Consider the following charts of the 4-week moving average of initial unemployment claims
The above chart shows that, overall, the trend is still lower and that claims have made decent headway from their highs. However, also note that we're still not below the 400,000 level in any meaningful way.
The above chart shows the number started dropping for a second time in the latter half of last year. But we've recently seen a spike that is most disconcerting. I've seen various explanations for the above numbers, with the most logical being that high fuel prices are forcing employers to cut other expenses -- namely, payroll.
The last time I wrote about durable goods, I said the following:
With the recent drops in three Fed region manufacturing indexes (Philadelphia, Dallas and Richmond) -- and manufacturing being a key driver of the current expansion -- these data series are disproportionately important. The durable goods chart is starting to look a little better. However, I'm going to reserve judgement for the next few months as we get more information about the manufacturing sector.
The latest news from this number was disappointing and put the chart back in the "concerning me" category:
When you combine all this with the recent slowdown news from the various regional Fed indexes, you get some possible problems.
I should add, that the vast majority of the regional Fed indexes are still printing strong future expectations numbers. This tells us the participants in the sector see the current manufacturing situation as temporary. I'm guessing that most people are thinking the problem is primarily centered on Japan digging out from the earthquake. But with India, China and Brazil facing higher inflation -- and with their respective central banks looking to slow that inflation by raising rates and reserve requirements -- I have to wonder whether the slowdown is more than temporary.
The of course, there are gas prices:
While prices ticked down recently, they are still high enough to choke the economy into slower growth. As I noted in the latest retail sales figures, consumers are shifting their spending to core items (food and gas) at the expense of other purchases.
These three areas add up to a slowdown. Now the question becomes how long will it last?