THE BASIS POINT

GDP Worse, Jobs Better, Home Prices Worse

GDP
As I have discussed here and in my weekly newsletters, we are seeing today another instance of revision of very important macroeconomic data.

BEA’s final GPD for 3Q2011 is now 1.8%. It started at 2.5% and was first revised to 2.0%. This “final” GDP will continue to be revised for years to come making one wonder WTF?

Some of the source of these revisions are understandable because investments, exports and imports only have two months’ data when the first release is issued necessitating guessing at the last month of the quarter.

Rick Davis of Consumer Metrics Institute has written extensively about this making the case that some of what BEA does lacks transparency because they use deflators (adjustments for inflation) which are out of line with CPI and PPI and for which BEA offers not explanation as to their primitive data or methods.

Initial Jobless Claims
-364,000 for week ended December 17
-Down 4,000 from previous week’s revised 368,000 (was 366k)
-4-week moving average was 380,250, down 8,000
-Below 400k signals improving jobs picture
-Average jobless claims since 2000 is 390k, so 1-week and 4-week numbers are less. Great trend.
-Continuing Claims for the week ended 12/10 were 3,546,000, the lowest level since GDP started back up.

Consumer Sentiment
Consumer Sentiment for December is 69.9 up from 64.1 in November. This is not hard data but a survey intended to measure predisposition to spend.

Leading Economic Indicators
LEI for November was +0.5%. Previous was +0.9%.

This is a rehash of 10 other bits of data. It is very much influenced by monetary policy (rates and money supply.) It is intended to forecast GDP growth 3-6 months in the future.

FHFA Home Price Index
Index level for October was -0.2% month/month and -2.8% year/year. Consensus for October was +0.3%. Home prices have not yet bottomed out. Add to that the admission yesterday by NAR that it had been overestimating Existing Home Sales for 5 years and one does not get imbued with confidence. This index isn’t the most credible barometer either because it only includes homes with Fannie/Freddie loans. Here’s the full report.

Corporate Profits
3Q2011 Corporate Profits were +6.2% year/year.