The Economy at a Glance

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» Business Activity
GDP increased strongly in Q3, rising at an annual rate of 3.9 percent and following a Q2 increase of 4.6 percent. Federal government spending, exports, and business capital outlays drove growth in Q3. Improvements in business activity have been widespread as industrial production has increased in 50 of the last 64 months and hovers just below a record high, the service sector has expanded 58 straight months, and durable goods orders have increased year-over-year in 51 of the last 58 months. Furthermore, the Small Business Optimism Index jumped to a seven and a half plus year high (highest since February 2007); however, despite the recent rally, the Index at 98.1 remained slightly below readings that have normally been associated with expansion and below its pre-recession average of 100 from 1973 through 2007.
According to the second estimate, real gross domestic product or GDP (the output of goods and services produced within the U.S.) expanded at an annual rate of 3.9 percent in Q3 after advancing in the previous quarter by an even greater 4.6 percent. GDP has rebounded strongly over the last two quarters after contracting in Q1 for the first time in 3 years, or 12 quarters. Economists had remarked that the weak showing in Q1 was largely the result of some temporary headwinds, including the cold winter, weak exports, and reduced inventory-building. Growth has exceeded 3.0 percent in four of the past five quarters; however, after including Q1’s contraction the economy has expanded just 2.0 percent so far in 2014, just below its 2.3 percent average annual performance during the five-year-old recovery. In Q3, federal government spending, exports, and business capital outlays drove growth. Business investment increased at a 7.1 percent rate, though it slowed from Q2’s 9.7 percent, and equipment spending increased a solid 10.7 percent. Federal government outlays surged 9.9 percent, including a 16.0 percent jump for defense, after falling 0.9 percent in Q2. Exports rose 4.9 percent, compared to 11.1 percent increase in Q2. Consumer spending, which accounts for more than two-thirds of the economy, increased 2.2 percent, slowing from 2.5 percent in the previous quarter. Businesses also substantially reined in their stockpiling after rapidly adding to inventories in the previous quarter. Economist James Marple of TD Economics and Dean Maki of Barclays Capital note that the healthy Q3 gains from trade and defense spending are unlikely to continue as the strong dollar is expected to hamper exports and the Eurozone’s economy is slowing.

Rising in 12 of the last 15 months, the Industrial Production Index ticked down jumped in October from a record high, decreasing a slight 0.1 point to 104.9 but was up 4.1 points from a year ago. Additionally, the Index has risen in 50 of the last 64 months since bottoming at 83.5 in June 2009.

New orders for manufactured durable goods rose sequentially for the first time in three months, increasing 0.3 percent in October after falling 0.7 percent the previous month but was up 5.5 percent from a year ago, marking the 51st year-over-year increase in the last 58 months. Excluding the volatile transportation component (aircraft orders), durable goods orders decreased sequentially for just the fourth time in the last 14 months, declining 0.9 percent in October.

The service sector grew (exceeding 50 on the ISM Non-Manufacturing Index) for the 58th month in a row with the pace of growth accelerating to near August’s nine-year high. In November, the Index jumped 2.2 points to register at 59.3 and was 5.2 points above its level of a year ago.

Up in 10 of the last 13 months, the Small Business Optimism Index jumped to a seven-and-a-half-plus year high (highest since February 2007), jumping 2.0 points in November to 98.1, and was 5.6 points above its level of a year ago. Despite the recent rally over the last 13 months, the Index remained slightly below readings that have normally accompanied an expansion and below its pre-recession average of 100 from 1973 through 2007. NFIB Chief Economist said, “Expectations for business conditions six months out rose a huge 16 percentage points while expectations for real sales volumes rose 5 percentage points. Unfortunately, the Index did not sprint past the average which is typical of a strong recovery before settling back down. Instead it’s been a slow slog just to reach this point. It’s a little early to declare a breakout. This performance will have to be consolidated by several more positive readings before owners are confident to hire more employees and expand their business. But it’s a good sign that comes at a good time for small business...”


Economic Indicators 
» Employment
Total U.S. nonfarm employment grew in November for the 50th consecutive month as a robust 321,000 jobs were created, accelerating from the 243,000 jobs that were created the previous month and marking the largest one month expansion in 34 months. Notably, Novemberís tally marked the 10th straight month that job gains surpassed the 200,000 level, the longest such stretch since the 19 months that ended in March 1995. Additionally, job totals were revised upward for the previous two months by a combined 44,000. In November, the private sector expanded for a record 57th consecutive month, adding 314,000 jobs, while the government sector gained 7,000. The unemployment rate was unchanged in November at 5.8 percent, matching last monthís 75-month low and was 1.2 percentage points below its 7.0 percent rate of a year ago. With just 119,000 workers entering the labor force in November, the labor force participation rate held steady at 62.8 percent, just above Septemberís 36-plus year low of 62.7 percent. The number of planned job cuts announced by U.S. companies dipped for the third time in the last four months, and was down over 20 percent from its level of a year ago. Through 11 months, job cuts are on pace to finish 2014 with the lowest year-end total since 1997.
Total nonfarm payroll employment expanded for the 50th consecutive month, increasing by a robust 321,000 in October, accelerating from the 243,000 jobs that were created the previous month and marking the largest monthly expansion in 34 months. November’s tally marked the 10th straight month that job gains surpassed the 200,000 level, the longest such stretch since the 19 months that ended in March 1995. Additionally, the job figures for September were revised upward from 256,000 to 271,000, and those from October were revised upward from 214,000 to 243,000. Job growth during the 50-month expansionary streak has averaged approximately 195,000 jobs per month. Economists believe that approximately 125,000 jobs must be created per month just to keep up with new workers entering the workforce. Led by job gains in professional and business services (+68,000), retail trade (+50,000), food health care (+29,000), manufacturing (+28,000), services and drinking places (+27,000), construction (+20,000), financial services (+20,000), and transportation and warehousing (+17,000), private-sector payroll employment increased for the 57th straight month, rising by 314,000 in November after gaining 236,000 the previous month. Approximately 10.9 million jobs have been created in the private sector over the last 57 months, an extension of the longest streak on record for private sector job growth. Meanwhile, government employment has declined in 31 of the last 54 months, although it added 7,000 jobs the previous month and has grown modestly 10 straight months. Over this 54-month period, government employment has fallen by about 1.1 million. The economy (both the private and government sectors) has fully recovered the 8.7 million total jobs lost between the start of the recession in December 2007 and February 2010 plus has created an additional 1.7 million jobs.

The unemployment rate was flat in November after dropping the previous month to a 75-month low (lowest since July 2008) and was down 1.2 percentage points from its 7.0 percent rate of a year ago. The underemployment rate (a.k.a. U-6 unemployment rate), a measure of labor underutilization which accounts for part-time workers due to economic reasons as well as discouraged job seekers, dipped to a six-plus year low (lowest since September 2008) after declining for the ninth time in the last 11 months. The underemployment rate decreased 0.1 percentage points to 11.4 percent and was down 1.7 percentage points from a year ago.

With the household survey showing that only 119,000 workers entered the labor force in November, the labor force participation rate, the share of working-age people in the labor force held steady at 62.8 percent, just above September’s 62.7 percent, which had marked the lowest level since Jimmy Carter was president over 36 years ago (February 1978) when the country was in the midst of stagflation. The aging of America, a modest jobs recovery from the last recession which has kept workers in school longer, and the rising number of workers on disability insurance are theories offered to explain the fall in the labor participation rate since it peaked at 67.3 percent in 2000.

The number of long-term unemployed (jobless for 27 weeks and over) was decreased from 2.9 to 2.8 million, representing 30.7 percent of the unemployed population. Since April 2010, the number of long-term unemployed has fallen by about 3.9 million, and in the last year, by approximately 1.2 million.

The Labor Department reported that the average work week for production and nonsupervisory employees on private nonfarm payrolls was unchanged in November at 33.8 hours, matching a seven-plus year high (highest since June 2007). Year-over-year, the average work week rose by 0.1 hour.

Challenger, Grey & Christmas reported a plunge in the number of planned job cuts by U.S. companies for the third time in the last four months. In November, planned jobs cuts dipped 29.8 percent to 35,940 after soaring 67.9 percent the previous month and were down 20.7 percent from its level of a year ago and was just 17.9 percent above September’s 14-plus year low (since June 2000). Heading into the final month of 2014, employers have announced 450,531 job cuts to date, which 5.8 percent lower than the 478,428 cuts at the same point in 2013. Job cuts are on pace to finish 2014 with the lowest year-end total since 1997. Year-to-date, the computer industry remains the top job-cutting industry with 58,207 planned layoffs, nearly double the 29,558 job cuts announced by computer firms between January and November 2013. John A. Challenger, CEO of Challenger, Gray & Christmas said, “While retailers have cut about 9,500 jobs over the last two months, this is an area that continues to expand. Right now, these employers are adding tens of thousands of seasonal workers to help with the holiday rush. It is true that these jobs are temporary and most will be eliminated in the new year. However, government data show that employment in the sector has nearly reached pre-recession levels and continues to grow. And, before dismissing all of these new jobs as low-skilled, low-paying sales clerk and cashier jobs, remember that the shift toward online shopping means retailers are hiring more and more app developers, IT security professionals, online and social media marketing teams, logistics engineers, as analysts to collect, sort and interpret all of that data collected with each mouse click.”


Economic Indicators 
» Consumer
Consumer spending, representing roughly 70 percent of U.S. economic activity, advanced 0.2 percent in October and was up 3.6 percent from a year ago and has increased in 60 of the last 66 months. October's results were boosted by spending on non-durable goods such as clothing and on services such as utility payments and rent. Plunging gasoline prices and a strengthening labor market have supported consumer discretionary spending. Retail sales, which account for 30 percent of consumer spending, rose 0.3 percent in October and 4.1 percent from a year ago and have sustained year-over-year increases for 60 consecutive months. Sales were brisk at clothing stores, rising 0.5 percent, and increased solidly at furniture and health and personal care stores. Consumers also spent more at bars and restaurants for the sixth month in a row, a positive trend that indicates Americans are growing more confident as people eat out more when the economy is healthier. Boosted by the apparel and discount sector, the Thomson Reuters Same Store Sales Index advanced year-over-year for the 63rd consecutive month, growing in November at a robust 5.0 percent clip, near Septemberís second highest growth rate in three years. Rising in eight of the last 12 months, the Conference Board Consumer Confidence Index fell from a seven year high but was up over 16 points from a year ago. With the Index registering at 88.7, it slipped back below the healthy 90.0 level where it has been stuck in all but three months since the recession began in December 2007.
Consumer spending, up in 60 of the last 66 months, rose for the eighth time in the last nine months, increasing 0.2 percent in October and was up 3.6 percent from a year ago. October's results reflected a 0.2 percent increase in spending on non-durable goods such as clothing and a 0.3 percent rise in spending on services such as utility payments and rent. However, consumers spent less on big-ticket items such as cars and appliances with spending on durable goods such as autos falling 0.2 percent in October. Plunging gasoline prices as well as a strengthening labor market have supported consumer spending, which should help to shield the economy from slowing growth in China and the euro zone, as well as a recession in Japan.

Personal income, a key pillar of consumer spending, rose in October for the 20th time in the last 21 months, advancing 0.2 percent for the second consecutive month. Furthermore, it has risen in 53 of the last 60 months and 4.1 percent year-over-year. With income growth matching consumer spending, the saving rate was unchanged at 5.0 percent. The saving rate averaged 4.9 percent in 2013, down from 7.2 percent in 2012. That had been the highest level in nearly two decades as Americans worked to boost savings following the 2007-2009 recession.

U.S. retail and food services sales, up sequentially in 18 of the last 23 months and 38 of the last 50, rose 0.3 percent in October after declining 0.3 percent the previous month. Additionally, retail sales were up a solid 4.1 percent from a year ago and have sustained year-over-year increases for 60 consecutive months.
Sales were brisk at clothing stores, rising 0.5 percent, and increased solidly at furniture and health and personal care stores. Consumers also spent more at bars and restaurants for the sixth month in a row, a positive trend that indicates Americans are growing more confident as people eat out more when the economy is healthier. However, sales fell 1.6 percent at electronics and appliance retailers after surging in September on the rollout of the iPhone 6 and they fell 1.5 percent at gasoline stations, a reflection of falling global oil prices.

For the 63rd consecutive month, the Thomson Reuters Same Store Sales (SSS) Index increased year-over-year with the pace of growth accelerating to near September’s second highest growth rate in three years (since September 2011). The Index advanced sharply at a 5.0 percent clip in November after rising a strong 3.9 percent the previous month. Three percent year-over-year growth generally indicates health among U.S. consumers, and the Index has grown at least as much in 36 of the last 49 months. The apparel retailers posted their strongest gain for 2014, followed by the discount sector.

Rising in eight of the last 12 months, the Conference Board Consumer Confidence Index declined from a seven year high (highest since October 2007), decreasing 5.4 points in November to 88.7, but was up a notable 16.7 points from a year ago. A reading of 90 generally indicates a healthy economy, and boosted by recent gains, the Index has surpassed that level in three of the last five months since the recession began in December 2007. The Present Situation Index declined from 94.4 to 91.3, while the Expectations Index decreased sharply to 87.0 from 93.8 in October. Director of Economic Indicators at The Conference Board said, “Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook. Consumers were somewhat less positive about current business conditions and the present state of the job market; moreover, their optimism in the short-term outlook in both areas has waned. However, income expectations were virtually unchanged and gas prices remain low, which should help boost holiday sales.”


Economic Indicators 
» Housing
Home sales continued their recent upward trend in October as existing home sales advanced for the sixth time in the last seven months, and new home sales advanced for the fifth time in the last seven months. Existing home sales increased 1.5 percent in October and were up year-over-year for the first time in 12 months following 29 straight months of year-over-year increases. Sales of new homes edged up 0.7 percent in October and were up 1.8 percent from a year ago. While home sales have benefited from steady job creation, rising rental rates, and historically low mortgage rates, issues related to limited inventory and higher home prices have created some headwinds for existing home sales. Tight inventory over the last year has kept the month supply of existing homes for sale near January 2013ís seven-plus year low. 30-year fixed rate mortgage rates continued their slide into November by falling for the sixth time in the last seven months to hover just 65 basis points above December 2012ís record low of 3.35 percent. Although home prices have advanced in 23 of the the last 30 months and were up nearly 5 percent from a year ago, they remained approximately 15 percent below their April 2006 peak.
Existing home sales advanced for the sixth time in the last seven months, increasing 1.5 percent to a seasonally adjusted annual rate of 5.26 million and were 2.5 percent higher than its annual rate of a year ago. This marked the first time in 12 months that sales were above year-ago levels following 29 consecutive months of year-over-year increases. The National Association of Realtors® (NAR) chief economist said, “Sales activity in October reached its highest annual pace of the year as buyers continue to be encouraged by interest rates at lows not seen since last summer, improving levels of inventory and stabilizing price growth. Furthermore, the job market has shown continued strength in the past six months. This bodes well for solid demand to close out the year and the likelihood of additional months of year-over-year sales increases.”

Month’s supply of existing homes based on the current sales rate declined to an eight month low after falling for the second straight month and hovered only 18.6 percent above January 2013’s seven-plus year low (since May 2005 near the peak of the housing boom). Total housing inventory at the end of October fell 2.6 percent to 2.22 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace, down 3.8 percent from 5.3 months in September but up 4.1 percent from 4.9 months a year ago. Unsold inventory was 5.2 percent higher than a year ago, when there were 2.11 million existing homes available for sale, but was 47.8 percent below the record of 4.04 million in July 2007.

Rising in five of the last seven months, new home sales edged up 0.7 percent in October to an annual rate of 458,000 and were up 1.8 percent year-over-year. October’s annual rate was just 1.8 percent below October 2013’s six-plus year high of 474,000 and was 64.7 percent above August 2010’s record low annual rate (since 1963) of 278,000. The number of building permits issued for new housing units jumped in October to a 76-month high (highest since June 2008) after advancing in three of the last four months. The number of permits rose 5.9 percent in October to an annual rate of 1,092,000 and was up 5.1 percent from a year ago.

Since sagging to its cyclical low of 134.07 in March 2012, the S&P/Case-Shiller Home Price Index has advanced in 23 of the last 30 months. In October, though, the Index edged down less than 0.1 percent to 173.72 but was up 4.9 percent from a year ago. Still, the Index was 15.2 percent below its April 2006 peak and remained mired at nine-and-a-half-plus year levels (below December 2004 levels).

Since falling to a record low, average monthly rates on a 30-year fixed rate mortgage have rallied in 12 of the last 23 months although edged down in November for the sixth time in the last seven months. 30-year mortgage rates declined 4 basis point in November to 4.00 percent, 26 basis points lower than a year ago but 65 basis points higher than when they bottomed out at a record low rate (since 1971) of 3.35 percent in November and December of 2013. A record low had been established 14 times over the last 48 months and in 13 of the last 39 months. Since 1971, the 30-year fixed rate has been below 4.0 percent in only 17 months, and those have all been in the past 35 months.


Economic Indicators 
» Financial
Major U.S. stock market indices rallied in November for the second consecutive month and hit record highs near month-end. U.S. markets have been boosted by better-than-forecasted economic data, including an upward revision for Q3 U.S. gross domestic product. Itís also been aided by Chinaís decision to cut interest rates, as well as fresh stimulus from the Bank of Japan and European Central Bank. Furthermore, falling fuel prices have been a boon to consumer consumption and to higher spending patterns going into the holidays. The Dow Jones Industrial Index, up in 23 of the last 30 months, rallied 2.5 percent in November, while the S&P 500 index, up in 24 of the last 30 months, also rallied 2.5 percent in November. Amid worries over the Eurozoneís economy and weak inflationary pressures globally, 10-year treasury yields dipped during November to near a 52-week low and have fallen in seven of the last 11 months. Yields remain historically low, likely reflecting the Federal Reserveís near zero-interest rate policy, investorsí ongoing concerns about the strength of the economic recovery, and modest inflation. Demand for credit strengthened for small businesses in Q3 for the 12th time in the last 15 quarters and at the fastest pace in nine years, while it strengthened for medium to large businesses in Q3 for the 13th time in the last 15 quarters and at the fastest pace in nine quarters. Credit standards for small businesses eased in Q3 for the 16th time in the last 17 quarters, while they eased for medium to large businesses in Q3 for the 18th time in the last 19 quarters.
Rallying in 23 of the last 30 months and establishing record highs in 16 of the last 18, major U.S. stock market indices rebounded in November for the second consecutive month, even hitting record highs at the end of the month, after falling in two of the previous three months. U.S. markets have been boosted by better-than-forecast economic data, including an upward revision for Q3 U.S. gross domestic product. It’s also been aided by China’s decision to cut interest rates, as well as fresh stimulus from the Bank of Japan and European Central Bank. Furthermore, falling fuel prices have been a boon to consumer consumption and to higher spending patterns going into the holidays. The Dow Jones Industrial Index (DJI) rallied 2.5 percent in November, hitting a record high to close month, and rising in 23 of the last 30 months and 10.8 percent from a year ago. The S&P 500 Index also rallied 2.5 percent in November and hit a record high near the end of the month. Additionally, the Index was up in 24 of the last 30 months and 14.5 percent from a year ago.

Amid worries over the Eurozone’s flagging economy and alarmingly low inflation as well as weak inflationary pressures in the U.S., 10-year treasury yields dipped in November near a 52-week low and have fallen in seven of the last 11 months since climbing to a 17-month high (highest since July 2011). Yields declined 15 basis points in November to close the month at 2.19 percent, only 10 basis point above its 52-week low and just 79 basis points above its record low rate of 1.40 percent which was established near the end of July 2012. Bond yields remain low by historical standards, reflecting the Federal Reserve’s near zero-interest rate policy, investors’ ongoing concerns about the prospects for a strong economic recovery, subdued inflationary environment, and geopolitical concerns. Amidst global uncertainly and turmoil, U.S. Treasuries remain the world’s favored refuge by investors.

In its last meeting, the Fed stated that it will maintain the target range for the federal funds rate at 0 to 1/4 percent for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2.0 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. The Fed has maintained the target range for the federal funds rate at 0 to 1/4 percent for 48 consecutive periods, which dates back to December 2008. Also, in its last meeting, the Fed announced the conclusion to its monthly bond-purchase program (of longer-term U.S. treasuries and mortgage-backed securities) as the U.S. economy has gained traction. But weaker growth in Japan and the Eurozone has pushed both the Bank of Japan and the European Central Bank to step up stimulus.

According to the Senior Loan Officer Survey, the net percentage of banks tightening credit standards for small businesses fell in Q3 2014 by 8.3 percent, marking the 16th time in the last 17 quarters that credit standards have eased for small businesses. The recent easing for small businesses has stood in strong contrast to the previous 14 quarters in which credit standards tightened in every quarter but one. Medium to large businesses have faced an easing of credit standards in 18 of the last 19 quarters with a net 10.7 percent facing an easing of credit standards in Q3. Demand for credit by small businesses as well as medium to large businesses improved as compared to the previous quarter. Demand for credit by small businesses strengthened by 25.0 percent in Q3, the fastest pace in nine years, and has improved in 12 of the last 15 quarters. Demand for credit by medium to large businesses has strengthened in 13 of the last 15 quarters, improving 30.7 percent in Q3, the fastest pace in nine quarters. An easing of credit standards or rise in demand for credit by businesses may signal faster economic growth.


Economic Indicators 
» Inflation
The Consumer Price Index (CPI) was flat on a monthly basis in October after increasing a mere 0.1 percent the previous month. Gasoline and other energy indexes declined, offsetting increases in shelter and an array of other items to leave the broad inflation index unchanged. The annual rate held steady for the second straight month at 1.7 percent, which was only 0.7 percentage points above last Octoberís four-year low and below the Fedís 2.0 percent target rate that is considered to be moderate. The Core CPI (removing volatile prices of food and energy) rose by 0.2 percent after edging up by 0.1 percent the previous month, while the annual rate ticked up from 1.7 to 1.8 percent, 0.2 percentage point above Februaryís 33-month low. In November, energy prices plummeted to four-plus year low as both gasoline and crude oil prices have retreated sharply over the last five months. Falling energy prices, subdued annual CPI, tame core inflation, and below normal utilization rates for physical capital should continue to temper inflationary concerns, enabling the Fed to keep interest rates at historically low levels for some time to stimulate economic growth. Down in six of the last eight months, the Baltic Dry Index (a barometer of ocean freight shipping costs) slid more than 19 percent in November and was down over 36 percent from a year ago.
The Consumer Price Index (CPI) was flat on a monthly basis in October after increasing a mere 0.1 percent the previous month. Gasoline and other energy indexes declined, offsetting increases in shelter and an array of other items to leave the broad index unchanged. The gasoline index fell for the fourth month in a row, declining 3.0 percent, and the indexes for natural gas and fuel oil also decreased. The food index rose slightly in October, with major grocery store food groups mixed. On an annual basis, the Index held steady for the second straight month at 1.7 percent, below the Fed’s 2.0 percent inflation target and just 0.7 percentage points above last October’s four-year low. The Core CPI Index, which removes the effects of volatile food and energy prices, rose by 0.2 percent after edging up by 0.1 percent the previous month, while the annual rate ticked up from 1.7 to 1.8 percent, 0.2 percentage point above February’s 33-month low. Besides the shelter index, airline fares, household furnishings and operations, medical care, recreation, personal care, tobacco, and new vehicles were among the indexes that increased.

The Producer Price Index (PPI) rose 0.2 percentage points on a monthly basis in October after declining 0.1 percentage points the previous month. A 26.1-percent jump in margins for fuels and lubricants retailing accounted for nearly 40 percent of the 0.5 percentage point increase in the index for final demand services. On an annual basis, the Index fell from 1.6 to a modest 1.5 percent, well below the cyclical peak of 7.1 percent that was reached in July 2011.

The capacity utilization rate, effectively the employment rate of physical capital in the manufacturing, mining, and utilities industries ticked down from a 75-month high (highest since May 2008), decreasing 0.3 percentage points to 78.9 percent in October. Although the capacity utilization rate has risen in 40 of the last 64 months and was 0.7 percentage points higher than prior year, it remained below the long-term average (from 1972-2013) of 80.1 percent; and thus, is not stoking near-term concerns of inflation.

Energy prices plummeted to four-plus year low in November as both gasoline and crude oil prices have retreated sharply over the last five months. Gasoline prices cooled 6.9 percent in November and were down 14.6 percent from a year ago, while crude oil prices cooled 11.0 percent in November and were down 22.2 percent from a year ago. In the final week of November, WTI crude oil spot prices averaged $72.36 per barrel, and retail gasoline prices in the U.S. averaged $2.86 per gallon.

The Euro weakened against the U.S. dollar for the sixth time in the last seven months, down 1.3 percent in November, while the Pound weakened against the U.S. dollar as well for the sixth time in the last seven months, down 2.2 percent in November. Year-over-year, the Euro weakened against the U.S. dollar, down 8.5 percent, while the Pound weakened 4.3 percent. At November close, 1 Euro yielded 1.24 U.S. dollars, and 1 Pound, 1.56 U.S. dollars.

Down in six of the last eight months, the Baltic Dry Index (BDI), which measures the daily average of prices in the spot market to ship raw materials in bulk, retreated 19.3 percent in November and was down a considerable 36.7 percent from a year ago.


Economic Indicators 
  Economic Indicators    Expand All  
 
      Indicator Latest Trend Date
» Business Activity
Gross Domestic Product3.9%11/25

GDP is the broadest measure of economic activity. Reported quarterly, GDP growth is the percent change in annualized total economic output. The major elements measured by GDP include consumption, investment, net exports, government spending and inventories. One popular definition of a recession is two consecutive quarters of negative percentage change in GDP, although this is not a hard and fast rule.


Industrial Production104.911/17

The Industrial Production (IP) Index, which is tracked by the Federal Reserve Board, measures the real output of the manufacturing, mining, and electric and gas utilities industries. The reference or base period for the index is 2007 at a level of 100. These aforementioned sectors are highly sensitive to interest rates and consumer demand; and thus, industrial production can be an important indicator for forecasting future Gross Domestic Product (GDP) and economic performance.


Durable Goods Order5.5%12/5

Durable Goods Orders primarily measures business spending on products expected to last more than three years such as machinery and computer equipment. The year over year change in order levels is a gauge of future growth for the manufacturing industry and a predictor of GDP growth. A subset of the data, nondefense capital goods orders, is considered a good indicator of business investment spending.


ISM Non-Manufacturing Index59.312/3

This is a composite indicator of three factors (employment trends, prices and new orders) in industries outside of manufacturing such as agriculture, construction, transportation, and retail trade. An index value above 50 signals a favorable increase in these factors and a value below 50 signals an unfavorable decrease.


Small Business Optimism Index98.112/9

This is a monthly index based on a survey of small business owners regarding 10 factors including their future plans for hiring, capital investment, and inventory building, as well as their expectations for future sales, profits, economic trends and credit market conditions. It is a broad indicator of current business conditions in the small business sector.


» Employment
Unemployment Rate5.8%12/5

The unemployment rate for all civilian workers represents the number of unemployed as a percent of the civilian labor force. To qualify as unemployed, a worker must be actively searching as well as physically able to work, but unable to find employment in the previous 4 week period.


Underemployment Rate11.4%12/5

The U-6 unemployment rate is an alternative measure of labor underutilization to the widely referenced U-3, or official unemployment rate. The U-6 rate includes the total unemployed as counted in U-3, plus all persons marginally attached to the labor force (those who would like to and are able to work but have not looked for work in the past year), plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force. 


Non-Farm Payrolls321K12/5

Nonfarm payroll employment is a monthly estimate of the number of paid employees working full-time or part-time in U.S. business and government agencies.  Trends in this figure are considered an indicator of strength and direction of the U.S. economy: increases indicate a growing economy and decreases point to a slowing or contracting economy.


Challenger, Gray, & Christmas - Layoffs Survey36K12/4

A monthly report published by outplacement firm Challenger, Gray, & Christmas on the number of announced large company layoffs. This report can help gauge the strength of the job market, which can be useful in gauging the strength of the overall economy.


Weekly Labor Hours33.812/5

Average weekly hours of production and nonsupervisory workers on private nonfarm payrolls is tracked monthly by the Bureau of Labor Statistics. A rise in weekly labor hours reflects an increase in labor utilization of those employed.


» Consumer
Consumer Spending0.2%11/26

A measure of monthly goods and services purchased by household consumers. The dollar figure represents an annualized, seasonally adjusted level of consumption. The percent change from month to month indicates growth (if positive) or contraction (if negative) in household consumption – a major component of GDP.


Retail Sales4.1%11/14

An estimate of monthly sales for retail and food service firms, based on a random sample of 5,000 companies. The monthly figure is adjusted for seasonality and holiday/trading day differences, and we record the percentage change from the current month compared with the same month a year ago as indicator of trends in discretionary consumer spending.


Thomson Same Store Sales Index5.0%12/4

The monthly SSS index provides a snapshot of U.S. consumer spending relative to expectations ahead of the monthly comps reporting cycle. The index tracks 29 retailers across a variety of specialties, including discounters, department, apparel, teen/kids, and drug stores. Costco® currently has the strongest weighting in the index after Wal-Mart® ceased reporting monthly same store sales results in April 2009.


Personal Income0.2%11/26

A measure of income received from wages and salaries, dividends and interest, rental income, and other business sources. The percent change from month to month indicates growth (if positive) or contraction (if negative). Personal income, a key pillar of consumer spending, tends to display a rising trend during periods of economic expansion, and show a stagnant or slightly declining trend during recessionary times.


Consumer Confidence Index88.711/25

This index is based on a survey of households regarding current and future business and employment conditions, as well as expectations for future income. It indicates consumers’ level of optimism and can affect their likelihood to make purchases – a major component of GDP. A declining trend in this index may indicate a slowdown in consumer spending and a slowdown in economic growth.


» Housing
Existing Home Sales5.26 mil11/20

This is an annualized, seasonally adjusted figure based on the number of existing home and condominium sale transactions that closed during the month. Month to month changes are considered a good measure of demand in the residential real-estate sector.


Existing Home Inventory5.1 mo.11/20

This is an annualized, seasonally adjusted figure based on the number of existing home and condominium sale transactions that closed during the month. Month to month percentage changes are considered a good indicator of activity trends in the housing market. The months supply figure represents the number of months required to sell all current existing home inventory at the current pace of sales activity. The lower this figure, the greater the need for new housing starts and construction activity.


S&P / Case-Shiller Home Price Index173.7211/25

The S&P / Case-Shiller Index is a monthly index that tracks home price trends in 20 major markets across the country. Prices shown are not seasonally adjusted.


New Home Sales458K11/26

This is an annualized, seasonally adjusted figure based on the number of new single family home transaction commitments (e.g. sales for which an agreement was signed) during the month. The level of monthly sales is considered a good indicator of activity trends in housing. Together with existing home sales, trends in housing activity can act as a leading indicator for consumer purchases of household items such as appliances and furniture.


Building Permits1,092K11/26

The Building Permits Survey (BPS) produces estimates of the number of permits issued for new housing units each month. The level of permits issued, which is shown at a seasonally adjusted annualized rate, is considered a good leading indicator of future trends in housing.

 


30-Year Fixed Rate Mortgage4.00%11/30

The 30-year fixed rate loan is the most common loan in the lending markets, and the 30-year interest rate is a good measure for the availability of credit to eligible borrowers in the home lending market. Changes in the mortgage rate impact both the level of new and existing home sales with a few months of lag time.


» Financial
S&P 5002.5%11/30

An index containing 500 American stocks (primarily large cap) across a range of industries, representing approximately 75 percent of the total value of the U.S. stock market. The S&P 500 is the most widely watched index of large-cap U.S. stocks and is considered to be a bellwether for the U.S. economy.


Dow Jones Industrial Average2.5%11/30

A blue-chip index containing 30 of some of the largest and most widely held stocks in America, representing approximately 25% of the total value of the U.S. stock market. The Dow Jones Industrial Average is one of the most popular indexes used to track the health of the U.S. equities market.


13-Week Treasury Bills0.00%11/30

T-Bills are short term U.S. government issued securities that mature in one year or less from their issue date. They are considered to be a nearly credit risk-free investment given their negligible default risk.


10-Year Treasury Notes2.19%11/30

Treasury notes are sold at regularly scheduled public auctions. The competitive bids at these auctions determine the interest rate paid on each Treasury note issue. Usually, bond market investors are forward-looking and this means interest rates on Treasury securities will move in the direction of Fed policy with a lead. As a result, one is more likely to see rising interest rates on Treasury yields during an expansion (and falling yields during economic slowdowns) in advance of policy changes by the Federal Reserve. Generally, stock prices and bond yields (interest rates) move inverse of each other.


Federal Reserve Rates0.25%10/29

The Federal Open Market Committee consists of the seven Governors of the Federal Reserve Board and five Federal Reserve Bank presidents. The FOMC meets eight times a year in order to determine the near-term direction of monetary policy. These meetings occur roughly every six weeks and and can be one of the most influential events for the markets. The interest rate set by the Fed, the federal funds rate, serves as a benchmark for all other rates.


Tightening/(Easing) of Credit-8.3%11/3

The Senior Loan Officer Opinion Survey on Bank Lending Practices addresses changes in the supply of C&I (Commercial and Industrial) loans to businesses. The results reported are based on responses from 60 domestic banks and 24 U.S. branches and agencies of foreign banks. Positive percentages represent a net tightening of credit, while negative percentages represent a net easing. An increase in the net percentage of banks tightening credit standard reflects a decrease in the supply of credit available to businesses to finance business operations (payrolls and inventories) and expansion (plant/equipment and mergers/acquisitions); and thus, may signal slower economic growth.


Demand for Credit25.0%11/3

The Senior Loan Officer Opinion Survey on Bank Lending Practices addresses changes in the demand for C&I (Commercial and Industrial) loans to businesses. The results reported are based on responses from 60 domestic banks and 24 U.S. branches and agencies of foreign banks. Positive percentages represent a net strengthening of demand, while negative percentages represent a net weakening. A rise in demand for credit reflects an increase in financing needs for business operations (payrolls and inventories) and expansion (plant/equipment and mergers/acquisitions); and thus, may signal faster economic growth.


» Inflation
Consumer Price Index1.7%11/20

The Consumer Price Index is a measure of the average price level of a fixed basket of goods and services purchased by consumers. The CPI is divided into two measures, with the ‘core’ rate excluding volatile food and energy costs. The year/year change in core CPI is seen by most economists as the best measure of the underlying inflation rate. The Federal Open Market Committee (FOMC) implements monetary policy to help maintain an inflation rate of 2.0 percent per year. Historically, inflation has averaged about 3.0 percent per year.


Producer Price Index1.5%11/18

The Producer Price Index measures a basket of finished goods purchased by businesses to sell to consumers. The PPI is used as an early indicator of inflation, since it gives some insight into the costs incurred by businesses to produce their goods and services. The most important indicator is the underlying core PPI number, which excludes volatile food and energy prices.


Capacity Utilization78.9%11/17

The Federal Reserve Board constructs estimates of capacity and capacity utilization for industries in manufacturing, mining, and electric and gas utilities. For a given industry, the capacity utilization rate is equal to an output index (seasonally adjusted) divided by a capacity index. Effectively, it is the employment rate for physical capital. When the economy is healthy, total capacity utilization should be near 80.0 percent. The long-term average rate from 1972 through 2013 is 80.1 percent. If it gets up close to 85 percent it is a serious sign that the economy is overheating and that inflation will soon be a very serious issue. Therefore, capacity utilization beyond a certain threshold may signal inflation is on the rise.


Fuel Prices-6.9%11/30

The Energy Information Administration publishes a weekly survey of fuel prices gathered from a sampling of service stations across the country. The association also publishes weekly WTI crude oil spot prices per barrel.


Currency - Euro & Pound (GBP)-1.3%11/30

The chart below shows the exchange rate of the U.S. Dollar with the Euro and British Pound. The vertical axis shows the number of U.S. dollars equal to one Euro and Pound. When the graph is falling, the dollar is strengthening, since it takes fewer dollars to purchase one euro. When the graph is rising, the dollar is weakening. The strength of the dollar is an important economic indicator as a strong dollar generally means bad news for American companies as their products will be more expensive in relation to foreign competitors, but good news for consumers as a stronger dollar results in lower prices for imported goods and services.


Baltic Dry Index (BDI)-19.3%11/30

The Baltic Dry Index is a daily average of prices in the spot market to ship raw materials in bulk. It represents the cost paid by an end user to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts. The Baltic Exchange is similar to the New York Mercantile Exchange in that it is a medium for buyers and sellers of contracts and forward agreements (futures) for delivery of dry bulk cargo. This index can be used as an indicator of the direction of overall global economic activity because it measures the changing demand for shipping capacity (which is generally limited and increases very slowly over time); consequently, small changes in demand can lead to much larger changes in shipping rates. The BDI can also be a good indicator of the future direction of inflation.



© 2014 Insperity


Disclaimer: The information being provided in the Economy at a Glance is an informational service of Insperity and is drawn from several governmental and other agencies. The information is provided as is and Insperity makes no representation regarding it or its accuracy.