Daily Economic Update

The PPI ratcheted up 0.7% this month, for reference, it jumped 1.9% last month. There is significant inflation pressures on the producer side. The consensus estimate for the PPI was 0% this month. Core PPI was down a bit at-0.3%, I have no faith in the core numbers, simply because they exclude most everything that has been increasing in price. The report shows that there are still significant inflation pressures at the producer level. While much of this cost has not yet been fed down to the consumer level, with increases this significant, there is no doubt that they will. However, realize that the relationship between the PPI and CPI isn’t typically a simple one.

U.S. October Producer Prices Rise 0.7%; Core Prices Fall 0.3%

Retail sales came in at about expected levels. Retail sales (ex-Autos) is actually a bit stronger than I expected. Consumer spending is still strong. This leads me to believe that the savings rate will again be negative early next month.

U.S. October Retail Sales Fell 0.1%; Ex-Autos Increase 0.9%

In case you are wondering why we should care? The housing market does not exist in a vacuum, it is driven by consumer sentiment and a host of economic factors. In order to understand the housing market movement, we must also monitor and understand the movement of it’s related factors.

Caveat Emptor,

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14 Responses to Daily Economic Update

  1. NJGal says:

    People are still in denial and think free money is here to stay. What better time to spend than the holidays, right? I think many will be in for a rude awakening come the spring.

  2. grim says:

    NAR Q3 Median Price and Existing Home Sales is out. I called the top of the market in mid September of this year. Obviously, there will be Realtor Fanfare about the Q3 numbers, but realize that Q3 is July, August, and September, a lagging indicator that correlates with what we noticed anecdotally.

    I’m going to try and whip up some graphs, etc.


  3. Anonymous says:

    Grim — it seems that sales activity picked up a tad in the 3rd quarter in NJ. In the first 2 quarters it was below that of last year by small amounts. Now its up by 3.9% in the 3rd quarter. That would mean that its still up for the year. Of course, inventory has accumulated so that even at last years run rate, we’re facing several months more of inventory.

  4. grim says:

    From what I’ve seen pouring through data, sales activity in Northern NJ peaks yearly in June, July, and August. This correlates pretty well with the NAR data. The report came out as expected, realize that we’re halfway through the fourth quarter at this point, that data includes data from July. It’s a nice look back in time, but nothing we didn’t know already.

    My sales data is a bit more up to date, I have data up until October.

    2003 had it’s peak in August
    2004 had it’s peak in June
    2005 had peaks in June and August

    I posted this graph earlier this month.

    YOY Sales


  5. Anonymous says:

    James — the NAR data shows a 3.9% increase over last year 3rd quarter. I wasnt comparing with q2.

    How does that square with your chart that shows the 2005 data below the 2004 data for most of that time period ?

    I realize that this is a look back and the last few months have been much cooler, but the general case of flat or dropping YoY sales was broken by this. You can beat NJAR will tout this as a jump in the 3rd quarter, ignoring the rise in inventories.

  6. Anonymous says:

    And grim, you mean “poring through data”, not “pouring through data” :-)

  7. grim says:

    Let me try to reconcile my data.

    You are looking at:

    Total Sales


    My data covers the counties that I classify Northern NJ, not all of NJ.


  8. grim says:

    Which are: Bergen, Essex, Hudson, Passaic, Somerset, Sussex, Union and Warren.

    Also note that my graphs are *not* based on seasonally adjusted data.

    Never knew the poring/pouring difference, learn something new every day..


  9. Anonymous says:

    Grim — yes that explains the data difference. On the other hand, I think South/CEntral NJ may also show a dropoff in the remaining months. Middlesex is already slowing down.

  10. Richard says:

    higher producer costs have been fed down to the consumer, just not the historical way of higher prices. example one, getting your IPod serviced. Apple won’t even look at it unless you hand them $100. that doesn’t mean fix it, that’s just to look at it. we see the increased costs of doing business shifted to everything but the initial product price. want to sign up for a service by talking to a customer service rep? $10 or free on the internet. extended warranties have shrunk, and now you have to pay on most items to get what was given before.

    don’t believe the hype folks. society has turned into a short term consummable nation. practically everything you buy is not expected to last more than 24 months tops.

  11. grim says:

    More rate hikes appropriate: Fed’s Moskow

    More Federal Reserve interest rate increases are “appropriate” at this time to hold down inflation, Chicago Fed President Michael Moskow said on Tuesday.


  12. James — the NAR data shows a 3.9% increase over last year 3rd quarter. I wasnt comparing with q2.

    How does that square with your chart that shows the 2005 data below the 2004 data for most of that time period ?

    And grim, you mean “poring through data”, not “pouring through data” :-)

    Grim….maybe I’m a little cynical, but this “anonymous” cat seemed more interested in trying to discredit your hard work, than adding any insight to the current housing market in North NJ.

    what kind of jackass corrects spelling on a blog….let alone the word “pouring/poring”????

    JMHO, but that dude sounded more like someone who has vested interest in seeing or believing RE prices will stay firm & continue higher next spring.

    keep up the great work….since many here truely appreciate it!!!

  13. Anonymous says:

    gravitymatters — you’re a total moron. Firstly, I put a smiley on my comment about pouring and poring, and thats not a spelling typo, its a different word. If you’re so tight-assed that you can’t recognize a joke when you see it, well ..

    Secondly, I wasn’t trying to knock grims hard work at all. I was simply trying to understand why there was discrepancy in numbers and if you had read my later post (if you can read), I found his clarification adequate. If you can find my comment on the accumulation of inventory in NJ to be a positive comment on the NJ market, then you are an even bigger fool than someone who buys at the top.

    Final point — the facts are the facts. If there is a slowdown (and I think there is), thats good news. If theres not, it could be a dead cat bounce. Either way, we need to examine numbers with cold detachment. Grim does that, you clearly don’t want to hear anything that disagrees with your view of “reality”.

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