Thursday, May 01, 2008

More mixed economic data

The economic data on Thursday was modestly negative, but mixed and not indicative of a worsening recession.

Real personal Income was essentially flat and real personal spending was up only slightly in March. Disposable income and spending were up. Real disposable income was flat, but actually down too slightly to show up in the rounded numbers. Real spending was up slightly. These were not great numbers, but more indicative of a slowdown than a full-blown recession. Real disposable income, which is one of the key metrics used to judge the onset of a recession is higher than its level in the Fall or January, so it is not yet indicating that a recession is clearly underway. But, it will feel like a recession to a lot of people since per capita real disposable income is in fact a little below its level in September.

Construction spending declined in March, but actually gained for non-residential construction.

The ISM Manufacturing report was essentially unchanged. The PMI was unchanged and slows a modest contraction in the manufacturing sector. New Orders continued to contract at the same modest rate. Production continued to contract, but showed a little improvement. Employment contracted at a faster rate. One bright spot was that the backlog of orders switched from contraction to modest growth. Also, exports expanded and at a faster rate.

The weekly unemployment claims numbers were a mixed bag, with claims up moderately, but the more-accurate 4-week moving average down modestly. Both numbers remain elevated, but still moderately short of the traditional 400,000 recession level. Continuing claims did finally poke above the psychologically important 3 million level, and the 4-week moving average moved higher.

Overall, it was moderately gloomy data, but the continuing boom in non-residential construction and real disposable income hanging near its peak suggest that the economy still isn't quite ready to move beyond the edge of a recession into outright recession.

-- Jack Krupansky

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