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September 26, 2013

GDP +2.5%. Pending Home Sales down.

September 26, 2013

GDP +2.5%. Pending Home Sales down.

GDP (2ndQ2013)

-Real (inflation adjusted) GDP Quarter/Quarter (seasonally adjusted, annualized)  2.5%.  Previous announcement was +2.5%.

This is the so-called final adjustment to 3rdQ.  In fact BEA continues to revise GDP for years.  One other issue I have with BEA’s method is that they adjust for inflation but offer no explanation as to where they get their inflation adjustment from.

The fact is that 2.5% growth in the economy is not producing jobs and allowing the debt/GDP ratio to continue to increase.

Initial Jobless Claims (week ended 9/21/2013)

– Initial Claims (seasonally adjusted) 305,000.  Previous was 301,000

– Unadjusted claims totaled 253,668 in the week ending September 21, a decrease of 19,250 from the previous week.

– 4-week Moving Average 308,000.

The data had admitted problems the 2 previous weeks.  The Labor Department says that the data is now reliable.

Corporate Profits (2ndQ 2013)

– After-tax profits +5.3%.  Previous quarter was +5.8%.

Note that there are many ways of calculating Corporate Profits.  This is the one from BEA.

What I an concerned about is not the level of profits but the fact that corporations are not confident enough in the economy that they are deploying these profits to try to expand their business.  That expresses a lack of confidence in economic growth.

Pending Home Sales Index (August 2013)

– Pending Home Sales Index 107.7.  Previous was 109.4 (revised from 109.5)

These are pending sales of existing homes.  I think that one large reason is that investors no longer see bargains able to be purchased as investment property.  The increase in prices has made bargains tougher to find.  In general I believe that stable housing prices are good.  Booms in prices followed by busts are, from recent experience, a formula for disaster.

Kansas City Federal Reserve  Manufacturing Index (September 2013)

– Index Level +2.  Previous was +8.

This is a survey index of manufacturers is the 10th Federal Reserve District.