U.S. Economic Highlights

Kenneth Goldstein
Kenneth Goldstein
Economist

21 Apr. 2014

Last week: With winter in the rearview mirror, the big question now is how much bounce will demand get – with shoppers finally able to get out and about. Weather may be the big reason why the economy underperformed in the first quarter. Good weather may be the reason why the economy over performs this spring. Look to the labor and retail sales report for evidence to confirm or refute this assertion.  

Monday, April 21

10:00am The Conference Board Leading Economic Index® for the U.S., March  

The Coincident Economic Index, which tells us where the economy is right now, continued to rise moderately through February. The Leading Economic Index for the United States has been consistently much stronger, suggesting there could be more punch going forward. With the end of inclement winter weather imminent, evidence of better conditions might begin to show in the housing, labor, and retail markets. Will this latest read on the data suggest continued improvement into the summer?      

Thursday, April 24

8:30am Orders for Durable Goods, March (Bureau of the Census)

This is the key economic report of the week. Relatively weak ordering has been persistent, as both consumer and business demand show something of a wait and see attitude. Did either the consumer and/or business see enough to step up their ordering pace last month?

THE SITUATION ABROAD

Why isn’t the global economy growing faster? A decade ago, there was an argument about excess supply capacity but a decade later, with relatively weak investment rates, that argument has less weight. Meanwhile, price pressures are low. Both energy and food prices are rising relatively slowly. And with elevated unemployment in major sectors of the global economy (like North America and the Euro-zone) wage pressure is also relatively low. The big key, then, is lack of stronger final demand. And yet The Conference Board’s Leading Economic Index for a dozen countries around the globe suggests the industrial core of the global economy is poised to pick up. That point is reinforced by the results of the latest round of surveys of purchasing managers. It would seem the ingredients are present for an acceleration in growth. Further, the headwinds, from fiscal policy to strained financial market conditions (but not geopolitical risk) appear to have lessened. But will growth pick up? It would seem only a lack of sentiment can hold back a turn to more global growth.   

FACT OF THE WEEK

$1/kilowatt

Solar power is getting considerably cheaper. Three decades ago, solar modules cost the equivalent of $16 per kilowatt (adjusted to 2012 dollars). A steady stream of innovation brought that cost down to only $4 per kilowatt by 2008. It was no mean feat to reduce the cost to only a fourth of what it had been. But in the last six years, further refinement has reduced the cost to only $1, making solar highly competitive with coal or natural gas as a source of energy to produce commercial and residential electricity. To be sure, coal supplies have been and remain plentiful. Recent discoveries of new natural gas fields and technology to exploit known fields have created dreams of not only self-sufficiency in energy but exporting energy. With the reduced cost of solar power, the dream of exporting is even closer. This is true because the supply of solar power is, well, potentially unlimited.  

FACT OF THE WEEK

$8,000

The Great Recession ended five years ago but the aftereffects linger, and in some instances remain very pronounced, though they impact different groups to differing degrees. One of the most profound impacts is the income deficit of younger workers, those who came of working age just as the Great Recession started.

The median income of “millennials” (mid-20s to mid-30s in 2012) was $8000 less compared with those of the same age in 2000. Moreover, the millennials of 2012 were more likely to be living with their parents, and less likely to move or get married. This is even more remarkable because this group has a higher level of education than those of a decade earlier. Their inability or unwillingness to risk career or start families implies that there will be lingering impacts decades from now – just as the Great Depression had lingering impacts. And because the negative impact will continue to linger, it impacts not just the millennials but the society and economy as a whole.
 

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