Reclaiming Common Sense

Mueller, Mueller, Mueller?

Will the pundits ever talk about the economy?


This week is, and was, Holy Week. Holy Week is a time of preparation within a time of preparation known as Lent. The past two plus years have been preparation for the "Mueller" report on Collusion and Obstruction. The parallels to the trial of Jesus is striking. People couldn't agree on the story. The judges could find no crime.  This week the Mueller report overshadowed Seriously Strong Unemployment Claims data, Record March Retail, and Solid New Construction data. Even so, there was a report with a headline that "Two-thirds of American CFOs Predict a Recession by the Summer of 2020." Next Friday's First Quarter GDP report should show continued strengthening.


(April 17) The week started with a forecast article for the New Home Construction data, the New Home Sales Data, and the Existing Home Sales data for March.  The month to month and March to March data was pointing toward some strength. The question is what are the lingering effects of the Government Shutdown? "How High Will Real Estate Jump This March" goes into the details.


(April 18) The media used to cover the weekly unemployment claims reports at the bottom of the 8:00 hour Thursdays. It was great if we had seasonally adjusted (SA) first-time (FTU) claims under 300,000 claims. This week we just had SA FTU under 200,000 claims for the past two weeks. "Astounding Unemployment Claims Data" digs into the data and finds seriously low first-time claims data, remarkably low continuing claims data, and an Insured Unemployment Rate of 1.20%.


(April 18) The March Retail Sales Report "rocked" if you listened to the mainstream media. The Report was goo, not great. "March Retail Lamb Reported as a Lion" details how the month to month data, the headline data, spiked, seasonally adjusted and non-seasonally adjusted. The March to March data was not as strong as it could have been.  The data was still good, growing at over 4% a year, seasonally adjusted or non-seasonally adjusted, during the past 12 months. Current year sales, the first three months, did grow at over 3%, which should mean that the first quarter GDP should grow, same quarter, by over 3% if Gross Private Domestic Investments, Government  Consumption Expenditures, and Import/Export data is at all strong.


(April 19) The stock markets were closed in the United States for Good Friday. The government still published the March New Construction data. The article "New Home Completion Up" explains that while the March Starts data was week, and the March units under construction data may have plateaued, that the Completions data bodes well for future sales. Completions hit the highest March level since March 2007.


Here's the thing regarding the "Survey" of CFOs:

  • "(T)he survey shows executives as relatively bullish for the current calendar year, with the median respondent predicting that their firm will increase capital spending by 5% over the next 12 months, while foreseeing employment at their company rising 2% and wages rising 3%."
  • "(G)rowing investment and employment figures are not inconsistent with fears of a recession in 16 months’ time, as investment and employment growth are lagging indicators of economic growth that typically continue to rise until the economy begins to contract."
  • "Last quarter's survey showed a greater degree of pessimism, with nearly half of respondents predicting a recession by the end of 2019... these figures were heavily influenced by the fourth quarter’s stock-market swoon, when the S&P 500 SPX, +0.16%   was in the midst of a nearly 20% freefall from its September highs."

If you are listening to the mainstream media echo chamber of "Collusion, Collusion, Collusion" and "Obstruction, Obstruction, Obstruction" then you might believe that we are heading into a recession. The Retail Sales data, the Completions data, and the Weekly Unemployment Claims data are all pointing towards a stronger economy through at least October.  This column has produced an article saying that it takes five to six quarters of declining GDP and two back to back quarters of negative GDP for a Recession to Officially happen. We may not have hit the peak for this cycle.


Next week we will receive the Existing Home Sales Data (April 22,) New Home Sales (April 23,) Manufacturing data (April 25,) Unemployment Claims Data (April 25,) and the GDP data (April 26.)


It's the economy.