Steven Hansen's  Instablog

This was a very slow week for economic releases. But two struck me as unusual - existing home sales and new home sales. Both actually sucked - notwithstanding whatever garbage you might have heard in the headlines.

• existing home sales were down 8.0% month-over-month, Up 6.9% year-over-year. This continues to solidify a relatively flat trend line with growth muddling along.
• new home sales were down 17.8% month-over-month, up 8.3% year-over-year. This was the worst year-over-year growth in 2012.

My point is that they bucked the 2012 trend of improving home sales. For now, I believe there is a changing seasonality with growing sales in Octobers and Novembers, and weakening sales in Decembers. But home sales certainly have my attention - and I am on alert for a changing trend.

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 now believes a 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.

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.

(click to enlarge)

Bankruptcies this Week: Education Holdings 1, fka The Princeton Review, Atari

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.

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