Initial jobless claims rose to a seasonally adjusted 216,000 for the week ending July 13. The 4-week moving average declined 250 to 218,750.
Prior
Prior Revised
Consensus Forecast
Forecast Range
Result
Initial Jobless Claims
209 K
208 K
215 K
208 K to 222 K
216 K
The advance seasonally adjusted insured unemployment rate remained unchanged at a very low 1.2% for the week ending July 6,
The Labor Department said no state was triggered “on” the Extended Benefits program during the week ending June 29.
The highest insured unemployment rates in the week ending June 29 were in Connecticut (2.2), New Jersey (2.2), Puerto Rico (2.2), Pennsylvania (1.9), California (1.8), Rhode Island (1.8), Alaska (1.7), Massachusetts (1.6), and Illinois (1.5).
The largest increases in initial claims for the week ending July 6 were in New York (+10,903), Michigan (+6,729), Kentucky (+2,515), Arkansas (+1,374), and Wisconsin (+1,264), while the largest decreases were in California (-7,210), New Jersey (-5,946), Texas (-2,057), Connecticut (-1,556), and Pennsylvania (-1,351).
The labor market overall has remained very tight, leading to a stronger than expected jobs report for June.
Employment Index Rises to Highest Level Since October 2017
The Philadelphia Fed Manufacturing Business Outlook Survey rebounded strongly in July, rising 21.5 points in July to crush the 4.5 consensus forecast. The diffusion index for current general activity more than recovered its losses from last month, increasing from 0.3 in June to 21.8.
Over 36% of the firms reported higher employment, compared with 25% last month. Only 6% reported decreases in employment this month.
The current employment index increased 15 points to 30.0, its highest reading since October 2017. The average workweek index also increased 16 points, hitting its highest reading in 14 months.
Over 36% of the firms reported higher employment juxtaposed to 25% last month. Only 6% reported decreases in employment this month. The current employment index soared 15 points to 30.0, the highest reading since October 2017.
The Manufacturing Business Outlook Survey is a monthly survey of manufacturers in the Third Federal Reserve District.
Donald Trump’s unexpected victory and the retention of majorities in both houses of Congress in 2016 led many Republicans to believe the GOP would not only hold the U.S. House. The more hubris among them even believed that the GOP might increase their majority.
It appears that all punditry and prognostication could have been dispensed with if everyone had followed Sean Trende’s analysis at Real Clear Politics, again based on history.
“If President Trump is not at 50% for the midterms then the GOP will be in a world of hurt”.
If the party faithful had faced this reality, then Republicans increasing their majority in the U.S. Senate would have been seen as the triumph it was, one which President Trump rightly hailed.
Franklin Delano Roosevelt lost 71 seats in the U.S. House and 6 in the U.S. Senate during his second term. Bill Clinton lost 52 and 8, respectively, during his first term. Barack Obama was “shellacked” and lost 63 and 6, respectively.
Since 1934, the average number of House seats lost is 33. At 40, President Trump doesn’t fit in the shellacked category, particularly considering the number of seats lost in California due to Election Day vote collecting and harvesting.
A gain of U.S. Senate seats has only happened five times previously since FDR.
Cooler, more experienced GOP heads knew this and guided by internal polling placed their resources correctly. President Trump stumped against vulnerable red state and swing state Democrats in Indiana, North Dakota, Florida and Montana, while trying to shore up vulnerable House Republicans.
This strategy paid off with a net gain of two U.S. Senate seats.
Of course, losing control of the U.S. House is not a blessing. But it was historically inevitable.
Has any good come from it? Yes, most certainly.
The Democratic Party swung sharply to the left after 2016, as would be expected. In their enthusiasm, they brought in a number of inexperienced, publicity-seeking radicals who have dubious anti-Semitic connections and make bizarre comments.
“The Democrats’ new street fighters‘ attacks have “taken a large degree of the media spotlight off the new House Speaker Nancy Pelosi and any hint of a legislative program.”
If this continues unabated and Speaker Pelosi seems to have no control over this radical posturing, which is cheered on by similarly naïve “progressives’ and the media, then it will present a major challenge to whomever earns the 2020 Democratic nomination.
If the Dem’s choose an overt leftist like Bernie Sanders or Kamala Harris, then the GOP has a made-to-measure message: “would you trust the country to high tax, anti-capitalist, radical Islam aligned radicals and undo all the hard won gains in employment and industrial growth?”
If by 2020 major peace overtures in North Korea have borne fruit, the “trade wars” are settled and disengagement from the endless wars in the Middle East results in American troops returning home, then it is hard to believe the voters would opt to negate it all for a radical administration.
Conversely, if a centrist candidate is the nominee, the question will be how much the progressive tail will wag the dog. These questions have significant bearing on the down-ballot elections in the U.S. House.
Even with an “unprecedented turnout of over 50% for a midterm,” 36 sitting Republican Congressmen not seeking re-election, massive Democratic enthusiasm and a relentlessly anti-Trump media, the GOP only needs to flip 19 seats to regain control of the lower chamber.
In 2018, the Democratic Party flips were tenuous, at best. Two districts were won by less than 1%, nine by less than 2%, three by under 3%, two by under 4% and four by under 5%.
Given the expected 2016-size Republican turnout in 2020, it is clear the return of the House to GOP control is more than feasible. Such feasibility is substantially enhanced if the Democratic “class of 2018” continues to flaunt their progressive attitudes and policies at the same level as now, which given the nature of the newcomers, seems likely.
New Residential Construction Report Steady, But Lagging Builder Confidence
New residential construction was mixed in June, with housing starts steady and building permits falling to more than a two-year low. The U.S. Census Bureau report has lagged builder confidence levels.
Prior
Prior Revised
Consensus Forecast
Forecast Range
Result
Starts – Level – SAAR
1.269 M
1.265 M
1.260 M
1.218 M to 1.280 M
1.253 M
Permits – Level – SAAR
1.294 M
1.299 M
1.300 M
1.251 M to 1.305 M
1.220 M
Housing starts came in at a seasonally adjusted annual rate of 1,253,000, 0.9% (±7.9%) below the revised May estimate of 1,265,000. That’s still 6.2% (±7.8%) above the June 2018 rate of 1,180,000.
Single‐family housing starts in June were at a rate of 847,000; this is 3.5% (±9.6%) above the revised figure for May at 818,000. For June, the rate for units in buildings with five units or more was 396,000.
Building permits came in at a seasonally adjusted annual rate of 1,220,000, which is 6.1% (±1.2%) below the revised May rate of 1,299,000 and is 6.6% (±1.1%) below the June 2018 rate of 1,306,000.
Single‐family authorizations in June were at a rate of 813,000; this is 0.4 percent (±1.0%) above the revised figure of 810,000 for May. Authorizations of units in buildings with five units or more were 360,000.
Housing completions came in at a seasonally adjusted annual rate of 1,161,000, which is 4.8% (±12.8%) below the revised May estimate of 1,220,000 and 3.7% (±10.5%) below the June 2018 rate of 1,205,000.
Single‐family housing completions in June were at a rate of 870,000; this is 1.8% (±11.5%) below the revised rate of 886,000 for May. For June, the rate for units in buildings with five units or more was 283,000.
The NAFB Housing Market Index (HMI) reported builder confidence held solidly at 65 in June.
Business inventories were estimated at $2,036.4 billion for May, up 0.3% (±0.1%) from April 2019 and 5.3% (±0.4%) from May 2018. That’s slightly less than the consensus forecast but follows a 0.5% build in April.
Indicator
Prior
Consensus Forecast
Forecast Range
Result
Inventories – M/M ∆
0.5%
0.4%
0.2% to 0.4%
0.3%
Data are adjusted for seasonal and trading-day differences but not for price changes.
Sales
The combined value of distributive trade sales and manufacturers’ shipments for May was estimated at $1,461.4 billion, up 0.2 percent (±0.2 percent)* from April 2019 and was up 1.5 percent (±0.4 percent) from May 2018.
Inventories/Sales Ratio
The total business inventories/sales ratio based on seasonally adjusted data at the end of May was only slightly higher at 1.39. The May 2018 ratio was 1.34.
The National Association of Home Builders (NAHB) Housing Market Index (HMI) ticked slightly higher to 65 in July, a solid reading that met the consensus forecast.
Indicator
Prior
Consensus Forecast
Forecast Range
Result
Housing Market Index
64
65
64 to 66
65
Methodology for HMI
The HMI is a weighted average of separate diffusion indices for these three key single-family series. The first two series are rated on a scale of Good, Fair and Poor and the last is rated on a scale of High/Very High, Average, and Low/Very Low.
A diffusion index is calculated for each series by applying the formula “(Good-Poor+100)/2” to the present and future sales series and “(High/Very High – Low/Very Low + 100)/2” to the traffic series. Each resulting index is then seasonally adjusted and weighted to produce the HMI.
Based on this calculation, the HMI can range between 0 and 100.
Gallup Poll Social Series finds more Americans now identify as pro-life than pro-choice, a shift from a tie at 48% in 2018. The poll conducted from May 1 to May 12 finds 49% of U.S. adults identify as pro-life, while 46% are pro-choice.
While most Americans continue to believe abortion should be legal “only under certain circumstances,” just 25% favor it being legal with no restrictions. Twenty-one percent (21%) think it should be illegal, period.
Industrial production was unchanged in June after gaining stronger than expected in May, as gains in manufacturing and mining offset declines in utilities. Last month, utilities drove the increase.
Indicator
Prior
Consensus Forecast
Forecast Range
Result
Production – M/M ∆
0.4%
0.1%
-0.1% to 0.4%
0.0%
Manufacturing – M/M ∆
0.2%
0.2%
0.1% to 0.4%
0.4%
Capacity Utilization Rate
78.1%
78.2%
77.8% to 78.3%
77.9%
Manufacturing output rose 0.4%, driven significantly by an increase of nearly 3% for motor vehicles and parts. Excluding motor vehicles and parts, manufacturing output was up 0.2%.
The output of utilities declined 3.6%, which the Federal Reserve attributed to milder-than-usual temperatures for June reducing the demand for air conditioning.
The index for mining gained 0.2%.
At 109.6% of its 2012 average, total industrial production was 1.3% higher in June than it was a year earlier. Capacity utilization for the industrial sector decreased 0.2% in June to 77.9%, a rate that is 1.9 percentage points below its long-run (1972–2018) average and less than the consensus forecast.
The advance estimate for U.S. retail sales in June came in at $519.9 billion, an increase of 0.4% (±0.5%) from the month prior and stronger than expected. Retail sales are now 3.4% (±0.7%) higher than June 2018 and have gained overall for the fourth straight month.
Indicator
Prior
Prior Revised
Consensus Forecast
Forecast Range
Result
Retail Sales – M/M ∆
0.5%
0.4%
0.1%
-0.2% to 0.4%
0.4%
Retail Sales less autos – M/M ∆
0.5%
0.4%
0.2%
-0.2% to 0.4%
0.4%
Less Autos & Gas – M/M ∆
0.5%
0.4%
0.0% to 0.5%
0.7%
Control Group – M/M ∆
0.5%
0.6%
0.4%
0.2% to 0.4%
0.7%
Total retail sales for the period from April 2019 through June 2019 were also up 3.4% (±0.5%) from the same period a year ago. The April 2019 to May 2019 percent change was revised slightly lower from up 0.5% (±0.5%) to up 0.4% (±0.2%).
Retail trade sales were up 0.4% (±0.5%) from May 2019, and 3.3% (±0.5%) above last year. Nonstore retailers gained strongly for a second straight month, surging 13.4% (±1.4%) from June 2018.
Health and personal care stores gained 5.5% (±1.9%) from last year.
Indicating underlaying strength and strong discretionary spending is the continued solid increase for restaurants, up 0.9% after gaining 1.0%, 0.7%, and 0.8%.
UPDATE: Bernie Sanders again holds the second place poll position in the latest two polls. Both polls also show Joe Biden with a 13% margin.
Bernie Sanders has lost his second place poll position, falling to third behind Elizabeth Warren in the latest 2020 Democratic nomination polls.
The sole challenger to the party’s coronation of Hillary Clinton in 2016 has long held the runner-up position behind the former vice president. But Senator Warren, D-Mass., now slightly leads Senator Sanders, I-Vt., 16.3% to 14.8%.
Of the four polls conducted solely during the month of July, Senator Sanders trailed Senator Warren in two, was tied at 15% in one and led only in the least recent conducted by Morning Consult for Politico from July 1 to July 7.
From July 7 to July 9, the Economist/YouGov Poll found Senator Warren leading Senator Sanders 18% to 12%. During the same period, the NBC News/Wall Street Journal Poll found the former leading the latter by a margin of 19% to 13%.
That’s a clear and consistent trend.
Meanwhile, Joe Biden continues to lead the crowded field, though his once significant double-digit lead has fallen to an average 11%. That inflated lead masks the narrower 7% and 4% margins in the two most recent polls.
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