Current Statistics (12-23-2003)


The Employment Picture


                        Unemployment Rate ({6.1% Sep}…{6.0% Oct})…{5.9% Nov}

The November Unemployment Rate came in at 5.9%.  According to the Bureau of Labor Statistics unemployment dropped from 6.4% in June to 5.9% (Seasonal adjusted measure) of the labor force in November, constituting a significant and continued brightening in the employment picture.  The data becomes even clearer when using the Not Seasonally adjusted numbers: June 2003 >> 6.5%, and Novmber 2003>> 5.6%!


for this recovery to really continue in 2004, we will have to see job creation numbers on the order of 200,000 per month as we move through the first quarter.





                        Jobless Claims

(4-wk rolling avg: 364,000 Dec-6, to 362,000 Dec-13, to 361,750 Dec-20)


The new Jobless Claims data came in at a 353,000 for the week ending December 20, 2003 an decrease in claims of 1,000 from the previous week’s 354,000. The crucial four-week average dropped to 361,750 for the week ending December 20.  Department of Labor data indicate that there have now been twelve consecutive weeks of claims below the 400,000 mark, generally viewed as the level required for economic expansion.  





                   GDP  (3rd Quarter 2003 Real GDP: 8.2% - Final)


The third quarter of 2003 showed continued positive growth in real GDP.  The Commerce Dept. reported an 8.2% growth rate for the 3rd Quarter 2003 (on an annualized basis).  It marked the 8th consecutive quarter of economic expansion, completely dismissing any notion that this recovery was a flash in the pan.  The 3rd Quarter 8.2% rate is the fastest the country has expanded in twenty years (9.0% in 1st Quarter 1984).  Again, the GDP growth was spread across the board, and is most markedly reflected in durable goods purchases rising some 28.0% and exports rising 9.9% (while imports rose only 0.8%).  4th Quarter GDP numbers will be released in January 2004.  




This is the third upward revision in Third Quarter GDP in as many months.  Also, it is interesting to note that the Bureau of Economic Analysis made significant revisions to previous periods.  Note that 3rd Quarter 2000 GDP was actually negative. 





                  Leading Indicators  (5.7%+ annual rate November 30, 2003)


According to figures released by the Conference Board on November 30, “The leading index increased by 0.4 percent in October.  September’s originally-reported 0.2 percent decline was revised up to a 0.0 percent change.  The leading index has now increased at a 5.7 percent annual rate over the last six months and this increase has been extremely widespread.”







The most recent data shows continued strong levels of construction put in place.  The October figures show an increase of 0.9% above the September numbers.  Additionally, the October data is 7.0% above that of October 2002.  This amounts to an annualized rate of $922 Billion.  This sector continues to perform strongly through the current expansion.




                        New Housing Starts    


The most recent data available shows continued near record levels of new housing starts.  The November figures are running at a seasonally adjusted annual rate of 2.07 million units, 4.5 percent higher than the 1.98 million-unit revised rate reported for October.  This is 17.6% higher than November 2002 figure of 1.76 million units.






                        New Residential Sales


According to the Census Bureau, sales of new homes dropped slightly from October’s numbers of 1.109 million units, to 1.082 million units (on a seasonally adjusted annualized basis) in October, representing a fall-off of 2.4%.  This rate exceeds the November 2002 figure of 1.022 million units by 5.9%. 






                       Durable Goods


The most recent report from the Commerce Department shows that New Orders for Manufactured durable goods decreased 3.1% in November to $180.1 billion.  Excluding defense, new orders decreased 2.9%.  This represents the largest decline in new orders since September 2002.  Year-to-date, new orders for 2003 were 2.0% above the same period for 2002.


Shipments increased at a 0.1% rate or $0.1 billion.  This followed a 0.9% increase for October.  Year-to-date, shipments were 0.1% above the same period for 2002.


Unfilled orders increased 0.4%, or $2.2 billion, with machinery leading the way at 1.5%.  This followed an increase of 1.6% in October.


Meanwhile, Inventories dropped 0.1% in November, reversing the October increase of 0.3%. 


Capital Goods Industries:

Defense, new orders decreased $0.4 billion or 4.7% to $8.8 billion; shipments decreased $0.4 billion or 4.8% to $7.5 billion; unfilled orders increased $1.3 billion or 1.0% to $136.2 billion; inventories decreased by $0.6 billion or 0.6% to $105.1 billion. 

Nondefense new orders decreased by $4.0 billion or 6.4% to $57.8 billion; shipments increased by $0.2 billion or 0.4% to $58.9 billion; unfilled orders decreased by $1.1 billion or 0.5% to $221.0 billion; and inventories fell by $0.6 billion or 0.6% to 105.1 billion. 


While there was a significant fall-off in new orders for November, durable goods spending has continued to perform well on a year over year basis.






                                Current Account Balance (Trade Balance)


The Current Account Balance consists of the Trade Balance (Net Exports (Exports less Imports) of Goods and Services), the Income Balance (Income Receipts and Income Payments), and net Unilateral Current Transfers.  The Department of Commerce publishes the Current Account Balance data on quarterly basis.

As reported by the Commerce Department on November 12, 2003, the trade deficit in October 2003 stood at $41.8 billion, growing by 1.2% from the  $41.3 billion reported for September 2003.  Exports were at $88.0 billion up by more than $2.2 billion from $85.7 billion revised figure for September.  Imports were at $129.7 billion, up by nearly $2.7 billion from the revised $127.1 billion reported for September.




On a good note, exports have improved significantly from September, growing by 2.7%.






Imports, on the other hand, grew at a 2.0% rate from September.  





The bad news is that the trade balance continues to worsen – again, this is due to the Locomotion Effect (rising imports during economic expansion).  This trend, however, should begin to reverse in the next few months (due to continued deterioration in the dollar and improvements in exports).





                       CPI ( - 0.2% ) / PPI ( - 0.3%) (Seasonally adjusted)


CPI – On a seasonally adjusted basis, the CPI-U, which was unchanged in
October, declined 0.2 percent in November.  Energy costs declined 3.0
percent, following a 3.9 percent drop in October.



PPI – On a seasonally adjusted Producer Price Index for Finished Goods declined 0.3 percent in November.  This decrease followed five consecutive increases -- including a 0.8-percent rise in October and a 0.3-percent increase in September.  





Low inflation continues to be the rallying cry of this recovery.  The New Paradigm reveals the continued deterioration of pricing power market-wide.  




                         Productivity, Unit Labor Cost and Compensation (Seasonally Adjusted)


According to a Department of Labor report, published on December 3, 2003 Productivity gains amounted to 9.4% for the 3rd Quarter 2003.  This was revised from the November estimates of 8.1%, adding to the 7 percent gain from the second quarter.  Unit Labor Cost was revised downward from -4.6% to an incredible -5.8%, versus a 3.2 percent drop in the second quarter.  Lastly, Compensation was revised down from a 3.1% in the third quarter to 3.0%, down from 3.6 in the second quarter.


In keeping with the New Paradigm, this is the best quarterly productivity increase in more than twenty years (2nd Quarter 1983).








                       10-year U.S. Government Bond Rate


The 10-year Maturity U.S. Government Security continues to remain trading at a relatively low rate.  On December 26, 2003 the yield stood at 4.15 percent.  In the absence of inflation, and coupled with the quality of U.S. Government debt, there is no reason for it to rise to a higher rate in the near future.


The reason these rates are (and will likely continue to remain) so low is because of the absence of inflation!









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