Merry Christmas! 
U.S. Economy Approaches Year’s End on Lackluster Note Measures of economic vitality including income growth, consumer spending and inflation weakened in November.
Household spending rose just 0.2% in November from the month before, a slowdown in growth from the previous two months, while incomes flatlined, the Commerce Department said Thursday. (…) But income growth has softened: Wage and salary income rose 3.5% in November from a year earlier, the slowest year-over-year gain since December 2013. (…)
Spending for October was revised up to a 0.4% gain from an initial estimate of up 0.3%. Incomes in October advanced 0.5% versus a previous reading of up 0.6%.
The personal-consumption expenditures price index, the Fed’s preferred inflation measure, was unchanged in November and up 1.4% from a year earlier. (…)So-called core prices, which exclude the volatile categories of food and energy, also held flat from the prior month and were up 1.6% from a year earlier. That was the weakest annual increase since July.
When adjusting for inflation, Thursday’s report showed consumer spending rose 0.1% in November from the prior month. Inflation-adjusted disposable personal income—income after taxes—was down 0.1%.
Americans saved a smaller share of their income last month. The personal saving rate fell to 5.5% from 5.7% the prior month.
The all-important American consumer is difficult to read this year. November was very weak across all income and spending measures following a strong summer and early fall. October was a strong month income-wise but real spending rose only 0.1%. Last month, income growth turned down. Q4 so far is showing real consumer expenditures up at a dismal 1.2% annual rate. (Table from Haver Analytics)
Retailers Make Final Push to Lure Last-Minute Shoppers
(…) In October, the National Retail Federation forecast that Americans would spend $655.8 billion in November and December, or a 3.6% increase from a year ago. However, in dollar terms, retail sales slowed slightly versus last year in the weeks between Thanksgiving and Christmas, according to data from NPD Group, a market research firm.
“This year’s trend clearly demonstrates how extreme promotions, now most noticeable in toys and electronics, are steering retail off the path of growth,” said Marshal Cohen, NPD’s chief industry analyst. “Even though we are lagging behind so far, don’t be surprised if that last week pulls in a lot of business,” for brick-and-mortar retailers. (…)
The level of promotional activity, especially among apparel retailers, ticked up the weekend before Christmas, according to Simeon Siegel, a Nomura Instinet analyst. Of the 21 retailers he follows, nine offered deeper discounts compared with the same weekend, known as “Super Saturday,” a year ago. (…)
The Christmas Tree Indicator: Consumers Are Joyful
Sales of Christmas trees have jumped 10% from a year ago, the largest increase on record, according to Oscar Sloterbeck, head of company surveys at Evercore ISI, which has tracked this data since 2003. (…)
Christmas tree sales growth in states that went for Mr. Trump was 3 percentage points stronger than in states won by Hillary Clinton. That is similar to what took place in 2008 when Barack Obama was elected, except in favor of the Democrat.
US student loan defaults hit a new high.
Source: @delislealleges, @Tmp_Research via The Daily Shot
Durable-Goods Orders Fall 4.6%
Orders for durable goods—products designed to last longer than three years, such as trucks or computers—declined 4.6% from a month earlier to a seasonally adjusted $228.17 billion, the Commerce Department said Thursday. (…)
When excluding orders tied to transportation, new orders increased 0.5%. When excluding defense, another choppy category, orders slid 6.6%. (…)
Core capital goods orders (nondefense capital goods orders excluding aircraft) rose 0.9% in November, the fifth increase in the last 6 months. New trend? (Table from Haver Analytics)
U.S. Leading Economic Indicators Hold Steady
The Conference Board’s Composite Index of Leading Economic Indicators remained unchanged during November (0.7% y/y) following an unrevised 0.1% October uptick. A 0.2% rise had been expected in the Action Economics Forecast Survey. The six-month change in the index improved to 2.0% (AR)
Contributing positively to the index last month were initial unemployment insurance claims, a steeper interest rate yield curve, nondefense capital goods orders, factory orders for consumer goods, stock prices, consumer expectations for business/economic conditions, stock prices and the leading credit index. Contributing negatively were the average workweek, building permits, a lower ISM new orders diffusion index and more initial claims for unemployment insurance.
Hmmm…
Trump team floats a 10% tariff on imports
President-elect Donald Trump’s transition team is discussing a proposal to impose tariffs as high as 10% on imports, according to multiple sources.
A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed at spurring US manufacturing, which could be implemented via executive action or as part of a sweeping tax reform package they would push through Congress. (…)
The senior transition official said the transition team is beginning to find “common ground” with House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, pointing in particular to the border adjustment tax measure included in House Republicans’ “Better Way” tax reform proposal, which would disincentivize imports through tax policy.
Aides to Ryan and Brady declined to say they had “common ground” with Trump, but acknowledged they are in deep discussions with transition staffers on the issue. (…)
At least one business community organization is worried enough about the prospect of the tariff it already has prepared talking points, obtained by CNN Wednesday night.
“This $100 billion tax on American consumers and industry would impose heavy costs on the US economy, particularly for the manufacturing sector and American workers, with highly negative political repercussions,” according to the talking points. “Rather than using a trade policy sledgehammer that would inflict serious collateral damage, the Trump administration should use the scalpel of US trade remedy law to achieve its goals.”
The talking points also claim the tariffs would lead to American job loss and result in a tax to consumers, both of which would harm the US economy. (…)
Trade hawks to rule the roost in Trump’s White House Appointments suggest economic relations, particularly with China, are set for shake-up
(…) With the naming on Wednesday of Mr Navarro, a longtime critic of US-China policy, to lead a new National Trade Council in the White House, the president-elect sent a signal that he intends to deliver on some of his most bombastic economic promises on trade.
Together with Wilbur Ross, the billionaire investor Mr Trump has chosen to lead the commerce department and act as his point person on trade, Mr Navarro co-authored a much-scrutinised white paper in September that helped flesh out the Republican candidate’s economic policy. It put reducing the trade deficit and fighting back against “cheating” by US trading partners such as China at the core, arguing that US workers had for too long suffered from what it viewed as bad trade policy. (…)
Maybe this is not a coincidence:
President Xi Open to Growth in China Falling Below 6.5%
President Xi Jinping is open to China’s economic growth slowing below the government’s 6.5 percent target due to rising debt and concern about an uncertain global environment after Donald Trump’s election win in the U.S., according to a person familiar with the situation.
Xi told a meeting of the Communist Party’s financial and economic leading group this week that China doesn’t need to meet the objective if doing so creates too much risk, said the person, who asked not to be named because the discussions were private. (…)
The shift signals that leaders see systemic risk as great enough to warrant re-evaluating key goals and may be less inclined to add to fiscal and monetary stimulus. (…)
Some meeting participants sounded the alarm about unsustainable debt, noting that other nations have experienced crises after borrowing climbed to around 300 percent of GDP, the person said. China’s debt-to-GDP ratio rose to about 270 percent this year, the person said. (…)
At another meeting last week, Xi and his top economic policy lieutenants pledged to make preventing and controlling financial risk to avoid asset bubbles a top priority for 2017. They also said they plan prudent and neutral monetary policy and proactive fiscal policy next year, according to a statement after the three-day Central Economic Work Conference. (…)
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China “Shocked” By Navarro Appointment, As Trump Team Proposes 10% Import Tariff
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“Death by China”: Beijing Fires “Trade Cooperation Warning” at Trump
World Trade Falls to 2014 Level, just in Time for a “Trade War”
(…) “But maybe if you’re going to do it,” Icahn said about the looming trade war with China, “you should get it over with, right?” (…)
Loonie Tumbles After Canadian Economy Unexpectedly Crashes Back Into Contraction
After 4 straight quarters of MoM growth in GDP, the Canadian economy plunged 0.3% in Q4 (considerably worse than the 0.0% expectations) despite a resugenece in crude prices. The Loonie is tumbling, back at 5-week lows, as manufacturing shrank a shocking 2.0% YoY – most since 2013.
- Goods-producing sector fell 1.3% m/m in Oct.
- Service-producing sector rose 0.1% m/m in Oct.
- Largest upside contributor was real estate, +0.05 ppts
- Largest downside contributor was manufacturing, -0.20 ppts
- Manufacturing output falls 2.0% m/m, biggest decline since December 2013
Credit Suisse agrees $5.3 billion U.S. mortgage settlement
The most addictive drug: Facebook
The social-media giant has defied even optimists’ projections of how big the 12-year-old firm could become. Today the company’s flagship social network claims 1.8bn active monthly users. Facebook has attracted these hordes by engineering features that are highly addictive and relevant to their lives, so people keep coming back for more hits. Throw in the other apps it owns, such as WhatsApp, Instagram and Facebook Messenger, and Facebook accounts for 30% of Americans’ mobile browsing time, compared with 11% for Google and YouTube combined. Collecting data on users has helped Facebook become the world’s second-largest advertising company on mobile devices. But Mark Zuckerberg wants to turn it into an even bigger part of the mobile ecosystem—hence the plans to develop Messenger and other messaging services into portals through which people can order taxis, communicate with businesses and so on. Being as useful as it is addictive could win Facebook even more friends. (The Economist)
