The goods production side of the economy continues to recover while other indicators faltered. Some key indicators followed by the NBER Business Cycle Dating Committee.
Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus as of 2/17 for February nonfarm payroll employment (light blue square), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (2/1/2021 release), NBER, and author’s calculations.
The aggregate data mirrors my spending over the past 12 months. Very little on services (still need a haircut) and not once going out for a meal or going to a bar. But yea – the groceries stores are making a killing off of me as I cook at home and enjoy my beer socially distanced from yoohoos I do not miss.
Are we seeing building inventories?
Wednesday’s December report had them up 0.6 percent (±0.1 percent) from November, but 2.6 percent (±0.4 percent) lower than in December a year earlier…
speaking of which, Wednesday’s report also gives you another month of manufacturer’s and trade sales (up 0.8 percent) that doesn’t appear to be on the chart above…and November’s sales were revised up to statistically unchanged from October, rather than down 0.1%..
Over the short-to-medium term, durables could be a problem. The U.S. auto sector forgot to order microchips, so vehicle production is likely to slow. Realtors are hoping for a 7% increase in home sales this year. If correct, that pace of sales could drive appliance and furniture sales. Realtors are, however, an optimistic bunch. Sales of electronics are likely to drag after the pandemic boom, but who cares? The U.S. doesn’t make electronic goods. No sign of pent up demand for goods in general. Is there such a thing as pent up demand for services? We’ll see. The Mian/Sufi/Verner channel looks OK, but that’s assuming everything is normal, which it isn’t.