Friday February 12, 2010

Happy New Year. No, this isn’t a calendar test, but it is a week baseball enthusiasts have been waiting for as pitchers and catchers begin reporting to spring training.

And the connection with the economy? Well, for starters, baseball statistics are, essentially, productivity statistics. And “advances in productivity,” according to the Economic Report of the President, “are crucial to increasing the living standards of all Americans — to building a better future.” Corporate (and increasingly Major League Baseball) managers will frequently say “you can’t manage what you can’t measure.”

Beyond that – and this may be a stretch – is the connection with “home” and the upcoming week will contain two reports keying on “home” or the housing market: Tuesday’s Housing Market Index, a measure a builder confidence expressed in a survey and Wednesday’s report on housing permits and starts, a measure of builder confidence in deed not merely words.

As with all statistics, often the headline number is not the most important, and new baseball statisticians at least are frequently looking beyond the traditional batting average or earned run average to find value in ballplayers.

So, too, with many of the economic numbers we’ll get this week. The builder confidence measure, for example, is the aggregation of responses to three questions assessing the strength of current sales, future (six months out) sales and buyer traffic, how many would-be new home buyers are “window shopping” so to speak. Curiously, the National Association of Home Builders doesn’t track any of the three sub-measures against sales of new homes, yet the traffic index matches quite closely with sales. It’s kind of like checking stats of how a particular batter performs against a particular pitcher.

The permits and starts report contains a little-tracked third element: completions. Matching completions against sales of new homes provides a clue as to whether an inventory glut is developing. Think of whether a team is on a winning streak or losing streak.

Toward the end of the week we get two related reports as well: the producer price index Thursday followed by the consumer price index Friday.

Within the CPI we look not only at the overall inflation rate, measured as the change in the index year over year, but the change in the “core” index, excluding more volatile food and energy components. That’s similar to looking at a batter’s overall batting average and then his average with runners in scoring position – clutch situations. (The Federal Reserve Bank of Cleveland has offered its own “trimmed mean” CPI which strips out the more volatile components of CPI, which might differ from month to month to track inflation. The Cleveland Fed measure is usually released about two hours after the Bureau of Labor Statistics “official” report.)

The beginning of a new baseball year is also a time for forecasts, and the upcoming week will contain those, with the release Wednesday of the minutes of the January 26-27 Federal Open Market Committee which includes updated economic projections from the members of the Federal Reserve Board of Governors and the presidents of the 12 Federal Reserve Banks.

The While House got in its first round of forecasts with the Economic Report of the President projecting the economy will add 95,000 jobs per month this year, just over 1.14 million for the year, growing to 2.3 million jobs in 2011, just over 3 million jobs in 2012 and nearly 3.3 million in 2013. Keep in mind, in addition to the 6.4 million jobs lost since the recession began in December 2007, the economy needs to create 125,000 jobs per month to keep up with population growth – which means in addition to the 8.4 million jobs lost, the economy is actually down about 11.4 jobs. Even with 95,000 new jobs each month this year will fall another 360,000 jobs further in the hole. It will take at least until mid 2015 at the earliest for payrolls to climb back to pre-recession levels.

The Congressional Budget Office, in its separate assessment of the outlook for the labor market, noted “average weekly hours worked in private industries fell sharply during the most recent recession, to a level well below their long-term downward trend.” One way employers can increase labor output without hiring new workers is to restore the average weekly hours worked. That effort could undermine the White House forecast.

While there’s no World Series ring if the White house forecasts are correct, there could be something more valued: re-election.

MONDAY February 15 NO DATA RELEASES – PRESIDENTS’ DAY
     
TUESDAY February 16 EMPIRE STATE INDEX (Feb)
    January Actual: 15.92 UP 11.4
    February Consensus: 16.0
     
    HOUSING MARKET INDEX (Feb)
    January Actual: 15 DOWN 1
    February Consensus: 15.0
     
    FEDERAL BUDGET (Jan)
    January 2009 Actual: $91.54 Billion Deficit
    January 2010 Consensus: $60.5 Billion deficit
     
    Atlanta Fed President Dennis Lockhart speech
     
    Minneapolis Fed President Narayana Kocherlakota speech
     
WEDNESDAY February 17 MBA APPLICATION INDEX (Week ended: Feb 12)
    Total Index:
    Week Ended February 5: 613.1 DOWN 1.2%
    Four-week moving average: 563.7 UP 6.8%
    Purchase Index:
    Week Ended February 5: 221.2 DOWN 7.9%
    Four-week moving average: 222.9 UP 2.5%
    Refi Index:
    Week Ended February 5: 2,893.9 UP 1.4%
    Four-week moving average: 2,570.9 UP 8.4%
    No February 12 Consensus 
     
    IMPORT / EXPORT PRICE INDEX (Jan)
    Import Price Index
    December Actual: 124.4 UNCHANGED
    January Consensus: 125.2
    Export Price Index
    December Actual: 144.4 UP 2.2%
    No January consensus:
     
    HOUSING PERMITS AND STARTS (Jan)
    Permits
    December Actual: 653,000 UP 10.9%
    January Consensus: 630,000 DOWN 3.5%
    Starts
    December Actual: 557,000 DOWN 4.0%
    January Consensus: 570,000 UP 2.3%
     
    INDUSTRIAL PRODUCTION – CAPACITY UTILIZATION (Jan)
    Industrial Production
    December Actual: 100.3 UP 0.6
    January Consensus: 100.9
    Capacity Utilization
    December Actual: 72.0 UP 0.5
    January Consensus: 72.5
     
    MINUTES – JANUARY 26-27 FOMC MEETING (With Economic Projections)
     
THURSDAY February 18 UNEMPLOYMENT INSURANCE CLAIMS (Wk Ended Feb 13)
    Initial Claims:
    February 6 Actual: 440,000 DOWN 43,000
    February 13 Consensus: 440,000
    Four-week moving average: 468,500 DOWN 1,000
    No February 13 Consensus
    Continuing Claims (Wk ended Feb 6)
    Week Ended January 30 Actual: 4,538,000 DOWN 79,000
    February 6 Consensus: 4,530,000
     
    PRODUCER PRICE INDEX (Jan)
    Finished Goods – All Items M-M / Y-Y
    December Actual:  UP 0.2% / UP 4.7%
    January Consensus: UP 0.6% / UP 4.5%
    Finished Goods – Core Items M-M / Y-Y
    December Actual:   Unch / + 0.9%
    January Consensus: +0.1% / + 0.8%
     
    LEADING ECONOMIC INDICATORS (Jan)
    December Actual: 106.4 UP 1.2
    January Consensus: 107.0
     
    PHILADELPHIA FED INDEX (Feb)
    January Actual: 15.2 DOWN 7.3
    February Consensus: 17.0
     
    Federal Reserve Governor Elizabeth Duke speech
     
    St. Louis Fed President James Bullard speech
     
    Atlanta Fed President Dennis Lockhart speech
     
FRIDAY February 19 CONSUMER PRICE INDEX (Jan)
    All Items M-M / Y-Y
    December Actual: UP 0.1% / UP 2.7%
    January Consensus:  UP 0.3% / UP 2.8%
    Core M-M / Y-Y
    December Actual:  UP 0.1% / UP 1.8%
    January Consensus:  UP 0.2% /  UP 1.8%
     
    New York Fed President William Dudley speech

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