New Home Sales (December 2011)
-New Home Sales for December were 307,000 (seasonally adjusted, annualized)
-Previous was 315,000. Consensus was 320,000
-Down 2.2% since November, Down 7.3% since December 2010
-Average sale price $266,000
-Estimated 302,000 new homes were sold in 2011, down 6.2% below the 2010 figure of 323,000
-Full report
-No surprise here – this is still weak.

Leading Economic Indicators
-Leading Indicators, Month/Month change +0.4%.

Forget the data here. What is notable is that money supply has been removed from LEI. This goes hand-in-hand with yesterday’s FOMC announcement that short-term rates would stay where they are for at least 2 more years. This is an admission that monetary policy has been ineffective as a stimulation force on the economy. That is, to me, an astonishing admission.

Durable Goods Orders (December 2011)
-New Orders, Month/Month 3.0%
-Ex-transportation, Month/Month +2.1%
-This is indicative of continued growth in manufacturing.

Chicago Fed Index of National Activity
-Index level was +0.17 for December

Kansas City Fed Regional Manufacturing Index
-Level was +7 for December

GDP
I want to correct what I wrote yesterday about the forecast for GDP. The Consumer Metrics index spiked in June-July. Since this seems to lead GDP by three month this indicates a fairly strong (3.5% or more) increase in 4Q2011 GDP. The subsequent slide down in the Consumer Metrics Index indicates a weak 1Q2012.

While 315,000 is better than 307,000 the fact is that both are poor. Still lots of excess inventory created during the housing bubble to be sold, and 2011 looks to be the worst year in history for sales. On the optimistic side: this is the best since April, builder confidence is up, and new construction jumped last month.

Durable Goods Orders
-DG Orders, Month/Month change +3.8%
-DG Orders, Year/Year Change +12.1%
-Ex-transportation, Month/Month +0.3%
-Ex-transportation, Year/Year +7.2%
-Much of the overall gain is in aircraft

Personal Income and Spending
Personal Income, Month/Month +0.1 %
Consumer Spending, Month/Month +0.1 %
Core PCE price index, Month/Month +0.1 %
Core PCE price index, Year/Year 1.7 %

PCE is a measure of inflation geared for the consumer, and the Core numbers above exclude volatile food and energy prices. Real (inflation adjusted) wages are declining. The economy continues to leave the average family behind. In fact, a good part of the increase in Personal Income this year has been from the decline in Social Security contributions, money that has to be made up from somewhere at some time in the future.

Dallas Federal Reserve Manufacturing Survey
The Production Index fell from +4.1 to -5.1. This is the first negative reading in 2 years. This is a monthly survey of manufacturers in Texas regarding their operations in the state conducted by the Dallas Federal Reserve Bank.

The weekly “New Pact to Make Everything in the EU OK” story is out today rallying equities and hurting Treasuries. The problem is that the situation is getting worse and these stories that a solution is near obfuscate reality.

Housing
-New Home Sales (seasonally adjusted annual rate) 313,000.
-Previous was 295,000. Consensus was 302,000.

MBA Mortgage Applications
-Purchase Index, Week/Week +6.4 %
-Refinance Index, Week/Week +4.4 %
-Composite Index, Week/Week +4.9 %
-The is week/week data and the previous week had a holiday making this data of minimal value.

Chicago Fed National Activity Index
-This is a weighted average of 85 existing monthly indicators of U.S. economic activity.
-Index level -.43
-Previous was +.02
-3-Month Average -.28

Richmond Fed Manufacturing Index
-August index change: -10 (vs. -1 for July)
-Full report
-More evidence supply side was more confident than the demand side. Now both are pulling back.

New Home Sales
-Seasonally Adjusted Annual Rate: 298,000
-This was below previous, below consensus, and 5mo low
-Total new homes for sale is at at 50 year low
-Sales were down in Northeast and West and up in South
-163,000 of those 298,000 sales were in the South
-Details here
-People appear to be moving toward affordability and jobs
-Builders have little reason to build with tough financing and soft values
-Homebuilding is a major contributor to jobs and this data offers no relief for unemployed construction workers and the jobs market in general.

May S&P Case-Shiller Home Price Index
-20 city composite, Month/Month: +0.6%
-20 city composite, Year/Year: -4.5%
-20 city composite prices down -32.3% from June/July 2006 to May 2011
-Average US home prices at summer 2003 levels
-Housing will still suffer until jobs pick up and post-bubble inventory is cleared
-May Case Shiller Charts Below & here’s full report

Consumer Confidence
Consumer Confidence increased from 58.5 to 59.5. An increased percentage of those surveyed said that they were having trouble finding jobs. To some extent, increased Consumer Confidence (which is a survey of attitudes rather than hard data) reflects lower gasoline prices.

Details are avialable from the Conference Board.

Retail Sales
ICSC-Goldman Store Sales
- Store Sales – Week/Week change +0.3 %
- Store Sales – Year/Year +4.2 %

Redbook Store Sales
Store Sales Year/Year change +3.5 %

Home Sales
- May New Home Sales: 319,000 (annualized)
- Down 2.1% since April, up 13.5% since May 2010
- Months of supply at 6.2 months, lowest reading since April 2010
- Median new-house price $222,600, down 3.4% since May 2010

This data along with Bernanke’s press conference yesterday is hammering equities and resulting in Treasury buying meaning higher mortgage and Treasury prices and lower rates. The growing consensus is that both Keynesian deficit spending and aggressive Fed monetary policy have done almost nothing to get solid gains to either GDP or the jobs market. Worse, the consumer has no confidence that the the situation will get better any time soon. This doesn’t encourage things such as home buying.

Bonds Rise, Rates Fall
-Case Shiller: U.S. Home Prices Fall to 8-Yr Low (S&P)
-Consumer Confidence Drops To 6-Mo Low In May (WaPo)
-Chicago area manufacturing 2nd biggest 1mo drop since Oct 08 (WSJ & ISM)
-Fed’s preferred consumer inflation measure (PCE) flat in April (BEA)
-April Pending Home Sales Drop After 2 Monthly Gains (NAR)
-2nd of 3 GDP readings 1.8% 1Q2011, down from 3.1% 4Q2010 (BEA)
-Prices on homes with Fannie/Freddie loans fall 2.5% in 1Q2011 (FHFA)
-April Durable Goods Fall 3.6% (Reuters)
-Greece default risk benefits U.S. bonds (last week. today’s update below.)

Bond & Rate Neutral
-April UofM Consumer Sentiment regains March losses (Bloomberg)
-Weekly jobless claims up 10k but continuing claims drop 46k (DOL)
-April New home sales up 7.3% but down 23% since April 2010 (Census)

Bonds Fall, Rates Rise
-Bonds lose slightly as stocks rally on Greece aid hope (Marketwatch)

Retail Sales:

-ICSC Goldman was +3.1% year over year.
-Redbook was +3.4% year over year.
-The Consumer Metrics Institute of online sales while still showing contraction has improved in the past week.

Recent weeks Retail Sales have been impacted by bad weather and high gasoline prices. The year over year should be a better metric but is sometimes bloated by “survivor bias” which eliminates the data of stores which were in business a year ago and are not in business now.

Retail Sales is a great early indicator of GDP. I see here a picture of modest growth.