Recent updates for personal income and spending in November, along with new data on durable goods orders, present a promising outlook for economic growth. Those claiming that the economy is heading towards a downfall should take note; today’s statistics provide a firm counterargument. Similarly positive November figures have emerged from various economic indicators in recent weeks. Earlier this month, I forecasted an enhancement in the overall economic activity from October to November, and the latest updates confirm that trend. Importantly, the data suggests that the risk of a recession remains minimal at this time, supporting the consistent message with which we have been operating.
Today’s report on personal income and spending for November is anticipated to show a recovery following the disappointing figures from October. The average econometric forecasts from The Capital Spectator align with market expectations, projecting increases of +0.3% for income and +0.4% for spending to be announced shortly today at 8:30 a.m. Eastern Time by the Bureau of Economic Analysis.
Is the U.S. economy facing a new recession, or has it already begun to shift into decline? Tomorrow’s update on the Chicago Fed National Activity Index (CFNAI) for November may provide clarity. The CFNAI recorded a three-month average of -0.56 in October, approaching the critical threshold of -0.70, which historically indicates an increased likelihood of a recession’s onset. While the potential risk should not be dismissed, The Capital Spectator’s average econometric forecast suggests a rebound, estimating the CFNAI’s three-month average to improve to -0.26, moving away from the recession signal implied by October’s figure.
Jobless claims saw an increase of 17,000 last week, reaching a seasonally adjusted total of 361,000. This rise is neither unexpected nor particularly alarming at this stage. As I previously noted before the report was released, my average predict was spot on, anticipating the exact rise to 361,000. Consequently, while the uptick in claims may sound notable, it falls within the broader, stable range observed throughout the year and can largely be considered insignificant.
Today’s update on weekly jobless claims (to be released at 8:30 a.m. Eastern) is expected to show an increase following last week’s significant decline to just over a five-year low. The average econometric forecast from The Capital Spectator suggests a rise to 361,000 new unemployment claims, seasonally adjusted, compared to the prior week’s figure of 343,000.
The latest report from the Census Bureau shows that housing starts decreased by 3% last month. This drop marks the first decline since July and, while not entirely unexpected, appears manageable. As I mentioned earlier, this decline does not significantly alter the overall positive trend in housing construction. The long-term outlook for new housing remains robust, buoyed by demographic shifts and rising demand in the market.
The November housing starts update is set for release today (8:30 a.m. Eastern) and expectations lean toward a decline compared to a 3.6% rise in October. The forecast from The Capital Spectator points to a decrease of about 2.5%. Additionally, the relatively high level of housing starts in October, compared to building permits issued during that month, suggests that November could see a pullback. Typically, discrepancies like this do not endure; historically, when starts are higher than permits, a fallback commonly occurs the following month.
Mebane Faber has come up with an interesting concept for an ETF that tracks investment results highlighted by the Barron’s Roundtable, an annual feature that offers various portfolio recommendations. According to Pundit Tracker, following the investment picks from the Barron’s Roundtable has proven lucrative over the years; since 2002, the average return of Roundtable selections has been 11.5%, compared to a -0.2% return for the S&P 500, with nearly all members outperforming the index.
According to the averaging of The Capital Spectator’s five econometric “nowcasts,” U.S. gross domestic product for the fourth quarter is projected to grow by 1.5%. This figure marks an increase from the 1.2% average noted in our last update on November 23. This improvement aligns with recent positive economic reports, including significant upticks in both industrial production and retail sales numbers for November. Today’s Q4 GDP nowcast reflects these recent indicators, suggesting a moderately positive economic momentum.
● Practical Risk-Adjusted Performance Measurement
By Carl Bacon
Summary via publisher, Wiley
Risk management within asset management firms is often deemed excessively complicated. This book seeks to simplify the subject, demonstrating through practical examples that risk can be straightforward. Unlike many texts that focus on theoretical risk analysis, this one emphasizes real-world applications, offering numerous worked examples that clarify risk measures and their implications.
