Daily Archives: July 16, 2008 @ 3:26 pm (Wednesday)

2008-07-16 US Economic Releases

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MBA Mortgage Applications (Jul 11)

Survey n/a
Actual 1.7%
Prior 7.5%
Revised n/a

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MBA Purchasing Index (Jul 11)

Survey n/a
Actual 359.7
Prior 365.8
Revised n/a

Minor down tic, still in a range that used to be indicative of 1.5 million housing starts per year, vs today’s approx 1 million.

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MBA Refinancing Index (Jul 11)

Survey n/a
Actual 1474.9
Prior 1379.3
Revised n/a

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Bloomberg Global Confidence (Jul)

Survey n/a
Actual 10.30
Prior 21.01
Revised n/a

Inflation and falling equity markets are getting everyone down.

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Consumer Price Index MoM (Jun)

Survey 0.7%
Actual 1.1%
Prior 0.6%
Revised n/a

Higher than expected.

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CPI Ex Food & Energy MoM (Jun)

Survey 0.2%
Actual 0.3%
Prior 0.2%
Revised n/a

Headline leaking into core.

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Consumer Price Index YoY (Jun)

Survey 4.5%
Actual 5.0%
Prior 4.2%
Revised n/a

Breakout!

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CPI Ex Food & Energy YoY (Jun)

Survey 2.3%
Actual 2.4%
Prior 2.3%
Revised n/a

If it was a relative value story, this would be a lot lower and going down.

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CPI ALLX (Jun)

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CPI TABLE (Jun)

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CPI Core Index SA (Jun)

Survey n/a
Actual 215.526
Prior 214.832
Revised n/a

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Consumer Price Index NSA (Jun)

Survey 217.903
Actual 218.815
Prior 216.632
Revised n/a

Karim writes:

  • Headline up 1.1% and 5.0% y/y

Above Fed’s comfort zones.

  • Core up 0.323% m/m and 2.4% y/y

In the 70’s I recall core passing 3% about the time headline passed 6%.

Click to see CPI Charts and CPI Table from the 1970s.

The difference there is no supply response for crude oil in sight this time.

  • Largest contributor to core was housing, where first 0.3% rise in oer this year was posted, and also a 1.8% rise in the fuel and utility component of housing.

Weak demand isn’t yet bringing CPI down as the Fed has been forecasting.

  • Lodging away from home (0.7%) had its second straight strong gain; this is usually +/- more than 1% each month, so likely to give back next month.

Weak occupancy hasn’t brought this measure down.

  • Tobacco up 1.5% due to tax hike in NY
  • Other items likely to reverse next month based on usual patterns are apparel (0.1%) and vehicle prices (0.1%)

Maybe, but lower car sales may not bring prices down over time due to cost issues.

  • Education (+0.5) also above trend

Costs rising here at well. And most employees probably get CPI increases.

  • Bernanke probably knew this number yesterday when he said inflation would be ‘temporarily higher’ in short-term.

Yes, and he and Vice Chair Kohn will have their hands full with the hawks at the August

  • Also, chain-weighted core CPI rose 0.1% and 2.1% y/y. This is a better proxy for core PCE (Fed’s preferred measure) as its not a fixed-weight time series and thus picks up substitution of one good versus another in consumer purchasing behavior.

Yes. Keeps this series lower than CPI until we’re down to eating bread and water, as deteriorating real terms of trade weigh on our standard of living.

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Net Long-term TIC Flows (May)

Survey $70.0B
Actual $67.0B
Prior $115.1B
Revised n/a

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Total Net TIC Flows (May)

Survey n/a
Actual -$2.5B
Prior $60.6B
Revised $61.6B

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Industrial Production MoM (Jun)

Survey 0.1%
Actual 0.5%
Prior -0.2%
Revised n/a

Better then expected.

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Industrial Production YoY (Jun)

Survey n/a
Actual 0.3%
Prior 0.1%
Revised 0.2%

Seems to be working its way lower over time. May be stabilizing with the weak USD.

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Capacity Utilization (Jun)

Survey 79.4%
Actual 79.9%
Prior 79.4%
Revised 79.6%

Higher than expected. The Fed is counting on slack to bring ‘inflation’ down.

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NAHB Housing Market Index (Jul)

Survey 18
Actual –
Prior 18
Revised –


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Bernanke testimony on inflation

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The last few Michigan surveys had one-year inflation expectations over 5%.

This is not lost on an FOMC that believes inflation expectations cause inflation.

Chairman Bernanke said this yesterday after outlining the inflation expectations/inflation process:

“A critical responsibility of monetary policy makers is to prevent that process from taking hold.”

‘Prevent’ implies action, not ‘monitoring’.

Might just be a poor choice of words.


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Exports, Inflation, and the USD

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This is what happens when non residents are scrambling to reduce their hoards of USD financial assets.

Exports rising like this along with the still falling dollar indicates the current $60 billion monthly trade gap is still too high – non-residents simply don’t want to accumulate USD financial assets at that rate.

This adjustment process continually aligns the ‘real’ (price adjusted) trade gap to levels that equal foreign $US ‘savings desires’.

For the US this currently means a weak USD and a combo of rising exports and rising traded goods prices.

GDP muddles through as government spending and exports support demand, with continuing weak domestic demand and declining real terms of trade crushing the US standard of living.

US Exports

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US Exports YoY


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Exports are a cost…

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Yet another economics professor gets it right!

September 02, 2007

Exports are Costs; Imports are Benefits

by Don Boudreaux

Today’s edition of the Chicago Tribune published this letter of mine:

You’re correct that free trade likely would create more opportunities for workers in Illinois to produce goods for export (“How free trade boosts Illinois,” Editorial, Aug. 25). Never forget, though, that the ultimate benefit of trade lies not in what people must sacrifice-not in the creation of opportunities to produce output for others-but in the greater quantity, quality and variety of goods and services that free trade makes possible for ordinary people to consume. Free trade’s bountiful harvest is not its exports; it is its imports.

Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, Va.


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