unemployment and underemployment remains high, USA weekly unemployment claims continue at 400,000+
3) USA real estate continues in a market depression
4) the USA cannot stop deficit spending therefore the USA has an ever increasing national debt
5) the USA local and state governments are in fiscal crisis
6) the Federal Reserve continues quantitative easing aka monetizing and devaluing the U.S. Dollar
There does appear to be a Day of Reckoning for the USA on the horizon, although no one really knows when. The aftermath of the Credit Bubble and Great Recession will linger for years. However, the USA GDP has grown for 6 consecutive quarters through Q4 2010. Currently the risk of a double dip recession appears much diminished, if not totally nonexistent. A stalling of the USA economic expansion in 2011 is now more probable, but the most likely immediate scenario appears to be a Q1 2011 GDP growth of approximately +3.0% QoQ. Anything less will be a setback.

Below are March blog post headlines from Boom Doom Economy,  Financial Controls, Baidu Planet, and Matrix Markets summarizing select economic data and news, in approximately reverse chronological order. This is not a comprehensive list of key economic data. It is selected economic data that gives a general idea of the overall economic conditions, with the exceptions noted in the preceding paragraph. Much is lagging economic data from February and even January. However, it does appear that economic expansion did continue in both the USA and on a Global scale.

Further below is the historical and projected USA GDP per the U.S. Bureau of Economic Analysis. Also further below is the projected GDPs for the USA, Japan, the Euro Area, and Total OECD per the latest OECD economic outlook. The economic data for March will now begin and should indicate continuing economic expansion. Q4 2010 was better than initially projected for the USA and Global economy. Whether the pace of the economic expansion will continue on to Q1 2011 or will slow is the concern now and is clouded by the high oil prices, the Japan natural disaster, and ongoing Middle East turmoil.

USA Positive Economic Data and News
● USA Weekly Unemployment Claims Under 400K for 3rd Week (Charts) *4-week average continues under 400K*
● USA CEO Confidence Hits Record High *Economic Outlook Index at nearly 10-year high*
● S&P 500 Regains 1300! (Chart) *Above 20 & 50 day averages*
● USA 2010 Annual GDP Revised Upwards to +2.9% (GDP Charts) *2009 GDP was -2.6%*
● USA GDP Revised Upwards to +3.1% for Q4 2010 (GDP Charts) *Qtly GDP $14.87 trillion annualized is all-time high*
● USA Weekly Leading Index Dips to 129.3 (Charts) *Annualized growth rate dips to +6.5%* [continues at encouraging level]
● USA Monthly Leading Economic Index Continues Upwards (Chart) "Pointing to economic expansion*
● USA Monthly Food & Retail Sales at All-Time High! (Charts) *February sales continue upward trend*
● Federal Reserve: "USA Economic Recovery on Firmer Footing" (GDP Chart) *Labor market improving gradually*
● Fed Beige Book: "USA Economic Activity Continued to Expand" (Review) "Labor markets modestly improved"
● USA Services Sector Growth at Post-Recession High! (Chart) *Non-Manufacturing Index expands for 15th month*
● USA Manufacturing PMI Highest Since May 2004! (Chart) *Economy expanded for 21st month*

USA Neutral and/or Negative Economic Data and News
● USA Consumer Confidence at 3-Month Low (Charts) March: "Sharp decline in expectations"
● Bank Failure Friday: FDIC Seizes 1 Bank (Charts) *2011 Totals: Failures 26, Cost $1.85 Billion*
● USA Industrial Production Dips (Charts) *Just below post-recession peak* [of concern, but still positive]
● USA Consumer Sentiment Plunges in March (Charts) *Rise in gas prices lowers optimism*
● USA Consumer Credit Increases in January (Charts) *Revolving credit at another cyclical low* [Unsecured credit lending is tight]
● USA Unemployment Rate Drops to 8.9% (Charts) *Jobs growth +192K in February* [Report mostly useless with contradictions]

Global Positive Economic Data and News
● China Monthly Leading Economic Index Increases (Chart) *Just below post-recession high*
● China Growing at Top Speed (Video) "Breathtaking pace of change"
● Global Manufacturing PMI at 2nd Highest All-Time! (Chart) *20th month of expansion*
● Global Economic Output Highest Since April 2006! (Chart) *February marks 19th month of expansion*
● Global Services Sector Growth Highest Since April 2006! (Chart) *19th month of expansion*

Global Neutral and/or Negative Economic Data and News
● Sovereign Fiscal Responsibility: The Best & Worst Nations (List) *USA in Worst 10*
● China Manufacturing Index Plunges (Chart) February: "Output rises modestly" [increasing at slower rate]
● High oil prices as a result of the Arab revolutions could materially slow the economic expansion


USA GDP by Quarter

USA GDP % by Quarter (Chart) The chart below is the annualized percentage change of the Real GDP (seasonally adjusted at annual rate) from the preceding quarter (QoQ), the most common GDP measure. As can be seen, there was a negative dip into the Great Recession beginning 2008 Q2, a rebound peaking in 2009 Q4, a downward trend in 2010 Q1 and Q2. The USA economy appeared to be at a crossroads at 2010 Q2: a continuing downwards trend towards zero growth or a bounce upwards from there? The 2010 Q3 +2.6% was a bounce upwards and the 2010 Q4 +3.1% continues the small, marginally adequate, uptrend. The Federal Reserve via the Federal Open Market Committee has resorted to QE2, a second round of quantitative easing, plus indirect quantitative easing in an attempt to boost the economy, increase the GDP, and bring down the unemployment rate. The chart covers the last 24 quarters of the USA GDP as reported by the Bureau of Economic Analysis from 2005 Q1 through 2010 Q4 (final estimate).




OECD: GDP Growth Projections by Quarter

OECD: GDP Growth Projections by Quarter (Chart) Below is the OECD GDP Growth Projections by Quarter for the USA, Japan, the Euro Area, and the entire OECD. These are annualized percentage growth rates. The chart is for 10 quarters, from Q3 2010 through Q4 2011. The USA lowest quarter is +1.9% in Q4 2010 and the highest is +3.7% in Q4 2012 (2 years from now). The Japan lowest quarter is +0.6% in Q2 2011 and the highest is +2.7% in Q1 2011 (next quarter). The Euro Area lowest quarter is +1.3% in both Q4 2010 (now) and Q1 2012 (next quarter). The highest quarter is +2.2% in both Q3 2012 and Q4 2012 (2 years from now). The Total OECD lowest quarter is +1.7% in Q4 2010 and the highest is +3.2% in Q4 2012 (2 years from now). No negative GDP quarters are projected nor on the graph.




Links

USA and Global economic news & analysis. There is always good/bad economic news, no matter how good/bad times are.

USA financial system, banking, Federal Reserve news and analysis. Select USA and Global economic news.

China economic, Internet, technology, and Baidu news. Select USA and Global economic news.

Matrix Markets
S&P 500 technical and fundamental analysis


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USA Weekly Unemployment Claims Under 400K for 3rd Week (Charts) *4-week average continues under 400K*

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United States Department of Labor: Unemployment Insurance Weekly Claims Report


*** Updated March 31, 2011 for the week ended March 26, 2011 Claims ***


USA Weekly Unemployment Claims Under 400K for 3rd Week
4-Week Moving Average Continues Below 400K

Official Statement by the US Department of Labor (Seasonally Adjusted Data) In the week ending March 26, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 6,000 from the previous week's revised figure of 394,000. The 4-week moving average was 394,250, a increase of 3,250 from the previous week's revised average of 391,000. The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending March 19, unchanged from the prior week's unrevised rate of 3.0 percent. The advance number for seasonally adjusted insured unemployment during the week ending March 19 was 3,714,000, a decrease of 51,000 from the preceding week's revised level of 3,765,000. The 4-week moving average was 3,765,250, a decrease of 32,750 from the preceding week's revised average of 3,798,000.

Trend The short-term trend continues below 400,000, and the the intermediate and long term trends are downwards. The current weekly unemployment claims (preliminary) of 382,000 is the 4th week in the last 5 weeks below 400,000 and:
=> Below the descending 4-week moving average of 394,250.
=> Below the descending 13-week moving average of 404,923, which has decreased 23 of the past 24 weeks.
=> Below the descending 26-week moving average of 420,077, which as decreased 19 of the past 20 weeks.
=> Below the descending 52-week moving average of 442,500, which has been decreasing for months.
=> The 13-week, 26-week and 52-week moving averages are at Post-Great Recession cyclical lows.
=> (The 13-week, 26-week, and 52-week moving averages charts are not shown on this page).

Cycle History Weekly unemployment claims (preliminary) of 388,000 for the week ended March 26, 2011 are down -263,000 and -41% from the Great Recession cyclical high of 651,000 for the week ended March 28, 2009. The weekly unemployment claims (preliminary) are up +17,000 and +5% above the Post-Great Recession cyclical low of 371,000 for the week ended February 26, 2011.

4-Week Moving Average (Chart) The chart below shows the 4-week moving average for the last 32 weeks, from the week ended August 21, 2010 through the latest week reported, March 26, 2011. The week ended August 21, 2010 was an intermediate term peak of 488,000. The trend had been downwards since this intermediate term peak. The 4-week moving average, currently 394,250 (preliminary), is considered a better, smoother measure of trend. The 4-week moving average continues an overall downtrend and has decreased 13 of the past 21 weeks and 21 of the past 31 weeks. Longer-term, the 4-week moving average dropped significantly to reach a first low of 462,500 for the week ended January 9, 2010. After an increase, another low was set of 448,000 for the week ended March 27, 2010. The overall trend continues downwards.



Weekly Unemployment Claims (Chart) The chart below shows the total weekly unemployment claims for the last 33 weeks, from the week ended August 14, 2010 through the latest week reported, March 26, 2011. A general decline in claims had been indicated, with an intermediate peak of 504,000 reached for the week ended August 14, 2010, the beginning of the chart.



Commentary The latest weekly unemployment claims (preliminary) is now the 6th time below 400,000 (revised) since the end of the Great Recession. The current claims (preliminary)of 388,000 is above the Post-Great Recession cyclical low of 371,000 for the week ended February 26, 2011. The 4-week moving average (preliminary) of 394,250 above the Post-Great Recession cyclical low of 388,500 for the week ended March 12, 2011. The short term is becoming neutral as indicated by the rising 4-week moving average. The intermediate term, and long term trends continue downwards as indicated by the descending  13-week, 26-week, and 52-week moving averages. Claims at  500,000 level is a benchmark, as is the 400,000 level.

Weekly claims first dropped below 500,000 in this Great Recession Cycle for the week ended November 21, 2009 at 477,000. Weekly claims have been below 500,000 since November 21, 2009 with only one exception (504,000 for the week ended August 14, 2010). Claims over 500,000 clearly indicate GDP growth is slowing, if not stalling or contracting, while claims less than 400,000 indicate an economic expansion is underway. Hence the uncertainty over the pace and strength of the USA economic recovery had been heightened as weekly unemployment claims had generally stayed in the mid-400,000s range until recently. Weekly unemployment claims are now continuing below 400,000 indicating a stronger economic expansion and GDP.


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Tuesday, March 29, 2011

USA Consumer Confidence at 3-Month Low (Charts) March: "Sharp decline in expectations"

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The Conference Board: Monthly Consumer Confidence Index


Official Statement by The Conference Board The Conference Board Consumer Confidence Index®, which had increased in February, declined in March. The Index now stands at 63.4 (1985=100), down from 72.0 in February. The Present Situation Index improved to 36.9 from 33.8. The Expectations Index decreased to 81.1 from 97.5 last month. Says Lynn Franco, Director of The Conference Board Consumer Research Center: “The sharp decline in confidence was prompted by a sharp decline in expectations. Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions. On the other hand, consumers’ assessment of current conditions improved, indicating that while the short-term future may be uncertain, the economy continues to expand.”

Trend The current trend reversed from strongly upwards, and a 3-year high, in February to plunging in March. The March Consumer Confidence Index (CCI) of 63.4 (preliminary) is the lowest since December 2010 (63.4) and:
=> Continues above the ascending 12-month moving average of 58.3 for the 5th consecutive months (see chart below)
=> Continues above the ascending 24-month moving average of 54.5 for the 13th consecutive month
=> Continues above the leveling off 36-month moving average of 51.8 for the 5th consecutive month
=> (The 24-month and 36-month moving averages charts are not shown on this page)

Cycle History The current Consumer Confidence Index (CCI) in March of 63.4 (preliminary) is down -48.5 and -43% from the cyclical peak of 111.9 in July 2007. The current CCI is up +38.1 and +151% from the Great Recession cyclical bottom of 25.3 in February 2009. Therefore, the CCI is closer to the cyclical low than the high.

Monthly Consumer Confidence Index (Chart) Below is a chart of the past 45 months of The Conference Board CCI (preliminary) from the July 2007 cyclical high of 111.9 through the latest month reported, March 2011. As can be seen, the Consumer Confidence Index bottomed at a Great Recession cyclical low in February 2009 and the Great Recession officially ended in June 2009. After a peak in May 2010 of 62.7, the CCI has been in a range from a low of 48.6 in September 2010 to a high of 72.0 in February 2011. The current CCI of 63.4 (preliminary) continues well above the recent lows of 48.6 in September 2010 and 46.4 in February 2010.



Consumer Confidence Index 12-Month Moving Average (Chart) Below is a chart of the latest 43 months of The Conference Board Consumer Confidence Index 12-Month Moving Average from August 2007 through the latest month reported, March 2011 (preliminary). The previous chart above, the Index of Consumer Sentiment, is rather like following the bouncing ball when charting human sentiment, confidence, mood, and outlook regarding the USA economy and their outlook for their financial prospects. Therefore, the 12 month moving average chart smooths out some of these short-term ups and downs, greed and fear, optimism and pessimism. The Pre-Great Recession peak was in August 2007 at 107.8 while the Great Recession low was in September 2009 at 42.7. The Post-Great Recession peak has been the February 2011 (preliminary) at 57.2. The 12 month moving average has been ascending for 5 consecutive months, after a 3 month dip.



Commentary The March 2011 Consumer Confidence Index of 63.4 (preliminary) is a complete reversal from the 3-year high just last month, February 2011. The -8.6 drop from February is the largest drop since February 2010 (-10.1). The Consumer Confidence Index continues well above the recent lows of 48.6 in September 2010 and 46.4 in February 2010. The spike in oil prices is the primary cause of the decrease plus the Japanese earthquake, Middle East unrest, and USA fiscal problems (local, state, federal) have contributed to lowered consumer confidence.


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*Data courtesy of The Conference Board*

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Friday, March 25, 2011

USA 2010 Annual GDP Revised Upwards to +2.9% (GDP Charts) *2009 GDP was -2.6%*

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Bureau of Economic Analysis: USA Annual GDP Estimate


USA 2010 Annual GDP Final Estimate +2.9%

Official Statement by the Bureau of Economic Analysis is at bottom of this post.

USA Annual 2010 GDP Final Estimate The Bureau of Economic Analysis released the Final Estimate of 2010 Annual GDP which was +2.9%, for a total GDP of $14.66 trillion. The prior second estimate of the Annual 2010 GDP was a +2.8% increase over the 2009 Annual GDP of -2.6%. So the final estimate was an upwards revision of +0.1%. The 2010 Annual GDP of +2.9% is the highest since 2005 (+3.1%). The USA GDP had decreased for 5 consecutive years (2005 through 2009) before this increase in 2010 (YoY %).

GDP +3.0% Benchmark A +3.0% annualized GDP growth rate is generally accepted as the minimum necessary to generate some jobs growth. Therefore, the USA economy did not grow at a sufficient rate in 2010 to create adequate jobs and bring down the true, not official, unemployment and underemployment rates. The Big Question: where is the USA economy headed? Three scenarios are usually discussed: 1) a double dip recession whereby the GDP will turn negative, 2) the economy will continue "bottom bouncing" with very slow growth and a continuing high unemployment rate (i.e., less than or near +3.0% growth), or 3) the bottom is in and GDP growth will accelerate to above +3.0% and continue above, jobs will be created, and the unemployment will continue to decrease. Scenario 2) with USA slow economic growth appears to be the consensus for 2011.

USA Real GDP % by Year (Chart) The chart below is the annual percentage change of the Real GDP (seasonally adjusted at annual rate) from the preceding year (YoY), the most common annual GDP measure. As can be seen, there was a dip in 2001 to +1.1%. The USA economy then recovered to a peak of +3.6% in 2004. Five consecutive annual declines ensued culminating in the Great Recession and a cyclical bottom in 2009 at -2.6%. 2008 was 0.0% and shows as a blank on the chart. The chart covers the last 16 years of the USA GDP as reported by the Bureau of Economic Analysis from 1995 through 2010 (third estimate).




USA Real GDP $ by Year (Chart) The chart below is the Real GDP (seasonally adjusted at annual rate) in total current dollars. As can be seen, the USA economy peaked in 2008, dipped in 2009, and then recovered to another peak in 2010. The chart covers the last 16 years of the USA GDP as reported by the Bureau of Economic Analysis from 1995 through 2010 (third estimate).



The Bureau of Economic Analysis Commentary on the 2010 Annual GDP (third estimate)

Real Real GDP increased 2.9 percent in 2010 (that is, from the 2009 annual level to the 2010 annual level), in contrast to a decrease of 2.6 percent in 2009.

The increase in real GDP in 2010 primarily reflected positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), nonresidential fixed investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The upturn in real GDP primarily reflected upturns in exports, in nonresidential fixed investment, in PCE, and in private inventory investment and a smaller decrease in residential fixed investment that were partly offset by an upturn in imports.

The price index for gross domestic purchases increased 1.3 percent in 2010, in contrast to a decrease of 0.2 percent in 2009.

Current-dollar GDP increased 3.8 percent, or $541.4 billion, in 2010. In contrast, current-dollar GDP decreased 1.7 percent, or $250.1 billion, in 2009.

During 2010 (that is, measured from the fourth quarter of 2009 to the fourth quarter of 2010), real GDP increased 2.8 percent. Real GDP increased 0.2 percent during 2009. The price index for gross domestic purchases increased 1.2 percent during 2010, compared with an increase of 0.5 percent during 2009.


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