Mixed Signals: New Home Sales, Jobless Claims, LEI, Manufacturing

Jobless Claims
-377,000 for week ended January 21, seasonally adjusted
-Up 21,000 from previous week’s 352,000
-4-week moving average was 377,500, down 2,500
-The bouncy week-to-week is an effect created in part by the 4-day week for Christmas, New Year’s Day and the MLK holiday. That said a 4-week average of 377,500 does not indicate a healthy labor market. Keep in mind that a large percent of Jobless Claims are laid off temps.

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

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.