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Personal income growth moderated in January, growing by 0.3%, down from the 0.5% growth reported in December. The BEA report released this morning indicated that personal consumption grew by 0.2% in January after failing to grow the previous month.


Personal income growth continued to be led by transfer and rental income. Wage income continues to grow as well, expanding at 0.4% for the second month. Disposable income grew by just 0.1% as tax payments jumped.

Consumption resumed growth in January led by durable goods. Durable goods spending grew by 0.9%, up from 0.5 % the previous month. This contrasts with a commerce department report that indicated durable goods spending shrunk 4% in January. This indicates that although businesses cut spending on capital goods, consumers continued buying durable goods.

Consumption of non-durable goods recovered in January, growing 0.4% after falling 0.8% in December.


The savings rate dropped slightly to 4.6% from 4.7% the previous month. The savings rate for the previous month was revised up substantially due to inclusion of third quarter census data.

Prices increased by 0.2% in January, faster than the 0.1% appreciation in December. Core prices also increased by 0.2%.

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Led by strong private sector gains, construction spending rose 0.8% in October according to a Census Bureau report released this morning. The growth is stronger than September’s weak 0.2% but remains at relatively low levels.


Private construction led the gain, growing by 2.3%, its fastest rate since May. Private residential construction was the primary contributor to the growth, up 3.4% from September. Non-residential growth was strong as well, growing 1.3%. Public construction spending proved a drag on growth falling 1.8%.

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New home sales improved 3.3% in April to an annualized pace of 343,000 units in April. The Census report also revised up March’s pace by 1%. The pace of new home sales is now nearly 10% above its year-ago levels.



Similarly to existing home sales, gains in new home sales were widespread geographically, with only the south reporting a decline in sales in April. Sales in the Midwest and West were both strong.

Supply of new homes on the market remains extremely tight at 5.1 months. This measure has remained below the six month mark for the past six months, indicating an extremely tight supply. This is a result of an extremely low level of new construction.

Although the median home price fell in April, to $230,000, there are signs of firming prices. The median home price is a volatile measure month to month, but in April, the median price is 4.9% above one year ago.

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Existing home sales increased in November, rising 4% to an annualized pace of 4.42 million units according to a National Association of Realtors report released this morning. Despite the encouraging growth this report included significant downward revisions to sales dating as far back as January 2007. Even with the downward revisions sales have grown 12.2% year-over-year in November. Some of this year-over year strength can be attributed to slow sales in November 2010 following the expiration of the federal homebuyer tax credit.


Existing home sales were revised down by 14.5% from a pace of 4.97 million to 4.25 million. These revisions extended all of the way to the beginning of 2007. The revisions reduced 2010 existing home sales by nearly 14.8%. There were also significant revisions in the number of homes listed for sale. Despite these revisions historical growth rates for existing home sales remain relatively unchanged.

Growth in November was seen across all regions, with the Northeast posting the strongest gains of 9.8% in November. The South saw the least improvement, rising 2.4% in November.

The months of homes available for sale continued to fall in November to 7.0, down from 7.7 the previous month. After incorporating downward revisions, this is the lowest level seen this year. These declines have been led by falling home inventory, rather than strong sales growth.

The median home price rose to $164,200 in November, up from $160,800 last month. Despite this, home sales remain 3.5% below their level one year ago.

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Construction spending continued to improve, rising 1.5% in December, its fastest level since August. Spending has now improved for 5 months and is 4.3% above its level one year ago.


Both private and public construction contributed to December’s growth. Private construction recovered in December, growing 2.1% after falling 0.4% in November. The improvement in private construction was led by non-residential construction, which grew 3.3% in December. Residential construction grew as well, but by a more modest 0.8%.

Public construction grew 0.5% in December, down from the 1.7% growth the previous month. The largest contributor to public spending was highway and street construction, which rose 1.8% from the previous month.

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Producer prices saw their largest monthly gain in three years in August, jumping 1.7%. August’s unexpected price increases were primarily driven by higher energy and food costs, as core finished goods only appreciated 0.2%. Prices are now 2.0% above year-ago levels, up from the 0.5% seen in July.



Prices at the earliest stages of production also surged, rising 2.2% over the month. Despite the strong appreciation in August, prices on crude goods are down 10.2% from year-ago levels.

Input costs are not expected to maintain the rapid appreciation seen in August, as the global economic slowdown will likely keep inflation moderate.

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Existing home sales accelerated 3.4% in April to an annual pace of 4.6 million units, up from the 4.5 million units reported in March. After falling in March, home sales are now back near the rapid pace set in January. January’s pace was the strongest since mid-2010. April’s pace is 10% faster than at this time last year.



April’s increase in sales was broad based, with all regions reporting improved sales. The gains ranged from 5.1% in the Northeast, to 1.0% in the Midwest.

The supply of existing homes on the market increased 9.5% to 6.6 months, its highest level since November. A surge in homes listed for sale drove the inventory up despite the faster pace. April’s growth in listings is the strongest one month gain since 2006, indicating that homeowners are beginning to gain confidence in the market.

House prices rose notably in April, with median home price rising 10.1% to $177,400. Home price appreciation is being driven by a declining share of distressed homes sold. According to the NAR, the share of distressed sales fell from 37% one year ago to 28% in April.

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Consumers increased their spending in September, with retail sales growing 1.1% over the month. The growth in September follows an upwardly revised August growth of 1.2%, making for the third consecutive monthly gain. September’s strength was led by electronics and appliance stores and non-store retailers largely due to iPhone 5 sales and sales at gasoline stations and auto dealers.


Core retail sales (excluding autos and gas) rose by 0.9%, up from the 0.3% the previous month. Growth from a year ago accelerated to 5.4% in September, up from the 5.0% reported in August.

Electronic and appliances saw the strongest gains in September, rising 4.5% over the month, followed by gasoline stations rising 2.5% over the month.

Auto dealers, grocery stores, and building supply stores all posted average to slightly above average growth. Departments stores were the only major category displaying weakness, with sales fall 0.2% in September.

Read the Census report.

Existing home prices continued to improve in July, with the Case-Shiller 20-city index rising 1.2% above year ago levels. Last month was the first time home prices had risen above year-ago levels since September 2010. Both the 10- and 20- city indices saw strong gains in July, rising 1.5% and 1.6% respectively. Despite their strong recent improvement, home prices remain 30% below peak levels.



Every metropolitan area surveyed saw month-over-month gains in home prices. Additionally, an increasing number of metro areas are seeing positive year-over-year gains. Sixteen of the 20 metro areas surveyed now have prices above year-ago levels, up from 13 the previous month. Los Angeles, San Diego, and Boston all saw their prices appreciate for the first time this month. New York, Las Vegas, Atlanta, and Chicago are the remaining cities with home prices remaining below year-ago levels.



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Private sector employment increased by 198k jobs in February according to ADPs National Employment Report. Gains in February continued to be driven primarily by the service sector, however the goods sector made gains as well. Februarys gain is slightly lower than Januarys gain of 215k jobs, revised upward from an initially reported 192k jobs. Januarys ADP report translated into a gain of 157k jobs as reported by the BLS.



Keeping with recent trends, the majority of job creation in February came from the service sector, which created 164k jobs, down from 184k in January.

The goods producing sector picked up steam in January, adding 34k jobs, up from 31k the previous month. Much of this gain was driven by improvements in the manufacturing sector, which added 9K jobs. The goods sector has now seen employment gains for five consecutive months.

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Housing starts rose a modest 1.5% in January to 699,000 annualized units according to a Census Bureau report released this morning. December’s housing starts were revised up as well, from 657,000 annual units to 689,000. Permit issuance also rose in January to 676,000 annual units, up 0.7% from December. Housing completions declined by 12% in January. All measures of housing construction are well above year-ago levels.


Gains in housing starts were led by multifamily construction, which rose 8.5% in January. Single family starts declined by 1.0% to an annualized rate of 508,000 homes. Permits for both single and multi-family homes rose by 0.4% and 0.9% respectively.

Although we have seen significant improvements in housing starts in the last year, they are improving from a low base and have a long way to go. The post-recession peaks near 700,000 units per year are nowhere near the 30-year average of 1.5 million units per year.

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Industrial production rose by a strong 0.7% in October according to a Federal Reserve report released this morning. The growth follows a downward revision of September’s growth to -0.1% from 0.2%. October’s growth is well above the growth seen in recent months, excluding a 1.2% jump seen in July.

Manufacturing output rose by a solid 0.5% in October due primarily to a 3.1% growth in motor vehicle production. Excluding the auto sector manufacturing rose 0.3%, matching September’s growth.


A 2.3% increase in mining output contributed to overall industrial production growth in October. This follows a contraction of 0.5% in September. Utilities posted a 0.1% decline in October, not nearly as bad as the 2.0% decline reported in September.

Looking forward the solid increases in final sales and slower rate of inventory accumulation over the last quarter imply that manufacturing will remain strong through the rest of the year.

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Consumer credit rose $17.1 billion in May. This ninth consecutive month of growth was fueled by the largest one-month gain in revolving credit since 2007. Consumer credit grew at an annualized rate of 8% and is close to prerecession levels. On the other hand, revolving credit remains below prerecession levels despite the large gain in May.



The demand for auto loans, student loans, and other types of nonrevolving credit increased at a 6.5% annual rate, or $9.1 billion. Revolving credit, the borrowing category including credit cards, rose at an 11.2% annual rate, or $8 billion.



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