Flash Update
FLASH UPDATE - July 1, 2007
JOHN WILLIAMS' SHADOW GOVERNMENT STATISTICS
FLASH UPDATE
July 1, 2007
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Recession Signals Deepen as Inflation Pressures Mount
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The SGS Alternate Data Series have been updated for the "final" first-quarter GDP, for the June U.S. dollar measures, and for money supply revisions affecting ongoing M3 (see comments in text -- the June preliminary estimate is due on July 9th). The Hyperinflation Summary is nearing completion, and the June/July SGS newsletter will follow in the week of July 9th. All postings will be advised by e-mail. -- Happy 4th of July to all! John Williams
Help-Wanted Advertising Falls to New Cycle and 50-Year
Lows
May's help-wanted advertising index plummeted to 27, from 29 in April, hitting new cycle and 50-year lows. After allowing for the Internet's siphoning meaningful volume away from the print media, the renewed plunge in the current data still signals a sharp weakening in current economic activity and could be a harbinger of weaker-than-expected June employment data due for release on July 6th. There were no happy surprises in other economic releases last week. On the price front, ongoing M3 annual growth for June looks like it was close to matching May's pace, while oil prices moved higher, again, and the Fed fretted a little more openly about its inflation worries.
GDP Revision Was Statistical Noise. Annualized, seasonally-adjusted quarterly growth in first-quarter GDP revised to 0.6873% +/- 3% in the "final" estimate, up from 0.6496% in the "preliminary" estimate, a change that was little more than statistical noise. Annual growth revised to 1.91% from the previously-reported 1.90%. While nominal growth was boosted slightly through the use of a gimmicked narrowing of the trade deficit (net exports account), such was offset by an increase in the GDP implicit price deflator (annualized inflation rate) from 4.0% to 4.2%.
Of some significance, historical GDP from 2004 to date will go through an annual revision on July 27th, along with the release of the "advance" estimate of second-quarter GDP. While prior history will show weaker economic growth than previously reported, it is a fair bet that the distribution of the revisions somehow will avoid creating a heretofore unreported quarterly GDP contraction.
Second Leg of June Consumer Confidence Falls. Following June's Conference Board measure turning negative on both a monthly and annual basis, the University of Michigan sentiment measure also declined for the month, dropping 3.4%. Year-to-year change on a monthly basis slowed to 0.5% from the prior month's 11.6% gain, but the three-month moving average change was a gain of 3.7%, up from 3.3% the month before. As lagging indicators of economic activity, these measures of consumer outlook confirm that the economy has been in trouble.
Durable Goods Orders Annual Growth Remains in Recession Territory. Seasonally-adjusted May durable goods orders declined by 2.8% (2.3% net of revisions) for the month, following a 1.1% increase in April (previously 0.6%). On an annual basis, orders were up by just 0.3% from the year before, which was a contraction after adjustment for inflation. New orders for nondefense capital goods fell by 8.3% for the month, following April's 0.1% decline, with annual change a gain of 1.4%.
M2 Revisions Take Notch Out of Ongoing M3 Growth. The Fed seems to have trouble counting time deposits. Downward revisions to large time deposits (greater than $100,000) during the last month have been significant, historically, but have had no meaningful impact on near-term annual M3 growth. The revisions to small time deposits, however, have reduced recent reported annual M2 growth. Where M3 is built upon M2, that has impacted M3, but not significantly.
Annual M2 growth rates for March, April and May, respectively, were 6.1%, 6.5% and 6.7%, before revision, and 5.6%, 6.1% and 6.3%, after revision. Annual SGS Ongoing M3 growth rates for March, April and May, respectively, were 11.7%, 12.8% and 13.3%, before the M2 revisions, and 11.4%, 12.5% and 13.1% after.
For June, two and a half weeks of reporting suggest the monthly annual growth rate will hold about 13%, which reflects some unusual downside volatility in the weekly, large time deposit estimates. A formal, preliminary estimate for June will be published on the Alternate Data Series tab on July 9th, and in the upcoming newsletter.
Week ahead: Odds favor a downside surprise in June payroll growth and an upside surprise in the unemployment rate. The wild card in the June report always is the Bureau of Labor Statistics' inability to adjust the data for shool-year seasonal variations.
Further details will follow in the newsletter.
___________________________________________
The June/July "Shadow Government Statistics" monthly newsletter should be posted during the week of July 9th, following the release of the June employment data on the preceding Friday. An e-mail advice of same will be sent.
FLASH UPDATE
July 1, 2007
__________
Recession Signals Deepen as Inflation Pressures Mount
__________
The SGS Alternate Data Series have been updated for the "final" first-quarter GDP, for the June U.S. dollar measures, and for money supply revisions affecting ongoing M3 (see comments in text -- the June preliminary estimate is due on July 9th). The Hyperinflation Summary is nearing completion, and the June/July SGS newsletter will follow in the week of July 9th. All postings will be advised by e-mail. -- Happy 4th of July to all! John Williams
May's help-wanted advertising index plummeted to 27, from 29 in April, hitting new cycle and 50-year lows. After allowing for the Internet's siphoning meaningful volume away from the print media, the renewed plunge in the current data still signals a sharp weakening in current economic activity and could be a harbinger of weaker-than-expected June employment data due for release on July 6th. There were no happy surprises in other economic releases last week. On the price front, ongoing M3 annual growth for June looks like it was close to matching May's pace, while oil prices moved higher, again, and the Fed fretted a little more openly about its inflation worries.
GDP Revision Was Statistical Noise. Annualized, seasonally-adjusted quarterly growth in first-quarter GDP revised to 0.6873% +/- 3% in the "final" estimate, up from 0.6496% in the "preliminary" estimate, a change that was little more than statistical noise. Annual growth revised to 1.91% from the previously-reported 1.90%. While nominal growth was boosted slightly through the use of a gimmicked narrowing of the trade deficit (net exports account), such was offset by an increase in the GDP implicit price deflator (annualized inflation rate) from 4.0% to 4.2%.
Of some significance, historical GDP from 2004 to date will go through an annual revision on July 27th, along with the release of the "advance" estimate of second-quarter GDP. While prior history will show weaker economic growth than previously reported, it is a fair bet that the distribution of the revisions somehow will avoid creating a heretofore unreported quarterly GDP contraction.
Second Leg of June Consumer Confidence Falls. Following June's Conference Board measure turning negative on both a monthly and annual basis, the University of Michigan sentiment measure also declined for the month, dropping 3.4%. Year-to-year change on a monthly basis slowed to 0.5% from the prior month's 11.6% gain, but the three-month moving average change was a gain of 3.7%, up from 3.3% the month before. As lagging indicators of economic activity, these measures of consumer outlook confirm that the economy has been in trouble.
Durable Goods Orders Annual Growth Remains in Recession Territory. Seasonally-adjusted May durable goods orders declined by 2.8% (2.3% net of revisions) for the month, following a 1.1% increase in April (previously 0.6%). On an annual basis, orders were up by just 0.3% from the year before, which was a contraction after adjustment for inflation. New orders for nondefense capital goods fell by 8.3% for the month, following April's 0.1% decline, with annual change a gain of 1.4%.
M2 Revisions Take Notch Out of Ongoing M3 Growth. The Fed seems to have trouble counting time deposits. Downward revisions to large time deposits (greater than $100,000) during the last month have been significant, historically, but have had no meaningful impact on near-term annual M3 growth. The revisions to small time deposits, however, have reduced recent reported annual M2 growth. Where M3 is built upon M2, that has impacted M3, but not significantly.
Annual M2 growth rates for March, April and May, respectively, were 6.1%, 6.5% and 6.7%, before revision, and 5.6%, 6.1% and 6.3%, after revision. Annual SGS Ongoing M3 growth rates for March, April and May, respectively, were 11.7%, 12.8% and 13.3%, before the M2 revisions, and 11.4%, 12.5% and 13.1% after.
For June, two and a half weeks of reporting suggest the monthly annual growth rate will hold about 13%, which reflects some unusual downside volatility in the weekly, large time deposit estimates. A formal, preliminary estimate for June will be published on the Alternate Data Series tab on July 9th, and in the upcoming newsletter.
Week ahead: Odds favor a downside surprise in June payroll growth and an upside surprise in the unemployment rate. The wild card in the June report always is the Bureau of Labor Statistics' inability to adjust the data for shool-year seasonal variations.
Further details will follow in the newsletter.
The June/July "Shadow Government Statistics" monthly newsletter should be posted during the week of July 9th, following the release of the June employment data on the preceding Friday. An e-mail advice of same will be sent.