Good economic indicators?
Posted by Don on September 15, 2009
Well the next in line of a string of good news lately is that Retail sales were up for August, PPI was up in August, and the Empire State Manufacturing survey was up in August.
Here is a rundown of today’s stats.
These are numbers up off of the bottom we had in economic indicators in April, but we are still way off from before the meltdown a year ago.
Lets start with Retail Sales. This number shows an increase of 2.7%, but when you take out autos and auto parts they were really up 1.1% from July. Of that 1.1% half of that increase was from gasoline stations. Now I don’t want to minimize the effect of the this, but the gas station increase was largely due to an increase in fuel prices, and we know auto sales were pumped higher by “Cash for Clunkers”. So a true increase in retail sales should be about .6%.
PPI was up 1.7% which should show producer prices increasing because of demand. Again just like retail sales energy prices were up 8% last month which caused the bulk of the increase. PPI was up .2% once you strip out food and energy. What is funny is that aside from my mortgage my largest monthly expenditures are gas and groceries. These input costs increasing will eat into corporate profits and require even more cost cutting.
Last but not least the Empire Manufacturing index. Yes it is going up and that is a good sign for the New York economy, but is not representative of the US as a whole. Most manufacturing gains are coming as a benefit of the weaker dollar. If the dollar strengthens at all this could easliy reverse.
The boogieman in the room is still unemployment, and yes the new jobless claims are slowing, but unemployment is sitting at 9.7% and we have an economy that runs on 70% consumer spending. I agree the recession is over, but we are far from seeing any true growth in the economy. In my opinion this is a bear market rally and not sustainable over the long term, but do not fight the trend of the market.
