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Economic Insights

Tue, 24 Aug 2010 06:32:00 -0700

By Matthew Gardner, Gardner Economics LLC
August 23, 2010

What to Watch This Week

Existing home sales for the month of July will be announced on Tuesday, and I expect that we will see further declines to an annualized rate of 5.14 million units from June's number of 5.37 million. We will continue to experience a "payback" following the high demand from buyers that took advantage of the tax credit, which will weigh down transactions. Additionally, and as I have said before, I am noting that buyers appear to be in no big hurry to transact, and this too will pull the number down.
Year-over-year home prices have seen some stabilization in recent months, and it will be interesting to see where this number ends up considering 32 percent of June’s transactions were distressed sales which generally sell for lower prices.
Durable goods orders for July should swing upward from its negative figure last June. Manufacturing has been hit hard, and I am hopeful for a good figure here.
New home sales, which jumped last month, are likely to see an additional uptick, but I am slightly cautious here. The increase that we saw in June was partly attributable to a downward revision in May's figures. Still, I am looking for an increase to 338,000 units (annualized) from 330,000 in June.
Initial unemployment claims, which were not at all good last week, are likely to remain elevated at just below the 500,000 mark. This is certainly not good, but I discuss my reasoning for not being totally despondent with the numbers below.
The latest estimate for U.S. GDP is likely to be revised lower, and I am looking for a figure of 1.4 percent from the initial estimate of 2.4 percent. All indications are that the government overestimated growth last quarter.
Revised consumer sentiment figures for August will remain basically where the advanced figures were (or maybe just a hair higher) than the 69.6 number announced earlier this month.

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Economic Insights

Tue, 10 Aug 2010 06:54:00 -0700

By Matthew Gardner, Gardner Economics LLC
August 9, 2010

What to Watch This Week

It is likely that we will see productivity figures, which will be released on Tuesday, show an uptick as we continue to work employees harder instead of increasing hiring. This is supported by increases in the average workweek.
The Federal Reserve is sure to keep interest rates where they are (0.25 percent), and I do not expect this to increase this year. In fact, the troubling payroll figures that we saw last week are likely to push the Fed to consider further accommodating actions to try and stimulate the very sluggish economic rebound.
Inflation numbers, which will be released on Friday, will show an increase; However, the movement will be very modest. I am not concerned about inflation at this point.
Consumer Sentiment numbers will be disappointing. I sometimes feel as if I am a broken record, but we are still concerned with the employment situation, and this will, yet again, weigh on this index.
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Economic Insights

Tue, 03 Aug 2010 07:36:00 -0700

By Matthew Gardner, Gardner Economics LLC
August 2, 2010

What to Watch This Week

General consensus is that we will see a reduction in construction spending when figures are announced today; However, I am not so sure. The improved sales that were announced last week may lead to a moderate increase in residential construction, but this may also be offset by weakness in the commercial sector.
Personal incomes should rise, although the increase will be very modest. My model is calling for a 0.2 percent increase following May's 0.4 percent rise. We are not in an inflationary environment at the present time.
Auto and truck sales numbers are also likely to see a modest bump that will be led by autos, but we will likely see a reduction in truck sales. Numbers are, however, well off the pre-recessionary levels.
I will be focused on payroll numbers when they are announced on Friday, and I am predicting that we will see a modest rise following the 125,000 decline seen in June. As I mentioned earlier this month, June's decline was a result of laying off 225,000 Census workers, and in fact, private payrolls expanded by 83,000. I am looking for a modest gain in the July figures.
Consumer Credit, which has been on the decline since October 2008, will continue its downward trend. We saw a very substantial reduction in revolving debt levels (-10.5 percent year-over-year), and this will continue to slide as banks contract further and consumers continue to try to deleverage. [More]

Economic Insights

Tue, 27 Jul 2010 09:19:00 -0700

By Matthew Gardner, Gardner Economics LLC
July 26, 2010

What to Watch This Week

New home sales numbers may be disappointing after they are released this morning; However, I personally think that there might be a little uptick as we come off the horrendous low of 300,000 units reported last month. The whiplash effect following the expiration of the tax credit pushed transactions to an all-time low, and being the contrarian I am, a small uptick may be on the cards. That being said, the numbers are sure to still be very low from an historic perspective.
Tuesday's Case Shiller figures will likely show very modest improvement across the entire index, and as I have said for some months now, the Seattle region will continue to claw its way back into positive territory.
I fear that consumer confidence numbers will continue to retract as the public agonizes over the snail’s pace of our economic recovery.
Initial and continuing unemployment claims are likely to remain elevated. While we are seeing additional temporary hiring occur in the summer months, employers remain particularly cautious when it comes to new hires. I am sure that there are many readers with children home from school and who are wondering where all the summer jobs are!
Consumer sentiment numbers are also released this week, and similarly to the confidence index, I expect that these numbers will continue to disappoint. Last month the figure remained benign, but I would not be surprised to see it lower as our economic engine continues to splutter and not roar.
Finally, we will see the preliminary estimates for U.S. gross domestic product for the second quarter of this year. It is my anticipation that we should see a figure of around 2.7 percent annualized growth that will match that of the first quarter. This is far from stellar, but inventory growth will continue to keep this figure on positive territory.

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Job Development: Adversity = Opportunity

Tue, 20 Jul 2010 09:39:00 -0700

Hello, I am Sue Z. Hart, CEO of Little Red Wagon University; a company designed to help organizations and individuals discover for the power of success through simplicity and fun. I am excited to talk with you today about the tenuous job market.

One of the biggest mistakes I see people make when they lose their job, or we go into a slow economy is panic. My advice, don’t! Yes, you will have to map out a plan but once you have set your course, put it on cruise and embrace the opportunities!

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Economic Insights

Tue, 20 Jul 2010 06:58:00 -0700

By Matthew Gardner, Gardner Economics LLC
July 19, 2010

What to Watch This Week

I am expecting to see further contraction in housing permits across the U.S. as builders remain wary of demand for housing following expiration of the tax credit. I expect this tocontinue the rest of the summer. We will also see a contraction in housing starts for the same reason.
Initial and continuing employment claims should continue to show modest improvement but not at the pace that all of us would like to see.
Existing home sales figures, released on Friday, will also show a substantial drop following the boost in sales from the tax credit. It would not surprise me to see a figure of 5.1 million sales (annualized) from last month’s figure of 5.66 million units.

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Economic Insights

Wed, 14 Jul 2010 07:05:00 -0700

By Matthew Gardner, Gardner Economics LLC
July 12, 2010

What to Watch This Week

Last week was fairly slim when it came to economic announcements; however, this week there is far more to sink our teeth into. I will be delving into our local employment situation for June when data is released on Tuesday. Although I do not believe that we will see positive growth on a year-over-year basis quite yet, we are on the verge of it and recent month-over-month numbers have shown signs of growth in some sectors. The unemployment rate might bump up a little with temporary census workers contracts ending, but this decrease is fairly minimal.
Retail sales figures will continue to point to improvement and that consumers are buying, albeit modestly. Last months figure of negative 1.2 percent will likely improve to negative 0.1 percent.
Business inventories should contract slightly as demand for goods grows.
Prices paid at factory gates (PPI) will show a very slight increase, furthering my belief that inflation remains very tame.
Consumer prices, which retracted slightly in May, will more than likely stay flat in sync with the PPI figure.
I am hopeful that initial employment claims, which came in better than expected last week (see below), will continue to show modest improvement.

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Economic Insights

Tue, 06 Jul 2010 14:41:00 -0700

By Matthew Gardner, Gardner Economics LLC
July 06, 2010

What to Watch This Week

We will get data on housing transactions for our market on Tuesday and I anticipate that we will see the highest transactional figures for the year as we see the end of the tax credit. I believe that figures for both King and Snohomish counties will be moderately higher than the prior month, and we will see continued stability in transactional prices.
The Institute for Supply Management figures will likely remain about where they were in May (55.4).
I hope that we will see weekly employment numbers show very modest improvement but improvement all the same. Nothing stellar to report yet, and I anticipate that gains will be sluggish throughout the summer.
Consumer Credit figures are the only other data point in this shortened week that is worthy of discussion. I anticipate that we will see further erosion in credit, especially revolving credit, and a likely slowdown in non-revolving credit. We are still cautious and maintain our posture of retiring debt, especially credit card debt as we become able to.

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Economic Insights

Mon, 28 Jun 2010 14:20:00 -0700

By Matthew Gardner, Gardner Economics LLC
June 28, 2010

What to Watch This Week

Personal incomes should increase very modestly, and I hope that we will see a tiny increase in expenditures as consumers no longer fear the shopping mall as much as they have been!
With eyes firmly fixed on the Case Shiller index, I anticipate that we will see a moderate increase in year-over-year prices to around 3.5 percent. Locally, I expect that the Seattle area will continue to claw its way upward toward positive annual appreciation, but we will likely still be short.
Consumer confidence figures should decline slightly as we remain uncertain on the job front.
Construction spending should also see retraction as homebuilders worry about demand for their product following conclusion of the tax credit.
Pending home sales, which saw tax-credit inspired advances last month, will retreat with the end of that program. Do not be surprised if we see a reduction of up to 10 percent here.
The big number comes in at the end of the week with monthly data on employment and the unemployment rate. I anticipate that we will see the unemployment rate remain static at 9.7 percent, but it is likely that we will see a modest reduction in non-farm payrolls as gains from Census hiring fade.

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Economic Insights

Tue, 22 Jun 2010 08:42:00 -0700

By Matthew Gardner, Gardner Economics LLC
June 21, 2010

What to Watch This Week

Existing homes sale figures for May will be announced on Tuesday, and I expect that there will be a moderate increase in transactions and that we may exceed the 6M figure (annualized). I am not as confident when looking at the new home sale figures for May and I anticipate that we will see a reduction in transactions from 504,000 to around 480,000, as theexpiration of the tax credit weighs more on this product and the gains that we saw in April (65,0000) weaken dramatically.
Nobody expects that we will see any adjustment in the Fed Funds rate. Actually, I am now predicting that we will not see a rate hike until well into the New Year. This might surprise some of my readers, but I was very interested in a paper released by the Federal Reserve Bank of San Francisco who suggested that, given the statistical relationship between core-consumer price inflation and the gap between actual unemployment and the natural (or normal) rate of unemployment, we may not see rates rise until 2012!
I hope that we will see weekly employment numbers show very modest improvement, but improvement all the same. Nothing stellar to report yet, and I anticipate that gains will be sluggish through the summer.
Gross Domestic Product revisions will likely be modest, as we have already seen substantial revisions to this figure (3.0 percent). It is likely that this will stand.
Revised Consumer sentiment numbers for June should basically be in line with the previous report of 75.5, but if we see any revisions at all they will likely be to the negative, as we continue to fret about the availability of new jobs as well as our overall economic recovery.

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Economic Insights

Tue, 15 Jun 2010 11:01:00 -0700

By Matthew Gardner, Gardner Economics LLC
June 14, 2010

What to Watch This Week

Housing data will take up most of my interest this week with the announcement of starts and permit activity. I anticipate that we will see a reduction in starts but an increase in permits. The likelihood is that permit activity will be led by the ever volatile multifamily sector (mainly apartments). I anticipate that starts will come in at around 655,000 and permits at about the same level.
CPI figures will continue to remain muted and I anticipate that we will see a figure of negative 0.1 percent for the month of May that will match April's figure. Core CPI should be at about 0.1 percent. Inflation is not on my radar at the present time.
Retail sales should inch higher and still be substantially above the levels that we saw a year ago with gas and automobile sale rising modestly.
I expect that the leading indicators figure will show improvement and come in at a figure of around 0.4 percent that is very positive considering the negative 0.1 percent that we saw for April.

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Top Five Reasons Marketing Plans Fail

Tue, 08 Jun 2010 09:25:00 -0700

By Andrew Ballard, President of Marketing Solutions Inc. of Seattle

If I had a nickel for every time I heard “my marketing plan didn’t work”… I wouldn’t be rich, but I’d have a boat load of nickels. There are five common denominators that precede a failed plan. Regardless of whether you’re a builder, part of the supply chain or an associate, avoiding these mistakes should improve the outcomes of your planning.

Developing a strategic marketing plan is fundamental to succeeding in our increasingly competitive marketplace. But just going through the motions, to check it off the to-do list, won’t amount to a measurable impact.

Strategic planning isn’t a “to-do,” it is an ongoing “process” that should change as your business situation and external environment evolve. A leading management consultant, Ron Carucci (Partner at Passages Consulting), suggests, “A strategic plan begins depreciating immediately; the value is in the planning, not the plan.

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Economic Insights

Mon, 07 Jun 2010 11:38:00 -0700

By Matthew Gardner, Gardner Economics LLC
June 7, 2010

What to Watch This Week

Consumer credit is likely to show further contraction as the public continues its goal to reduce personal debt. I would not be surprised to see a reduction of around another $4 billion. Data supporting this thesis has already been seen in the disappointing retail sales figures that were released last week.
The stock of unsold goods as represented in the wholesale inventory report should rise modestly but still be at levels below that of a year ago. The likely increases will come in petroleum reserves and computer equipment.
Retail sales should inch higher and still be substantially above the levels that we saw a year ago with gas and automobile sales rising modestly.
I am anticipating that consumer sentiment, although notoriously difficult to predict in these frenetic times, will rise modestly from 73.6 to 75 on the back of more stable U.S. economics. However, this may be further affected by the Euro zone meltdown. I am hopeful though!
Business inventories will also likely rise modestly as companies are still restocking their shelves, albeit cautiously.

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Economic Insights

Tue, 01 Jun 2010 14:49:00 -0700

By Matthew Gardner, Gardner Economics LLC
June 1, 2010

What to Watch This Week

My eyes will be fixed firmly on data for existing home sales that is sure to show increasing sales as buyers took advantage of the expiring tax credit. The big question that remains is whether momentum can be maintained going forward, and all indications suggest that, on a national level, we are going to see a slowdown as the market finds its own buoyancy.
The Case-Shiller Index will continue to show modest improvement in both the 10- and 20-City Indexes. All markets however, are not, created equal, and I do not expect that the Seattle market will turn positive yet. But, we are still headed in the right direction. There are some markets that have become remarkably bullish, with San Francisco recording an almost 12-percent year-over-year increase through February. This is confusing, but it is my belief that bank-owned properties are not being released to the market in order to boost prices through a shortage of available housing units. I will be keeping my eye on this as we move into the summer and see if it will be maintained.
Consumer Confidence will likely continue to show slim improvement on the back of job creation, but I do not expect to see the jump that was seen in April. It is likely that troubles abroad will start to dampen our short-term enthusiasm over our own growth prospects
In a similar vein to my comments above, relative to existing home sales, new home sales should show tax-credit-induced improvement. The increase in sales has been more dramatic than in the resale arena, and I do fear that we will see a sharper slowdown in coming months at the national level.
I am not anticipating any major adjustments to U.S. Gross Domestic Product when the first revision is announced on Thursday.
Consumer Sentiment, which declined in April, may move modestly higher, but I worry that the expectations for future economic gains will weigh down any improvement. We are in choppy waters right now, and the shore is still some distance away.

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Excellent Job Performance: How to Keep the Job You Have!

Thu, 20 May 2010 10:08:00 -0700

By Beth Madden, Madden Industrial Craftsmen, Inc

This is a tough market for job seekers. It is more important than ever to you make sure you are doing everything possible to keep the job you have. Here are three key factors, beyond basic job skills, that can be your key to success:

Punctuality is Key: It is important to show up on time every day you are scheduled to work. Whether you just started a new job, or have been on the job for years, in this market, employers will not tolerate either tardiness or unexcused absences. They are watching every dime and when you are late or miss a day’s work that is not planned, you end up costing your employer money by either lost production or additional resources required to cover your position. So, set the alarm clock early, and take care of yourself and your vehicle to make sure you can arrive on time every day.

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