The Chicago Fed National Activity Index (CFNAI)
Index points to a pickup in economic growth in October 2021.
Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.76 in October 2021 from –0.18 in September 2021. All four broad categories of indicators used to construct the index made positive contributions in October, and all four categories improved from September. The index’s threemonth moving average, CFNAI-MA3, ticked down to +0.21 in October from +0.22 in September.
Durable Goods Orders
New orders for US manufactured durable goods rose 2.5 percent month-over-month in November of 2021, extending gains from a revised 0.1 percent increase in October and compared to market expectations of a 1.6 percent increase.
New orders for U.S.-made capital goods unexpectedly fell in November while shipments rose modestly, suggesting that shortages were hampering business spending on equipment. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dipped 0.1% last month, the Commerce Department said on Thursday. These so-called core capital goods orders shot up 0.9% in October. Economists polled by Reuters had forecast core capital goods orders rising 0.6%.
Current Account
The U.S. current account deficit surged to a 15-year high in the third quarter 2021 amid a record increase in imports as businesses rushed to replenish depleted inventories to meet strong demand. The Commerce Department said on Tuesday that the current account deficit, which measures the flow of goods, services and investments into and out of the country, accelerated 8.3% to $214.8 billion last quarter. That was the largest shortfall since the third quarter of 2006. The U.S. current-account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $16.5 billion, or 8.3 percent, to $214.8 billion in the third quarter of 2021.
Corportae Profits
US Corporate Profits Revised Lower in Q3. Corporate profits in the United States rose 3.4 percent to a fresh record high of USD 2.52 trillion in the third quarter of 2021, slowing from a 10.5 percent jump in the previous period and compared with preliminary estimates of 4.3 percent. Undistributed profits climbed 5.3 percent to $1.08 trillion and net cash flow with inventory valuation adjustment, the internal funds available to corporations for investment, increased 1.8 percent to $3.14 trillion. Also, net dividends increased 2.0 percent to $1.44 trillion
New Home Sales
November new home sales rose 12.4% from downwardly revised October data, to 744,000 (SAAR), according to the U.S. Census Bureau. Sales were down 14% from November 2020. The median sales price of new houses sold in November 2021 was $416,900. There were an estimated 402,000 new homes available for sale nationwide in November (seasonally adjusted), a supply of 6.5 months at the current sales rate. New home sales climbed sharply in November on the heels of a deep decline in downwardly revised October data, marking a choppy end of 2021 for home builders. New home sales recorded their largest monthly gain since July 2020, but were down considerably from last November, when home buying was boosted by the recovery from pandemic lockdowns and the brief COVID recession. Even so, compared to pre-pandemic 2019, new home sales have increased much faster than the typical two-year pace as buyers frustrated with lost bidding wars on existing homes find options in new construction. But they must be patient. In 2020, builders required about seven months to complete the average new home, but supply chain disruptions and labor shortages likely pushed this waiting period to record highs in 2021. These challenges will ease next year, and sales will be bolstered by robust wage growth and a wave of first-time buyers, but the future of tens of billions of dollars in proposed federal spending on housing is now more uncertain, potentially denting some longer-term prospects for home building.
Jobless Claims
Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 205,000 for the week ended Dec. 18, the Labor Department said. Early this month, claims dropped to a level last seen in 1969. Economists polled by Reuters had forecast 205,000 applications for the latest week. Claims have declined from a record high of 6.149 million in early April of 2020. Applications typically increase during the cold weather months, but an acute shortage of workers has disrupted that seasonal pattern, resulting in lower seasonally adjusted claims numbers in recent weeks.
Personal Income
A barometer of inflation that is the Federal Reserve’s preferred indicator of pricing pressure rose at an annual rate of 5.7% last month, the Labor Department reported on Thursday. Excluding often volatile food and energy costs, the core index rose 4.7% annually, up from 4.2% in October. While the overall index was in line with estimates, the core was below. Both are still way above the Fed’s stated goal of average annual inflation of 2%.The increase in personal income in November primarily reflected increases in compensation of employees and government social benefits,” the report noted. “Within compensation, the increase reflected increases in both private and government wages and salaries. On the spending side, the increase was driven almost completely by increased spending on services.
Consumer Spending
A separate report from the Commerce Department on Thursday showed consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6% last month. Consumer spending shot up 1.4% in October. Services surged 0.9%, accounting for nearly all the gain in spending last month. The broad increase in services was led by housing and utilities. Spending on goods edged up 0.1% as outlays on long-lasting manufactured goods like motor vehicles fell 0.6% reflecting shortages. Spending on goods was also weaker after Americans started their holiday shopping early to avoid empty shelves. The scarcity of goods is hampering business spending on equipment. A third report from the Commerce Department showed orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dipped 0.1% last month. These so-called core capital goods orders jumped 0.9% in October.
PCE Price Index Nov. 2021 - Inflation
Inflation accelerated in November 2021. The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 0.5% after a similar gain in October. In the 12 months through November, the so-called core PCE price index accelerated 4.7%. That was the largest increase since February 1989 and followed a 4.2% year-on-year advance in October. When adjusted for inflation, consumer spending was flat after increasing 0.7% in October. Despite the unchanged so-called real consumer spending last month, economic growth is expected to have accelerated in the fourth quarter.
Growth forecasts for the fourth quarter are as high as a 7.2% annualized rate. The economy grew at a 2.3% pace in the third quarter. It is expected to grow 5.6% this year, which would be the fastest since 1984, according to a Reuters survey of economists. The economy contracted 3.4% in 2020. But the outlook for next year is cloudy. COVID-19 infections are soaring and President Joe Biden’s signature $1.75 trillion domestic investment bill known as Build Back Better, which aims to expand the social safety net and tackle climate change, suffered a blow on Sunday when moderate Democrat Senator Joe Manchin said he would not support it. That prompted economists to slash their growth estimates for next year.
MBA
Mortgage applications decreased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending December 17, 2021.
The Market Composite Index, a measure of mortgage loan application volume, decreased 0.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week and was 42 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 9 percent lower than the same week one year ago
Existing Home Sales
November 2021 Existing Home Sales Increase for Third Consecutive Month. NAR released a summary of existing-home sales data showing that housing market activity this November increased 1.9% from October 2021, the third consecutive month of increase. November’s existing-home sales reached a 6.46 million seasonally adjusted annual rate. November’s sales of existing homes declined 2.2% from November 2020, reflecting the off-season bump in sales in the second half of 2020 as the economy started opening up from the pandemic lockdown.
Consumer Sentiment UM
University of Michigan consumer sentiment 70.6 vs. 70.4 preliminary and expected. Expectations 68.3 vs. 67.8 expected. Current conditions 74.2 vs. 74.6 expected. Inflation expectations 4.8% vs. 4.9% expected. The uptick was primarily due to significant gains among households with incomes in the bottom third of the distribution," survey director Richard Curtin says. "Indeed, the bottom third expected their incomes to rise during the year ahead by 2.8%, up from 1.8% last December, and the highest level since 2.9% was recorded in 1999. There have only been five times in the past half century that income expectations among low income households have exceeded the December 2021 level.
Consumer Confidence for Dec 2021
The Conference Board Consumer Confidence Index increased again in December 2021, after an upward revision in November. The Index now stands at 115.8 (1985=100), up from 111.9 (an upward revision) in November. The Present Situation Index—based on consumers' assessment of current business and labor market conditions—was relatively flat at 144.1, down from 144.4 last month. The Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—rose to 96.9 from 90.2. Consumer confidence improved further in December, following a very modest gain in November 2021.
GDP Q3 2021
The nation’s gross domestic product expanded at an annual rate of 2.3% in the third quarter, in the final estimate released Wednesday by the Labor Department. The reading was revised from the prior 2.1% estimate and compares with increases of 6.4% and 6.7% in the first and second quarters, respectively. Third-quarter growth was curtailed by the presence of the delta variant of the coronavirus, concerns over inflation and supply-chain issues that hampered businesses in their ability to provide goods to consumers. Those have abated somewhat and economists now expect fourth-quarter GDP to come in anywhere from 5% to 7%, with uncertainty over the effects of the latest omicron variant of the coronavirus.
Leading Indicators
The Conference Board Leading Economic Index (LEI for the U.S. increased by 1.1 percent in November 2021 to 119.9 (2016 = 100), following a 0.9 percent increase in October and a 0.3 percent increase in September. The U.S. LEI rose sharply again in November, suggesting the current economic expansion will continue into the first half of 2022, Inflation and continuing supply chain disruptions, as well as a resurgence of COVID-19, pose risks to GDP growth in 2022. Still, the economic impact of these risks may be contained. The Conference Board forecasts real GDP growth to strengthen in Q4 2021 to about 6.5 percent (annualized rate), before moderating to a still healthy rate of 2.2 percent in Q1 2022. |
