– Real GDP (seasonally adjusted, annualized) +1.7%. The gain looks better on the surface only because the pervious quarter was revised down from +1.8% to +1.1%. The real news is that we are running a 1.4% annual gain in GDP for 6 months.
– GDP Deflator Quarter/Quarter +0.7%. This is an inflation measure where each component is weighted to the extent that it contributes to GDP.
This report is awful and worse yet the media and markets are reacting as it were good because the data has been crafted so that it topped expectations. It did this only because the prior quarter was adjusted downward. Also, BEA never reveals how it adjusts the data for inflation. It does not use CPI-U but publishes a number with no explanation as to how it was calculated.
Manipulation of GDP should not resemble a street 3-card Monte game.
The news is that markets are cheering +1.4% GDP growth for the first half on the year. I find that frightening.
MBA Purchase Applications (week ended 7/26/2013)
– Purchase Index Week/Week -3.0%. Previous weeks were -2.0%, +1.0%, 3.0%, -3.0%, +2.0%, -3.0%, and +5.0%.
– Refinance Index Week/Week -4.0%. Previous weeks were +1.0%, -4.0%, -4.0%, -16.0%, -5.0%, -3.0%, and +5.0%
– Composite Index Week/Week -3.7%. Previous weeks were -1.2%, -2.6%., -4.0%, -11.7%, -3.0%, 3.3%, +5.0%, -11.5%.
The story that the housing market has not been hurt by higher rates is no longer believable. The Housing market is being hurt by 1) higher rates 2) higher prices 3) more difficult mortgage qualifying standards 4) a very low rate of increase in full-time jobs.
When I say “the housing market” I mean the national picture. Housing is still, as always, local and some places are doing well.
ADP Private Jobs (July 2013)
– Private Jobs +200,000. Previous revised from +188,00 to +198,000.
This is an encouraging sign for Friday’s BLS report.
Chicago PMI (July 2013)
Business Barometer Index 52.3. Previous was 51.6. Anything above 50 indicates expansion.
This is a survey of manufacturing and non-manufacturing businesses.