Last Week in Review: Monday Sept. 30, 2019

Here is a summary of some of the significant economic data/news that came out last week.

Third-quarter 2019 new orders for durable goods remain on track for a second annual decline.  August 2019 Real New Orders for Durable Goods showed a monthly gain of 0.2% [1.0% ex-Commercial Aircraft], but an annual decline of 4.9% [down by 2.1% (-2.1%) ex-Commercial Aircraft].

The third estimate of second-quarter gross domestic product was unrevised at 2.0%. But growth was revised sharply lower for both gross domestic income and gross national product. Annualized real quarterly growth in  Q2 2019 GDI was revised down to 1.82%, from its initial estimate of 2.11%, versus 3.24% in Q1 reporting. GNP, which is GDP plus the balance of trade in factor income (interest and dividend payments) was revised down to 2.78%, from 3.18% in the initial second-quarter reporting. This compares with 3.09% in Q1 2019.

August industrial production showed a month-to-month gain, but year-on-year growth continues to collapse, as ShadowStats put it, “in a pattern not seen since the 2015-2017 mini-recession.” August 2019 Industrial Production gained 0.65% in the month, versus a revised decline of 0.13%  in July. The number includes an August gain of 0.51% in manufacturing versus a revised decline of 0.39% in July,  and an August gain of 1.43% in mining, versus a revised decline of 1.45% in July. On the manufacturing front, August capacity utilization notched off a 21-month low of 77.5% to 77.9%. According to ShadowStates, this is still “deep in recession territory.” Quarterly revisions showed an unrevised annualized  Q2 2019 contraction of 3.09% in the dominant manufacturing sector and an upwardly revised quarterly gain of 7.87% in the mining sector. The second-quarter decline in aggregate industrial production deepened to 2.14%. Based on two months of reporting, the early trend in year-to-year third-quarter 2019 growth slowed from 1.18% to 0.26% for industrial production, manufacturing slowed from 0.03% to a decline of 0.55%, with mining slowing from 9.89% to 4.75%.

New York Fed daily systemic-liquidity infusions intensified last week with the central bank initiating 14-day repo operations. It plans to continue 24-hour repo operations through at least Oct. 10.

The US Treasury added $450 billion to the outstanding US national debt in August.

Consumer confidence plunged in September. It was the biggest drop in nine months. The Conference Board index of consumer attitudes fell to 125.1, from a downwardly-revised 134.2 the month before.

Housing starts climbed 12.3% in August from the prior month. Analysist say lower mortgage rates spurred the building spree. But there is some indication that this could be a short-term boost. Mortgage applications went into a slide, falling 10.1% the week of Sept. 21, according to the Mortgage Bankers Association’s seasonally adjusted index. Single-unit building permits held on an early track for a third consecutive annual quarterly decline.

The dollar got a boost last week as the NY Fed continued repo operations. Fear of a dollar shortage has pushed the dollar index higher.

Gold fell 1.8% on the week.

Silver was down 2.6%.

There was more trade war optimism than pessimism last week. Trump said something to the effect of “we’ll have a deal sooner than people expect.” And it seems that talks are on track right now. On the other hand, Trump also made some statements critical of the Chinese last week.

ShadowState.com was the source for much of this data.