Economics Update (Catching Up)

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Unemployment Claims, Courtesy Calculated Risk


Consumer Credit, Courtesy of EconomPic


Office Vacancies, Courtesy Calculated Risk


Office Investment, Courtesy Calculated Risk


Strip Mall Vacancies, Courtesy Calculated Risk

So, we have some news on the unemployment front, with new unemployment claims falling to 521,000, a 33,000 drop, with the 4 week moving average falling 9K to 539,750, and continuing claims falling by 72K to 6.04 million.

We also have some good news from Australia has become the first G-20 central bank to raise its benchmark rate, by 25 basis points (¼%) to 3.25%.

My guess is that the Reserve Bank of Australia's (RBA) is premature in this action, as is generally the case with first movers coming out of a recession, but it means that the next central bank will likely be correct, or at least less wrong, as the second movers, such as the European Central Bank and the Bank of England, who both kept their rates unchanged, generally are in such things.

Still, 3¼% is pretty damn low by historical standards.

It could be that Australia's rate hike may force other central banks' hands though, as their rate increase appears to have pushed prices down, and yields up, on US Treasuries.

We also saw retail sales rising for the first time in over a year in September, and the Institute for Supply Management has released its Non Manufacturing Index, which rose to 40.9, up from 48.4 in August, and the first time that it has been above 50, meaning expansion, as opposed to that whole 2^nd derivative is positive thing, for the first time in 11 months.

So, it appears that there is some sort of recovery in the works, assuming that something else bad does not happen, like US apartment vacancy rates hitting a 23-year high and rents falling, consumer credit continuing to contract, CRE taking a hit as office vacancies go up as rents go down, along with strip mall vacancies hitting a 17 year high, and wholesale inventories falling in August.

Much of what worries me is real estate, though it has to be said that mortgage applications have risen as the rate for a 30 year fixed mortgage has fallen to 4.87%(!).

It does appear that the good economic news, along with the Australian rate hike, has had an impact on currencies and energy, with oil rising above $71/bbl, and the dollar falling on both an increased risk appetite, and downward pressure from the Aussie rate hike.

As to how much is optimism, and how much is the rate hike, the fact that gold hit a new high, and gold is typically seen as a hedge against uncertainty leaves me inclined to lean toward the pessimistic view, but then again I always lean toward the pessimistic view.