Consumer Sentiment: Final Results for August 2020

The University of Michigan's Index of Consumer Sentiment (ICS) - Final Results for August 2020 was released today:

Predicted: 75.0

• Actual: 74.1

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• Change from Previous Month: +2.207% (+1.6 points)

• Change from 12 Months Previous: -17.483% (-15.7 points)

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• Final ICS Reading for July 2020: 72.5
  
  
• Final ICS Reading for August 2019: 89.8

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From today's report:

"...Consumer sentiment has remained trendless in the same depressed range it has traveled during the past five months. The August figure posted an insignificant gain of just +0.4 Index points above the April to July average. The small August gain reflected fewer concerns about the year-ahead outlook for the economy, although those prospects still remained half as favorable as six months ago. The pandemic has created distinctive consumer reactions to the economy.

Since the April shutdown of the economy, a sizable number of consumers thought conditions could hardly get any worse. The natural response was that economic conditions would improve given the absence of any negative economic causes for the recession. For example, while nine-in-ten consumers viewed the current state of the economy negatively in August, half of all consumers anticipated the economy would improve in the year ahead.

Although half anticipates an improved economy, when asked to judge the performance of the economy, 62% judged that the overall conditions in the economy could be best described as unfavorable. Although strong gains in consumer spending from the 2nd quarter lows can be anticipated, those gains will significantly slow by year-end without some additional fiscal spending programs to diminish the hardships faced by unemployed workers, small businesses, as well as support for state and local governments..."

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The ICS is derived from the following five survey questions:

1. "We are interested in how people are getting along financially these days. Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?"
   
   
   
2. "Now looking ahead, do you think that a year from now you (and your family living there) will be better off financially, or worse off, or just about the same as now?"
   
   
   
3. "Now turning to business conditions in the country as a whole, do you think that during the next twelve months we'll have good times financially, or bad times, or what?"
   
   
   
4. "Looking ahead, which would you say is more likely: that in the country as a whole we'll have continuous good times during the next five years or so, or that we will have periods of widespread unemployment or depression, or what?"
   
   
   
5. "About the big things people buy for their homes, such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?"
   
   

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• Click here for more on how the ICS is calculated.

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The ICS uses a 1966 baseline, i.e. for 1966, the ICS = 100. So any number that is below the 1966 baseline of 100 means that the folks who were polled recently aren't as optimistic about the U.S. economy as those polled back in 1966.

The ICS is similar to the Consumer Confidence Index in that they both measure consumer attitudes and offer valuable insight into consumer spending.

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The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

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• Click here to view the full University of Michigan report.

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PCE Price Index + Personal Income + Consumer Spending Report for July 2020

The Commerce Department's Bureau of Economic Analysis (BEA) released its report on The PCE Price Index, Consumer Spending and Personal Income for July 2020:

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Consumer Spending (Personal Consumption Expenditures)

Predicted: +2.0%

• Actual: +1.9%

• Actual (2012 Chained* Dollars): +1.6%

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Personal Income

Predicted: +0.5%

• Actual: +0.4%

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• Disposable Personal Income, Current Dollars: +0.2%

• Disposable Personal Income (2012 Chained* Dollars): -0.1%

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The above highlighted percentages represent the month-to-month change in Consumer Spending (aka Personal Consumption Expenditures), Personal Income and Disposable Personal Income for the entire United States.

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Personal Consumption Expenditures (PCE) Price Index
Predicted: +0.5%
Actual: +0.3%

• Change from 12 months previous: +1.0%

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Core PCE Price Index
( = PCE Price Index minus food and energy)
Predicted: +0.5%
Actual: +0.3%

• Change from 12 months previous: +1.3%

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The yellow-highlighted percentages represent the month-to-month change in the prices associated with domestic personal consumption.  The PCE Price Index is different from the Consumer Price Index (CPI) in that it is a very broad measure of the prices associated with domestic products and services, while the CPI measures a more limited fixed basket of goods and services.

The broad nature of the PCE Price Index is key to why it is the Federal Reserve's preferred measure of inflation.  The Federal Open Market Committee (FOMC) pays very close attention to it.

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The "predicted" figures are what economists were expecting, while the "actual" figures are the true or real figure.


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From Today's Report:

"...Coronavirus (COVID-19) Impact on July 2020 Personal Income and Outlays


The July estimate for personal income and outlays was impacted by the response to the spread of COVID-19. Federal economic recovery payments continued but were at a lower level than in June, and government “stay-at-home” orders lifted in some areas of the country. The full economic effects of the COVID-19 pandemic cannot be quantified in the personal income and outlays estimate because the impacts are generally embedded in source data and cannot be separately identified..."

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CHART: Month-to-Month Change In Personal Income
July 2020 Update

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• Click here to view the full Commerce Department report (PDF).
   

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* =  Chained dollars is a method of adjusting real dollar amounts for inflation over time, so as to allow comparison of figures from different years. The Commerce Department introduced the chained-dollar measure in 1996. Chained dollars generally reflect dollar figures computed with 2012 as the base year.

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Gross Domestic Product (GDP): Second Estimate for Q2, 2020

Earlier this morning, the Commerce Department's Bureau of Economic Analysis (BEA) released its second estimate for U.S. Real Gross Domestic Product (GDP) for the second quarter of 2020:

Predicted: -32.9%
Actual: -31.7%

The yellow-highlighted percentage represents the quarter-to-quarter change for Real Gross Domestic Product for the entire United States.

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"...Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $226.9 billion in the second quarter, compared with a decrease of $276.2 billion in the first quarter.

Profits of domestic financial corporations increased $39.5 billion in the second quarter, in contrast to a decrease of $42.2 billion in the first quarter. Profits of domestic nonfinancial corporations decreased $170.1 billion, compared with a decrease of $190.5 billion. Rest-of-the-world profits decreased $96.2 billion, compared with a decrease of $43.5 billion. In the second quarter, receipts decreased $139.7 billion, and payments decreased $43.4 billion..."

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"...Coronavirus (COVID-19) Impact on the Second-Quarter 2020 GDP Estimate

The decline in second quarter GDP reflected the response to COVID-19, as “stay-at-home” orders issued in March and April were partially lifted in some areas of the country in May and June, and government pandemic assistance payments were distributed to households and businesses. This led to rapid shifts in activity, as businesses and schools continued remote work and consumers and businesses canceled, restricted, or redirected their spending. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified..."

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CHART: GDP, Second Quarter 2020, Second Estimate

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• On September 30, 2020, a third and "final" GDP estimate will be released by the BEA, which will contain the most accurate and authoritative data for the second quarter of 2020.

The GDP is a very broad measure of economic activity for the entire United States, covering all sectors of the economy. The Commerce Department defines real GDP as, "the output of goods and services produced by labor and property located in the United States."

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• Click here to view the full Commerce Department report (PDF).

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New Unemployment Insurance Claims for The Week of August 22, 2020

Jobless Claims

Earlier today, the Labor Department released its weekly report on New Jobless Insurance Claims for the week that ended on August 22, 2020:

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Predicted: 1,000,000

• Actual: 1,006,000

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The yellow-highlighted figure represents the number of first-time claims for unemployment benefits for the entire United States. The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

• Previous Week (revised): 1,104,000

• 4-Week Moving Average: 1,068,000

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• Click here to view the full Labor Department report

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Durable Goods Orders During July 2020

The Durable Goods Orders report for July 2020 was released by the Commerce Department this morning:

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Predicted: +5.0%

• Actual: $230,672,000,000 (+$23,216,000,000 [+11.191%])

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• June 2020 (revised): $207,456,000,000 (+$14,851,000,000 [+7.711%])

 
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CHART: Durable Goods Orders - July 2020 Update

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The yellow-highlighted figures represent the dollar amount of new orders for durable or hard goods for immediate or future delivery from U.S. manufacturers, along with both the dollar and month-to-month percentage change.

Examples of durable goods: cars, airplanes, computers, furniture -- items that are built to last at least three years.

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• Click here to view the full Commerce Department report (PDF).
  
  

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Crude Oil Inventories Report for Week of August 21, 2020

Crude Oil Inventories

The U.S. Crude Oil Inventories report for the week that ended on August 21, 2020 was released this morning:

-- Change from Last Week: -4,700,000 Barrels

-- Change from A Year Ago (Y/Y): +80,000,000 Barrels

-- Current U.S. Crude Oil Stocks: 507,800,000 Barrels

Diminishing crude oil inventories often translate to higher crude oil prices (and vice versa), but not always.

The report is produced by the U.S. Energy Information Administration (EIA).

• Click here for the full Week in Petroleum report.

• Click here for The Weekly Crude Oil Price

• Click here for A Crude Oil Price Chart

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New Unemployment Insurance Claims for The Week of August 15, 2020

Jobless Claims

Earlier today, the Labor Department released its weekly report on New Jobless Insurance Claims for the week that ended on August 15, 2020:

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Predicted: 1,200,000

• Actual: 1,106,000

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The yellow-highlighted figure represents the number of first-time claims for unemployment benefits for the entire United States. The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

• Previous Week (revised): 971,000

• 4-Week Moving Average: 1,175,750

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From This Morning's Report:

"...The COVID-19 virus continues to impact the number of initial claims and insured unemployment. This report includes information on claimants filing Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation claims..."

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• Click here to view the full Labor Department report

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Leading Economic Index for July 2020

The Conference Board® released its Leading Economic Index® (LEI) for July 2020 this morning:

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Index for July 2020: 104.4 (The baseline 100 score is associated with 2016 data.)

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Predicted: +2.0%

• Actual: +1.359% (+1.4 points)

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• LEI for June 2020: 103.0
  
  
• LEI for May 2020: 100.0
  
• LEI for April 2020: 97.0
   
• LEI for March 2020: 103.5
  
  
• LEI for February 2020: 111.8
   
• LEI for January 2020: 112.0
  
  
• LEI for December 2019: 111.4
  
  
• LEI for November 2019: 111.6
  
  
• LEI for October 2019: 111.4
  
  
• LEI for September 2019: 111.6

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The yellow-highlighted percentage is the month-to-month change for the index.  The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

The LEI is a composite of 10 of the nation's economic data releases that's put together by The Conference Board. Statistically, the components listed below have shown a significant increase or decrease before national economic upturns or downturns:

1. The Standard + Poor's 500 Index
   
   
2. Average weekly claims for unemployment insurance
   
   
3. Building permits for new private housing
   
   
4. The interest rate spread between the yield on the benchmark 10-Year Treasury Note and Federal Funds
   
   
5. ISM® Index of New Orders
   
   
6. Manufacturer's new orders for consumer goods or materials
   
   
7. Manufacturers' new orders, nondefense capital goods excluding aircraft orders
   
   
8. Average weekly manufacturing hours
   
   
9. Average consumer expectations for business conditions
   
   
10. Leading Credit Index™
    

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CHART: Leading Economic Index - July 2020 Update

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CHART: Leading Economic Index - Six-Month Growth
July 2020 Update

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From Today's Report:

"...'The US LEI increased for the third consecutive month in July, albeit at a slower pace than the sharp increases in the previous two months,' said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. 'Despite the recent gains in the LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam. The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020.'..."

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• Click Here to view the Conference Board report.

• Click Here to view the full Conference Board report with Technical Notes

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Housing Starts During July 2020

The U.S. Commerce Department this morning released its Housing Starts report for July 2020:

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Housing Starts:
Predicted: 1,400,000
Actual: 1,496,000

Change From Previous Month: +22.623% (+276,000 units)
Change From One Year Previous: +23.432% (+284,000 units)

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Building Permits:
Predicted: 1,400,000
Actual: 1,495,000

Change From Previous Month: +18.84% (+237,000 units)
Change From One Year Previous: +9.44% (+129,000 units)

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Housing Starts: The top, yellow-highlighted figure is a measure of initial construction of single and multi-family residential units in the United States for the indicated month. Seasonally adjusted annual rate. The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

If you're wondering about the demand for new homes in the United States, or about the American residential construction industry in general, then you should pay attention to the monthly Housing Starts report. This report also offers insight into specific types of consumer spending: when housing starts are up, demand for the stuff that a consumer would purchase for a new home (large appliances, consumer electronics, furniture, etc.) tends to also rise -- and vice versa.

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CHART: Housing Starts - July 2020 Update

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• Click here to view the full Commerce Department report (PDF)

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Employment Situation Report for July 2020

The Employment Situation Report for July 2020 was released by The Department of Labor's Bureau of Labor Statistics this morning:

Nonfarm Payrolls (month-to-month change)
Predicted: +1,500,000
Actual: +1,763,000

U-3 Unemployment Rate (Headline)
Actual: 10.2%
Previous Month: 11.1%
12 Months Previous: 3.7%

U-6 Unemployment Rate*
Actual: 16.5%
Previous Month: 18.0%
12 Months Previous: 6.9%

Average Hourly Earnings (month-to-month change)
Predicted: Unchanged
Actual: +0.239% (+$0.07)

Average Hourly Earnings (year-on-year change)
Predicted: +5.0%
Actual: +4.78% (+$1.34)

Average Weekly Earnings (month-to-month change)
Actual: -0.05% (-$0.51)

Average Weekly Earnings (year-on-year change)
Actual: +5.39% (+$51.84)

Civilian Labor Force Participation Rate: 61.4%
Previous Month: 61.5%
12 Months Previous: 63.0%

Average Workweek
Predicted: 34.5 hours
Actual: 34.5 hours

Economist, academics, central bankers and investors pay very close attention to the monthly Employment Situation report as it offers penetrating insight as to the current and near-future state of the overall U.S. economy. If a) Americans are earning more money and b) the economy is creating new jobs, this typically translates to more money being pumped into the economy (and vice versa.)

The "predicted" figure is what economists were expecting, while the "actual" is the true or real figure.

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From Today's Report:

 "...The change in total nonfarm payroll employment for May was revised up by 26,000, from +2,699,000 to +2,725,000, and the change for June was revised down by 9,000, from +4,800,000 to +4,791,000. With these revisions, employment in May and June combined was 17,000 higher than previously reported..."

"...Coronavirus (COVID-19) Impact on July 2020 Establishment and Household Survey Data

Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic. In the establishment survey, approximately one-fifth of the establishments are assigned to four regional data collection centers for collection. Although these centers were closed, interviewers at these centers worked remotely to collect data by telephone. Additionally, BLS encouraged businesses to report
electronically. The collection rate for the establishment survey—which had a longer-than-average collection period in July—was 78 percent, higher than the average for the 12 months ending in February 2020. The household survey is generally conducted through in-person and telephone interviews. However, for the safety of both interviewers and respondents, the vast majority of interviews were done
by telephone, with in-person interviews conducted on an extremely limited basis in some areas of the country. The household survey response rate was 67 percent, up from the rate of 65 percent in June but much lower than the average rate of 83 percent for the 12 months prior to the pandemic.

In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs. Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they are continuing to receive benefits.

In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (July 12th through July 18th). Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. As in recent months, a large number of persons were classified as unemployed on temporary layoff in July.

Since March, household survey interviewers have been instructed to classify employed persons absent from work due to temporary, coronavirus-related business closures or cutbacks as unemployed on temporary layoff. BLS and Census Bureau analyses of the underlying data suggest that this group still may include some workers affected by the pandemic who should have been classified as unemployed on
temporary layoff.

The share of responses that may have been misclassified was much smaller in June and July than in prior months.

For March through June, BLS published an estimate of what the unemployment rate would have been had misclassified workers been included. Repeating this same approach, the overall July unemployment rate would have been about 1 percentage point higher than reported. However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error..."

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Chart: U-3 (Headline) Unemployment Rate

July 2020 Update

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Chart: Nonfarm Payroll Employment

July 2020 Update

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 * =  The U-6 Unemployment Rate is defined as:

"Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force."

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• Click here to view the full Department of Labor report.

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Crude Oil Inventories Report for Week of July 31, 2020

Crude Oil Inventories

The U.S. Crude Oil Inventories report for the week that ended on July 31, 2020 was released this morning:

-- Change from Last Week: -7,400,000 Barrels

-- Change from A Year Ago (Y/Y): +79,700,000 Barrels

-- Current U.S. Crude Oil Stocks: 518,600,000 Barrels

Diminishing crude oil inventories often translate to higher crude oil prices (and vice versa), but not always.

The report is produced by the U.S. Energy Information Administration (EIA).

• Click here for the full Week in Petroleum report.

• Click here for The Weekly Crude Oil Price

• Click here for A Crude Oil Price Chart

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