Today’s North American Data

February 22, 2011

U.S. consumer confidence according to the Conference Board survey advanced 5.6 points to 70.4 in February and by 17.1 points over the first two months of this year.  More confidence is being expressed about the labor market even though employment increased merely 36K in January and at a 56K per month rate over the past six reported months.  While the hiring rate remains inadequate, layoffs have slowed.  Because of workers dropping out of the labor force, the unemployment rate fell much more sharply than anticipated from 9.8% in November to 9.0% in January, but this isn’t prompting Fed officials to tighten monetary policy.  People with jobs are feeling much more secure and additionally glad to see a political counter-weight in the congress dedicated to smaller government with less spending and less taxation.  For those Americans who kept wealth invested in the stock market, there is extra reason for celebration.  Compared to mid-2010, The S&P 500, DJIA, and Nasdaq are up by 28.9%, 26.0%, and 32.3%.

Problems remain for Americans out of work and those whose main source of lifetime savings is tied up in real estate.  The Case-Shiller house price index for 20 metropolitan areas fell by another 0.4% seasonally adjusted (and 1.0% not adjusted) in December.  Prices fell at a 7.4% annualized pace during the second half of last year and are just 2.3% above the April 2009 low-point.  The decline since mid-2006 has been 31%, and prices are no higher than levels some eight years ago.  Back in the darkest times of the 2008-09 recession, it was fashionable to believe that an enduring and sustainable recovery would only be secured when the housing market had fallen to a level from which a renewed uptrend in prices and sales would be possible.  That hasn’t appeared to have yet happened.  Nonetheless, real GDP in the United States is currently advancing for the seventh straight quarter and managed to post cumulative growth of 4.5% (3.0% annualized) over the first six quarters of the upturn.

In Canada where real GDP advanced by 3.4% between the third quarter of 2009 and third quarter of 2010, a streak of six straight monthly rises in retail sales was snapped in December, when such fell 0.2% nominally and 0.4% in real terms.  Nonetheless, nominal retail sales were 4.9% greater than in December 2009 and posted an increase of 5.1% for 2010 as a whole.  December’s mild setback in retail sales reflected a 2.8% drop in motor vehicles and parts.  Excluding that item, sales advanced 0.6% in the latest month.  Released Canadian data last week included a 0.8% advance in wholesale turnover in December on top of a 1.2% increase booked in November.  Such sales were 5.8% greater than their December 2009 level, and the on-year climb in sales was 6.9% if motor vehicles are excluded.  Canada has a healthier labor market than the United States but higher headline inflation, too.  Canada’s CPI increased 2.3% between January 2011 and the first month of 2011.  On-year U.S. CPI inflation last month stood at 1.6% in January 2010.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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