Americans are buying more goods as importers continue seeing lower prices.
Retail sales rose 0.2% on a month-over-month basis in January, according to a new report by the Census Bureau. They rose 3.1% from a year ago, with an 8.7% increase in non-store retailers. Sporting goods, hobby, book and music stores showed a surprisingly strong increase, rising 9.1% from the same period a year ago.
Equity markets struggled Monday amidst two reports pointing to a sluggish and weakening job market in America. U.S. nonfarm payrolls rose by just 151,000 versus expectations of 190,000 in January, according to a report by the Bureau of Labor Statistics (BLS). The weakness was broad based and was reflected in weak labor force participation, which remained little changed at 62.7%, according to data compiled by the BLS.
Economists are beginning to worry that previous optimism about the U.S. economic recovery was premature. A number of economic indicators suggest an economic slowdown, as productivity falls, factory orders decline, jobless claims rise, and employers cut more jobs at the beginning of 2016.
Less Jobs, Disappointing Jobless Claims
The US non-farm payroll report typically dominates the first Friday a new month. In recent years, it has become among the most important economic reports globally. Not today.
Americans are buying fewer houses even as interest rates fall, and demanding fewer services even as job gains strengthen. The dynamic between lower demand for homes and services and lower interest rates and more job gains is confounding economists, who expect a lock-step progression in which higher demand results in gains in both services and jobs. Yet the data is significantly more mixed.
GDP growth has slowed significantly while increasingly more companies are going broke and Americans are spending less. According to the Atlantic Federal Reserve’s GDPNow forecast, expect to see 1.2% GDP growth in the first quarter of 2016, after seeing just 1% growth in the last quarter of 2015. This is a significantly lower rate of growth than the 2.0% growth seen in the third quarter, and a significantly lower level than most analysts had expected.
A little over a month after the Federal Reserve confidently proclaimed the economic strength of the U.S., several indicators are showing signs of a shrinking economy. Manufacturing activity continues to decline, marking the fourth month that U.S. manufacturing has weakened. According to the Institute for Supply Management, manufacturing activity fell from the previous month and is shrinking. The Institute for Supply Management’s (ISM’s) Manufacturing PMI fell to 48.2%, with employment and inventories contracting.
A continuing decline in union membership now means that there are less union workers in the United States than at any point in history since World War II. Union membership fell to 11.1% of the total number of wage and salary workers in the U.S. as part of a trend that has been continuing since 1980, according to a new study by the Bureau of Labor Statistics (BLS).
Despite efforts from the Federal Reserve to drive interest rates higher, lower expected borrowing costs and sliding inflation are lowering Treasury yields and may make mortgages cheaper. Mortgage applications rose as interest rates fell, according to a new report by the Mortgage Bankers Association (MBA), which noted a 6.2% increase in total mortgage applications from the prior week.
A leading economic indicator suggesting Texas’s economy is suffering an aggravated decline on the falling price of oil left most investors undeterred from staying with U.S. stocks. The monthly Texas Manufacturing Outlook Survey showed a sudden and unexpected decline in activity, falling to a sharp contraction because of weak demand.
