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Weekly Review - Residential Construction Was Not Good Or Bad

This was a funny week for me as the data released this week which I thought was mediocre, the other analysts and market pumping pundits was excellent. Building permits (or starts) is a case in point - analysis here. Most pointed to building starts as the primary metric. I use two metrics as primary:

  1. the year-over-year change of permits issued and construction completions (which was one of the lowest year-over-year gains in 2012); and,
  2. the ratio between permits issued and construction completions which were also at a 2012 low. However, this is a seasonal issue, and the end of the year always has low numbers. The year-over-year gain was about average for 2012.

Overall my view is that building permits were ok - but nothing to write home about.

The Econintersect economic forecast for January 2012 shows weak growth. The underlying dynamics have a whiff of improvement - as underlying trends seemed to have stabilized with some marginally improving. Most of the recession markers have evaporated, and one of our alternate methods to validate our forecast remains recessionary (but now only slightly so). All in all, still not a great forecast - but at least there is hope that conditions will be improving in the months to come.

ECRI believes the recession began in July 2012. ECRI first stated in September 2011 a recession was coming . The size and depth is unknown. The ECRI WLI growth index value has been weakly in positive territory for over three months. The index is indicating the economy six month from today will be slightly better than it is today.

Current ECRI WLI Growth Index

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Initial unemployment claims fell from 371,000 (reported last week) to 335,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here).

The real gauge - the 4 week moving average - fell marginally from 365,750 (reported last week) to 359,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2010 (blue line), 2011 (red line), 2012 (green line)

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Bankruptcies this Week: Penson Worldwide, Blue Earth Solutions, Direct Markets Holdings

Data released this week which contained economically intuitive components (forward looking) were:

  • Rail movements (where the economic intuitive components indicate a moderately expanding economy).

All other data released this week either does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.

Weekly Economic Release Scorecard:
Investing.com Weekly Wrap-Up 18 January 2012
Fractional Reserve Banking: The Source of All Evil?
What We Read Today 18 January 2013
If You Don't Want to Increase Revenues, Where Do You Want to Cut Spending?
ECRI's Weekly Leading Index Growth Index Improves Moderately w/e 11 January 2013
Preliminary January 2013 Michigan Consumer Sentiment Drops Again
Infographic of the Day: Overspending by Consumers
China: Slowest Growth of the 21st Century
Wal-Mart Plans to Promote "Made in America"
Fed's Balance Sheet 16 January 2013: Balance Sheet Up $24 billion, New High
Defining the Line of the Trend
Japan: Fiscal Stimulus Until Inflation
Rail Week Ending 12 January 2013: Four Week Rolling Average At Low Levels
Platinum Overtakes Gold at Last
The Debt Ceiling May NOT be the Big Economic Threat
The Government Lied When It Said It Only Bailed Out Healthy Banks: 12 of the 13 Big Banks Were Going Bust
What We Read Today 17 January 2013
January 2013 Philly Fed Business Outlook Shows Contraction Again
CoreLogic: 1.4 million Homes Moved Into Positive Equity In 3Q's of 2012
12 January 2013 Unemployment Claims Drop Significantly
Residential Building Sector Improvement Continues in December 2012
Infographic of the Day: Student Loans
Singing "The Internationale" in America?
Cautionary Details on U.S. Manufacturing Productivity: Susan Houseman
South Korea: Asian Beacon
January 2013 Beige Book: Economy Is Marginally Better
Recognizing the Need for Economic Adjustment
What We Read Today 16 January 2013
AAPL: Flirting with Disaster
France Invading Mali
Nonfinancial Leverage NFCI Again Deteriorated Slightly w/e 11 January 2013
December 2012 Industrial Production Improves At Slower Rate
December 2012 CPI Moderates to 1.7% Year-over-Year Inflation
Infographic of the Day: Occupying Mars
America's Deceptive 2012 Fiscal Cliff - Part 4
Can Banks Really Just Create Money?
Bruce Bartlett: Furor Over Platinum Coin Misguided
America's Deceptive 2012 Fiscal Cliff - Part 3
What We Read Today 15 January 2013
Business Inventories and Sales Continue Slowing Trend November 2012
November 2012 CoreLogic Home Prices Now Up 7.4% Year-over-Year
January 2013 Empire State Survey Continues to Signal Contraction
December 2012 Producer Price Index Inflation Remains Moderate
Retail Sales Weak in December 2012
Infographic of the Day: Renting Your Apartment in 2080
Stratfor: Avoiding the Wars That Never End
America's Deceptive 2012 Fiscal Cliff - Part 2
A Small Info Graphic on Obesity with a BIG Message
Surge into Stock Mutual Funds Is Most in 11 Years
Spanish Sovereign Bonds - Now with Default Option!
United States Current and Future Oil Outlook
Average Gasoline Price Rise $0.004 in Week Ending 14 January 2013
BRIC's Forecast to Outspend On Consumer Electronics in 2012
America's Deceptive 2012 Fiscal Cliff - Part 1
Will It Be 1937 All Over Again?
What We Read Today 14 January 2013
China's Import Prices Continue to Moderate
Infographic of the Day: Solar Flares
Just Released: The 2013 Forecast in One Chart
France: Revolutionary Thought in Terms of Employment
U.S. Post Office Headed for Privatization?
The Top Five at CES Las Vegas 2013
India: Copycat Rape Crimes? Problem Runs Deeper
Java's Deadly Flaw
Business Cycle Forecasting: The First-Rate Results of Robert F. Dieli
Insider Trading 11 January 2013: Insider Trading Sending Wildly Bullish Signal?
What We Read Today 13 January 2013
2012's Biggest Lie, 2013's Biggest Risk
Sunday Economic Comedy: Jobs Requiring Little Qualifications
Infographic of the Day: Electric Vehicles
The Week Ahead: Great Expectations?
European Sovereign Debt Could Be Reduced by 64% Instantaneously
Washington Has a Revenue Problem
Gold Sentiment is Back to Lows of 2012
Treasury, Fed, President Oppose Platinum Coin
What We Read Today 12 January 2013
Initial Claims Decline 14.3% vs. Same Week 2012, Continuing Improving Trend
Old People Distorting Understanding Of the Employment Situation
US Manufacturing: What Are The Prospects?
November 2012 Trade Data Shows Economy Still Expanding
Export Price Deflation Continues in December 2012
Is it Time to Buy Gold Again?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.