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Nov 16, 2020
The intensifying COVID-19 pandemic is weighing heavily on global business sentiment. Assessments of present conditions are especially weak, with the percent of positive responses close to the 20% threshold consistent with a global recession. Expectations regarding prospects through the spring are only a bit better. Responses to the nine questions posed in the global sentiment survey have been net negative for the past nine months; this is nearly as long as during the financial crisis in 2008-2009.
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Nov 13, 2020
U.S. consumer sentiment slipped in November to its lowest level since August as the increase in COVID-19 infections seemingly outweighed any wave of election relief. The preliminary reading from the University of Michigan was 77, down nearly 5 points from 81.8 in October. Confidence remains down about 24 points from February. The move was driven by the expectations component, which fell 7.9 points from October. The present conditions index fell 0.1 point. Inflation expectations rose. Median 12-month inflation expectations rose to 2.8% from October's 2.6%. Five-year expectations rose from 2.4% to 2.6%.
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Nov 13, 2020
The Moody's Analytics & CNN Business Back-to-Normal Index ticked up to 81.6 from a revised 80.5 the week before. The increase leaves the U.S. a couple of points below mid-October's high of 83.4 but ends a two-week streak of declines. With daily infections of COVID-19 now twice as high as July's peak, it's hard to imagine economic activity getting much closer to normal in the near term.
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Nov 02, 2020
The U.S. recovery regained some momentum in September, providing a favorable jumping-off point for growth in the final three months of the year. This is going to be needed because of the fading support from fiscal stimulus and the surge in confirmed COVID-19 cases. Our estimate of monthly GDP rose 0.7% (not annualized) in September following a 0.4% gain in August.
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Oct 29, 2020
The National Association of Realtors pending home sales index dropped 2.2% to 130 in September, snapping its four-month winning streak, but is still its second-highest level ever. Homebuyers continue to brave open houses despite ongoing fears over the virus in order to capitalize on record-low home financing costs. Potential home sales cooled slightly in all census regions with the exception of the Northeast, which registered a small gain. Pending home sales remain up 20.5% nationally on a year-ago basis.
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Oct 29, 2020
The pandemic has created unprecedented volatility in U.S. GDP. The record-shattering 31.4% decline in real GDP at an annual rate was followed with a similarly record-breaking 33.1% gain according to the BEA's preliminary estimate. The gain reversed about 75% of the prior decline. Strength was widespread. Consumer spending, most investment components, exports and inventories rose strongly while government spending and imports were offsets. Real disposable income fell 16.3% thanks to waning stimulus but this reversed only a small part of the 46.6% gain in the second quarter. The saving rate fell from 25.7% to a still-remarkable 15.8%. The BEA was unable to quantify the huge impact of the pandemic.
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Oct 27, 2020
U.S. consumer confidence remains at a low level as millions remain without work and COVID-19 infections rage. The Conference Board's consumer confidence index dipped from a revised 101.3 in September (previously 101.8) to 100.9 in October. Consumers' assessment of present conditions rose from 98.9 to 104.6, still massively below the level of around 170 before the crisis. Expectations fell from 102.9 to 98.4 in October. The labor market differential improved modestly.
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Oct 27, 2020
House price appreciation continued in August, as measured by the S&P CoreLogic Case-Shiller 20-City Composite Index. The not seasonally adjusted index rose 5.2% from August 2019. Of the 20 metro areas in the index, Phoenix, Seattle and San Diego had the strongest year-over-year appreciation.
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Oct 27, 2020
U.S. durable goods orders in September were better than we expected, rising 1.9%. Transportation orders were a big support, as motor vehicle and parts orders were up 1.5%. The volatile defense aircraft and parts orders dropped 46.1% while the level of nondefense aircraft and parts orders remained negative. This isn't surprising, as durable goods orders for nondefense aircraft are net of cancellations. Excluding transportation, new orders rose 0.8%. The encouraging sign was the 1% gain in core capital goods orders.
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Oct 11, 2020
The consumer credit market expanded in September, increasing by $87.0 billion, a 0.63% month to month change. The consumer credit market is now $13.9 trillion in outstanding debt, which is 3.94% higher than where it was last year. The year over year growth of 3.94% is higher than it has been in past months. Credit issuance is till being driven by first mortgages, with auto balances and student loans also notching positive gains. The unsecured market still has weak issuance and all products are now contracting on a year over year basis. Performance of existing loans is still strong, as personal incomes are still higher than pre-pandemic levels due to federal stimulus. Performance into the future is highly dependent on whether or not additional fiscal stimulus is passed.
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Sep 23, 2020
The Moody's CMBS Delinquency Tracker total delinquency rate edged down 22 basis points to 7.73% in August. Delinquencies improved thanks to forbearance and other loan modifications. The subcomponents were mixed in August, though. Office and retail declined while the rest of the subcomponents remained unchanged or increased. All regional scores decreased except for the West. Delinquency rates will remain elevated in the short term.
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Sep 22, 2020
Existing-home sales advanced 2.4% in August, adding to June's and July's sizable gains and reaching their highest level in 14 years. Pent-up demand for housing continues to be released as homebuyers regain their confidence and take advantage of multigenerational lows in mortgage rates. Single-family and condo/co-op sales both rose, increasing 1.7% and 8.6%, respectively. Moreover, sales were upbeat across all census regions, and the Northeast registered double-digit gains.
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Sep 22, 2020
The manufacturing recovery in the Richmond Federal Reserve District accelerated in September, according to the Fifth District Survey of Manufacturing Activity. The composite index increased 3 points to 21. Volume of new orders increased as local business conditions improved, but supply-side constraints caused shipments to moderate. To meet growing demand, factories increased hiring and workers are averaging longer workweeks.
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Sep 18, 2020
Having fully recovered to pre-pandemic levels, Canadian retail resumed a slower pace of growth in July. Retail sales edged up by 0.6% in July to C$52.9 billion after the prior two months' V-shape recovery. Motor vehicle and parts dealers, gasoline stations, and clothing and clothing accessories stores led the increase while building material/garden equipment and supply dealers and food and beverage stores saw dips in sales. In volume terms, retail sales increased by 0.4%.
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Sep 17, 2020
The U.S. housing market has been red hot, but it appears to have cooled some in August. Housing starts fell 5.1% to 1.416 million annualized units, weaker than either we or the consensus anticipated. The volatile multifamily segment accounted for all the weakness as starts dropped 22.7% to 395,000 annualized units. Single-family housing starts rose 4.1% to 1.021 million. This is the fourth consecutive monthly gain in single-family starts. Housing permits slipped 0.9% to 1.47 million annualized units, but the decline was attributed to multifamily. Low mortgage rates and pent-up demand will support housing, but homebuilders are grumbling about supply constraints and surging costs.
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Sep 16, 2020
Net long-term capital flows were positive for the third straight month in July. Net inflows totaled $10.8 billion, following revised inflows of $113 billion in June. Foreign residents were net sellers of $26.7 billion worth of long-term U.S. securities in July, compared with net purchases of $78.8 billion in June. Private foreign investors were net sellers of $20.8 billion while official foreign investors reduced their holdings by $5.9 billion. U.S. residents contributed to capital inflows, decreasing their holdings of long-term foreign securities by $37.5 billion.
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Sep 16, 2020
Homebuilder confidence reached a record high in September. The NAHB Housing Market Index increased to 83, 5 points more than the August value. The continued upward trend and the index being firmly above the 50-point threshold indicate more builders view conditions as good than poor. The subcomponents and regional scores increased this month.
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Sep 16, 2020
Business inventories rose in July, though by less than expected. The inventory build increased by 0.1% from June. Among the categories, manufacturing inventories contracted 0.5% while retail grew 1.2%. The total business inventory-to-sales ratio was 1.33, down from 1.39 in July 2019.
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Sep 16, 2020
The recovery in retail sales, like many other measures of economic activity, has slowed, although in this case it is at least in part because the recovery is nearly complete. Retail sales grew 0.6% in August after increasing a downwardly revised 0.9% in July and soaring 8.6% in June and 18.3% in May. Sales were 2.6% above their year-ago level and 1.9% above February's level. Vehicle dealer sales changed little despite the dip in new-vehicle sales. Core sales rose 0.7%, with growth led by restaurants as well as apparel, furniture and building supply stores. Department stores, grocery stores, sporting goods and hobby stores, and other general merchandise stores posted declines for the month.
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Sep 14, 2020
Our estimate of global consumer price inflation was unchanged in August at 3.7% y/y. Whereas the inflation rate sped up to 0.8% y/y in developed economies, from 0.7% a month earlier, in developing economies it slowed to 5.2% from 5.3%. The outlook for global inflation is to the downside. Although supply chain disruptions, a defining feature of the COVID-19 crisis, typically lift prices, the global pandemic's sharp hit to global demand and to commodity prices (notably oil) is taking the upper hand. As a result, underlying inflation pressures will remain weak this year.
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Sep 08, 2020
The NFIB Small Business Optimism Index increased 1.4 points in August to 100.2. This follows July's 1.8-point decline. Seven of the index's 10 components improved from July to August, while two declined and one did not change. Though small-business owners' outlook improved, the NFIB's Uncertainty Index rose to 90, the second-highest reading since 2017.
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