Flash Update
JWSGS - FLASH UPDATE - Jul. 24, 2006
JOHN WILLIAMS' SHADOW GOVERNMENT STATISTICS
Flash Update July 24, 2006
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Housing, Retail and CPI Data Confirm Recession Signals
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This is the first of many Shadow Government Statistics (SGS) Flash Updates. Distinct from an SGS Alert, which addresses unusual or breaking circumstances, a Flash Update provides a quick, interim, summary of developments that had been anticipated or discussed in the prior regular newsletter. -- John Williams
Two key series -- Retail Sales and Housing Starts -- have generated solid recession warning signals, based on reports published last week. Once generated, such signals always have been followed by the signaled contracting or booming economy.
The June CPI showed the 0.20% monthly gain expected by consensus forecasters, which translated into an unadjusted 4.32% annual rate of inflation. Those numbers locked-in both a 1.2% annualized real (inflation-adjusted) second-quarter retail sales contraction, and the annual retail sales growth rate moving below the 1.8% fail-safe level, as discussed in the July 17th newsletter.
Real retail sales contracted by 0.3% in June and were up just 1.6% year-to-year. The quarterly retail sales contraction, in particular, should create something of a reporting problem for the Bureau of Economic Analysis (BEA) with this coming Friday's GDP reporting. The BEA will endeavor to bring in second-quarter GDP growth stronger than consensus estimates, which are hovering above three percent. Nonetheless, the heavily-politicized GDP number is not likely to let down the Administration, coming into the mid-term election.
The highly volatile housing starts series showed a 5.3% monthly contraction in June, which translated into an 11.0% annual decline. Most importantly, though, the three-month moving average year-to-year change fell to a 9.0% contraction, a steeper decline than seen at any point before or during the last official recession. In line with the July 17th newsletter's observations, this series generated the expected recession warning signal.
Federal Reserve Chairman Bernanke warned in last week's Congressional testimony of slowing economic growth, and he claimed that inflation was contained or would be contained by slowing business activity. The economy more properly could be described as coming in for an immediate crash landing. Contained inflation, however, remains a wishful fantasy of Fed and Wall Street spinmeisters.
Further details will follow in the regular August SGS.
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August's "Shadow Government Statistics" is scheduled for release on Wednesday, August 18, 2006. The posting of the next SGS, as well as any Interim Updates or Alerts, will be advised immediately by e-mail.
Flash Update July 24, 2006
__________
Housing, Retail and CPI Data Confirm Recession Signals
__________
This is the first of many Shadow Government Statistics (SGS) Flash Updates. Distinct from an SGS Alert, which addresses unusual or breaking circumstances, a Flash Update provides a quick, interim, summary of developments that had been anticipated or discussed in the prior regular newsletter. -- John Williams
Two key series -- Retail Sales and Housing Starts -- have generated solid recession warning signals, based on reports published last week. Once generated, such signals always have been followed by the signaled contracting or booming economy.
The June CPI showed the 0.20% monthly gain expected by consensus forecasters, which translated into an unadjusted 4.32% annual rate of inflation. Those numbers locked-in both a 1.2% annualized real (inflation-adjusted) second-quarter retail sales contraction, and the annual retail sales growth rate moving below the 1.8% fail-safe level, as discussed in the July 17th newsletter.
Real retail sales contracted by 0.3% in June and were up just 1.6% year-to-year. The quarterly retail sales contraction, in particular, should create something of a reporting problem for the Bureau of Economic Analysis (BEA) with this coming Friday's GDP reporting. The BEA will endeavor to bring in second-quarter GDP growth stronger than consensus estimates, which are hovering above three percent. Nonetheless, the heavily-politicized GDP number is not likely to let down the Administration, coming into the mid-term election.
The highly volatile housing starts series showed a 5.3% monthly contraction in June, which translated into an 11.0% annual decline. Most importantly, though, the three-month moving average year-to-year change fell to a 9.0% contraction, a steeper decline than seen at any point before or during the last official recession. In line with the July 17th newsletter's observations, this series generated the expected recession warning signal.
Federal Reserve Chairman Bernanke warned in last week's Congressional testimony of slowing economic growth, and he claimed that inflation was contained or would be contained by slowing business activity. The economy more properly could be described as coming in for an immediate crash landing. Contained inflation, however, remains a wishful fantasy of Fed and Wall Street spinmeisters.
Further details will follow in the regular August SGS.
August's "Shadow Government Statistics" is scheduled for release on Wednesday, August 18, 2006. The posting of the next SGS, as well as any Interim Updates or Alerts, will be advised immediately by e-mail.