The market spent most of the week waiting for Ben Bernanke's speech, mainly to see whether he'd implement an asset-friendly QE3 program. Although initially disappointed by no QE3 announcement, the market took some solace in the fact that Dr. Bernanke promised to extend September's normal meeting by a day just to evaluate what further measures could be adopted by the Fed to help the economy along. He very carefully said he would do what he could to help but postponed any big new project, at least until he could see whether his no-interest-rate-increase pledge of two weeks ago produces the desired effect. While not new or unexpected, I am very pleased the Fed took a pass on knee-jerk reaction that could have produced QE3. I hope this will take more air out of the commodity bubble in the ensuing weeks. That should make the consumer a little happier in the months ahead.
Economic Data Relatively Tame The widely expected second-quarter GDP revision was negative, reducing growth to just 1.0% from the previously announced 1.3%. Slower exports contributed to the revision as did a surprise slowing in inventory growth. The more important consumption and business spending portions of the report were revised upward. The footnotes also indicated that disposable income, after inflation, would be marked up to about 1.1% from 0.7% after just revising the data downward last month during the benchmark revisions. Durable goods orders also looked surprisingly strong overall, but certainly not in every category. Manufacturing isn't dead yet, at least according to this report and last week's industrial production report. Housing prices also logged their second increase in as many months.
GDP Growth Stalled in the 1.5%-2.5% Range, Despite What the Statistics Say The up-and-down revisions of the personal income report cited above combined with a lot of contradictory reports make the job of economist even harder. Some of the best employment numbers of 2011 now look like they came during the months of the worst economic conditions. Likewise, the Institute of Supply Management Reports on Manufacturing have been trending down since early in the year at just about the same time real manufacturing data and orders began improving (or at least held their own). And after a series of revisions, the economy looks like it bottomed in the March quarter and that both the June and September quarters showed marked improvement. These data seem to defy the consensus view that we had a reasonably strong spring and have just now entered a soft spot and that the economy is on the way down. Changing seasonal patterns, up-and-down inflation, high gas prices, and the Japanese tsunami have done major damage to the reliability of the short-term economic indicators that have been so valuable in the past. My guess is that we have been stuck in pretty narrow 1.5%-2.5% growth range over the last year that hasn't gotten much better or much worse despite what the statistics say.
Second-Quarter GDP Revised Downward as Expected In the government's second cut at second-quarter GDP, growth was reduced to 1.0% from 1.3%, as widely expected. Revisions touched many categories and included both increases and decreases. As many assumed, the major culprit in the revision was previously announced changes in export data, which decreased GDP by 0.4. More shocking was that inventory growth slowed dramatically and the inventory adjustment slowed GDP by the same 0.4% that exports did. Inventories appear to be too low and are likely to bounce back in the future. It's highly unusual for inventories to be this negative a contributor so early in a recovery. On the plus side, consumption was revised up as was business spending. While a downwardly revised GDP number is never a positive, I am pleased the reduction was due mostly to inventories while consumption and business spending actually improved.
After all these revisions, it looks like we have upwardly trending GDP growth after a weak winter. Here is the trend over the last six quarters:
GDP Growth
Q3 2011
The bad news is that given the extreme decline we had this recession, all we have gotten is a lackluster recovery, even if that trend is looking at least a little better. Growth of 2.5%-3% is generally considered normal growth for the U.S. economy. For what it's worth, I think third-quarter GDP growth will exceed the consensus expectation of 2% based on auto sales, business spending, and services growth all by themselves. However, exports and housing will be detractors in the third-quarter GDP calculation.
Verizon Strikers Cause a Jump in Unemployment Claims Over the last two weeks, initial unemployment claims bumped up to 417,000 from 399,000, driven by striking Verizon employees in New York applying for unemployment benefits. Most states categorically deny claims by strikers who were not locked out by employers, but New York does allow some workers to collect. Hence, about 21,000 Verizon workers have applied for benefits (out of 45,000 strikers). So excluding those strike-related claims, benefits have hovered around the 400,000 level for several weeks. Frankly, given the number of high-profile financial firms that have announced layoffs (including Bank of America displayPTip('BAC', 'BAC','YTD', '', '', '', '', '', '','msg','P'); and UBS displayPTip('UBS', 'UBS','YTD', '', '', '', '', '', '','msg','P');), I am a bit surprised at how well-behaved this indicator has been.
The good news is that the Verizon workers recently agreed to go back to work despite their contract dispute with the company. That should bring claims back down to a more normal level. Unfortunately, Verizon employees were out on strike over the critical period when the data were gathered for the national employment report, due next week. This could put a 45,000-person damper on a report that was perhaps already looking a little soft.
The real problem with unemployment is not the number of layoffs, but the lack of new jobs and consequentially the length of unemployment. The odds of claims getting much better from here are minimal. The employment market and the economy can still improve without much of a change in claims. In 2006, one of the better years of the last recovery, claims averaged 312,000 per week. At the worst of the recession, March 2009, claims got as high as 678,000. At the current strike-adjusted level of 400,000 or so, we are much closer to a boom year performance than recessionary levels. It would take a jump in the four-week moving average above the 500,000 level to really alarm me.
Manufacturing Might Not Be Dead After All July durable goods orders jumped an exceptionally strong 4%, exceeding expectations. Unfortunately, the gains were highly concentrated in the auto and aircraft industry. On a month-over-month basis, primary metal was the only other category to show an increase.
While I'm not a fan of this concentration, orders for cars and autos often lead to increases in orders in other categories in subsequent months. What's more, the three major "up" categories comprised almost 40% of all new orders.
July is always a hard month to read because June represents the end of a quarter and in many cases the end of a fiscal year. There is often a rush of orders at the time as customers put the screws to vendors trying to make their quarterly numbers. I think this trend has been stronger in recent years than the seasonal factors used by the government. It makes more sense to me to look at the data on a year-over-year basis to eliminate some of these seasonal factors. I also like to use a three-month moving average to smooth the monthly volatility, especially due to volatile data from the aircraft and auto sectors. I prefer this methodology rather than tossing out the transportation sector outright, because transportation orders represent more than 25% of all durable goods orders.
Year-Over-Year Durable Goods Orders
Month-to-Month Change (%)3 Month AverageYear-Over-YearChange (%) January4.012.0February-1.19.7March4.610.5April-2.59.5May2.010.0June-1.38.2July4.09.0Source: Census Bureau
Interestingly, shipments of durable goods have been improving. While orders are probably a better indicator of future events, shipments and production are what drive the GDP calculations. The news here is good and likely to improve more as the Japanese auto industry ramps up again.
Year-Over-Year Durable Goods Shipments
Month-to-Month Change (%)3 Month AverageYear-Over-YearChange (%) January0.35.9February0.06.7March3.18.2April-1.48.3May0.57.7June1.17.0July2.57.2Source: Census Bureau
International Purchasing Managers' Reports Stabilizing Too Hidden in all of the week's data was an improvement in the Chinese PMI and a stable reading for Europe. At a minimum, I think this means manufacturing is not completely falling off. But by no means are things as strong as they were a year ago. For example, the China PMI registered an improvement to 49.8 from 49.2, though still down from readings in the mid-50s several months ago. That type of reading for China is still consistent with industrial production growth of 13%, not too shabby. The European index also did better than expectations, basically holding steady at 51.1. According to our industrials team, the report showed improved momentum in Germany and slower results in France. Unfortunately, the new orders component of both reports suggested that there could be some slowing in the index in the months ahead.
Home Prices Up? Believe it or not, home prices increased for the second month in a row according to the Federal Housing Finance Agency. Prices increased 0.9% in June after a 0.4% increase in May, which should bode well for the more closely watched Case-Shiller home price index due next week. But on a year-over-year basis, prices are still down about 4% and about 19% from the April 2007 peak. Stabilizing prices, along with greater home affordability and lower mortgages, should eventually fuel increased home purchases. By regions, price appreciation ranged from a negative 0.8% in the Western region to a stunning 3.3% gain in the East North Central region.
New Home Sales Stuck in the Mud That was not the case with this week's new home sales report, which showed new home sales fell 0.7% to 298,000 units roughly in line with expectations. Foreclosures and relatively high prices compared to existing homes are keeping a lid on new home sales. In fact, those sales remain perilously close to multidecade lows. Inventories sound particularly skinny at 165,000 units. That level looks infinitesimally small compared with the 110 million or so existing households. If the market ever regains momentum, there is almost no supply.
Next Week: Personal Income, Purchasing Managers' Report, Jobs, and Autos Next week, the national Purchasing Managers' report will get a lot of attention--perhaps more than it deserves. Based primarily on poor regional results announced earlier this month and fears of slowing exports, experts are expecting the PMI report to show a decrease from 50.9 for the July release to 49.7. I can picture the headlines now: "PMI Drops to a 24-Month Low, Below Critical 50% Level, Indicating Declining Manufacturing Sector." Wrong!
To greatly simplify, managers are asked whether things are getting better, getting worse, or staying the same in this survey in several different categories (orders, production, employment, and so on). The ISM adds all the "getting better" responses and adds half the "staying the same" responses, producing a total that generally ranges between 30 and 70. While much importance is attached to the 50 number, the statistical work by the ISM suggests that the reading has to dip into the low 40s to indicate an upcoming recession.
The ratio dipped below the magic 50 four times in the 1990s, and only at the end of the decade did we actually get a recession.
Also, while constructing an index this way gets to a quick answer, it does suffer some statistical problems. What the index fails to capture is if a few industries are doing really, really well while the majority are muddling along the flat line, the index will show a poor result. This week's durable goods report highlighted that very same issue. While categories representing 60% (in dollar value) of durable goods were down and only 40% were up, the total dollar value of orders was up an impressive 4%. That's because the transportation sector was up 14.6%, which swamped the down categories that were down mostly in the low-single-digit range.
Personal Income and Spending Report Could Be Interesting Just last month in the annual GDP revisions, the real disposable income report was revised sharply lower, which came as a bit of a surprise. It changed the picture from one where the consumer was spending relatively in line with incomes to one in which it looked like the consumer was dependent on savings and stock market gains. Lo and behold, this week buried deep in the technical section of the GDP revision was a footnote that real disposable income would be revised up again based on new data concerning bonuses. Now instead of growing at annualized rate of 0.7% in the first half, it now looks like the growth rate was 1.1%.
Anyway, based on better employment data for July and relatively high inflation, the consensus is for personal income to be up a strong 0.4% and spending to be up 0.5%. The bad news is that the CPI for the same period was also up 0.5%, potentially wiping out most of those gains. I am hopeful that the income and spending gains will be a little better than consensus and the price deflator used for personal income and spending will turn out to be a little less than the CPI, producing real disposable income growth of a tenth or two. The numbers should look a lot better for August when inflation could get near the zero mark again.
Auto Still Affected by Supply Issues You know the auto supply issues have to be bad when competitors start poking fun at Honda displayPTip('HMC', 'HMC','YTD', '', '', '', '', '', '','msg','P'); and Toyota displayPTip('TM', 'TM','YTD', '', '', '', '', '', '','msg','P'); in their television commercials. Nissan displayPTip('NSANY', 'NSANY','YTD', '', '', '', '', '', '','msg','P'); is currently running a couple of ads highlighting supply problems and Honda and Toyota. Here's a link to one of those Nissan commercials.
All of this is long-winded way to say that August auto sales won't be anything to write home about with high prices and low supply, not to mention a slightly scared consumer. July sales were about 12.2 million units and the consensus for August is the same, which strikes me as just a bit high. Numbers should begin to look better in September and October as increased production hits the showroom floor.
Jobs Report Will Be Stung by Verizon Strike The consensus is for job growth to fall from 117,000 in July to 55,000 in August. At least part of that decline is due to the Verizon strike mentioned above. But a generally weakening economy suggests to some economists that things may get so bad we could see an outright decline in jobs. Based on modestly improved weekly claims numbers and respectable manufacturing numbers I don't think a decline is in the cards, but as with all government reports anything is possible. Even though a small decline isn't that much different from a small increase from an economics standpoint, an outright decline would put investors in a very foul mood.
Return to DiscussBe Seen. Be Heard. Become a Morningstar Contributor.Reach a readership of advisors, professionals, and active investors. Submit your commentaries for publication on Morningstar.com.
Securities mentioned in this article Ticker Price($) Change(%) Morningstar Rating Morningstar Analyst Report With Morningstar Analyst reports you can get our expert Buy/Sell opinions on over 3,900 Stock and Funds Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies. Video Reports Deja Vu All Over Again? More Videos... Most Popular Related News Also in Investing Specialists Our Ultimate Stock-Pickers' Top 10 Buys and Sells $(".bloomreach-wrap").load("/GHeaderFooter/BloomreachWidget.aspx"); .br-related-heading, .br-found-heading { border-top: 3px solid #666666; font-weight: bold; font-size:10px; padding: 2px 0 7px; color:#000000; } Sponsored Links Buy a Link Now Sponsor Center Please Wait... ECONOMY USA_VZ,USA_BAC,USA_UBS,USA_NSANY,USA_TM,USA_HMC E0_USA_VZ E0_USA_BAC E0_USA_UBS E0_USA_NSANY E0_USA_TM E0_USA_HMC &primaryKeyword=ECONOMY 2 {CommentWebService} OAS_AD('Bottom'); Content Partners Site Directory Site Map Our Products Corrections Help Advertising Opportunities Licensing Opportunities Glossary RSS Mobile Portfolio Affiliate Careers Company News International Sites: Australia Canada China France Germany Hong Kong Italy The Netherlands Norway Spain U.K. Switzerland Independent. Insightful. Trusted. Morningstar provides stock market analysis; equity, mutual fund, and ETF research, ratings, and picks; portfolio tools; and option, hedge fund, IRA, 401k, and 529 plan research. Our reliable data and analysis can help both experienced enthusiasts and newcomers. © Copyright 2011 Morningstar, Inc. All rights reserved. Please read our Terms of Useand Privacy Policy.Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time. var HeaderBox = initBoxQuote("AutoCompleteBox","AutoCompleteDropDown"); HeaderBox.IdleDisplayMsg = ""; HeaderBox.LocalRegion="USA"; HeaderBox.SetPreference('USA','EN',32); var FooterBox = initBoxQuote("AutoCompleteBoxFooter","AutoCompleteDropDownFooter"); FooterBox.IdleDisplayMsg = ""; FooterBox.LocalRegion="USA"; FooterBox.SetPreference('USA','EN',32); //clears all content/image boxes-------------------------------------------------------------------------------------- var imageIDs=new Array('siteDirectoryContent', 'siteMapContent', 'productsContent'); //content boxes .mi_row3{display: none} var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-16669347-1']); _gaq.push(['_setDomainName', '.morningstar.com']); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); var Name = $('meta[name=DC.Creator]').attr("content").split(','); var Title = $('meta[name=DC.Title]').attr("content"); var URL = window.location.href; var Author = Name[1] + " " + Name[0]; var PubDate = $('meta[name=DC.Date]').attr("content"); _gaq.push(['_trackEvent', 'Article Title From Morningstar', Title, URL]); _gaq.push(['_trackEvent', 'Author Name From Morningstar', Author, URL]); _gaq.push(['_trackEvent', 'Article URL From Morningstar', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date From Morningstar', PubDate, URL]); _gaq.push(['_trackEvent', 'Article Title', Title, URL]); _gaq.push(['_trackEvent', 'Author Name', Author, URL]); _gaq.push(['_trackEvent', 'Article URL', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date', PubDate, URL]);The good news is that the Verizon workers recently agreed to go back to work despite their contract dispute with the company. That should bring claims back down to a more normal level. Unfortunately, Verizon employees were out on strike over the critical period when the data were gathered for the national employment report, due next week. This could put a 45,000-person damper on a report that was perhaps already looking a little soft.
The real problem with unemployment is not the number of layoffs, but the lack of new jobs and consequentially the length of unemployment. The odds of claims getting much better from here are minimal. The employment market and the economy can still improve without much of a change in claims. In 2006, one of the better years of the last recovery, claims averaged 312,000 per week. At the worst of the recession, March 2009, claims got as high as 678,000. At the current strike-adjusted level of 400,000 or so, we are much closer to a boom year performance than recessionary levels. It would take a jump in the four-week moving average above the 500,000 level to really alarm me.
Manufacturing Might Not Be Dead After All July durable goods orders jumped an exceptionally strong 4%, exceeding expectations. Unfortunately, the gains were highly concentrated in the auto and aircraft industry. On a month-over-month basis, primary metal was the only other category to show an increase.
While I'm not a fan of this concentration, orders for cars and autos often lead to increases in orders in other categories in subsequent months. What's more, the three major "up" categories comprised almost 40% of all new orders.
July is always a hard month to read because June represents the end of a quarter and in many cases the end of a fiscal year. There is often a rush of orders at the time as customers put the screws to vendors trying to make their quarterly numbers. I think this trend has been stronger in recent years than the seasonal factors used by the government. It makes more sense to me to look at the data on a year-over-year basis to eliminate some of these seasonal factors. I also like to use a three-month moving average to smooth the monthly volatility, especially due to volatile data from the aircraft and auto sectors. I prefer this methodology rather than tossing out the transportation sector outright, because transportation orders represent more than 25% of all durable goods orders.
Year-Over-Year Durable Goods Orders
Source: Census Bureau
Interestingly, shipments of durable goods have been improving. While orders are probably a better indicator of future events, shipments and production are what drive the GDP calculations. The news here is good and likely to improve more as the Japanese auto industry ramps up again.
Year-Over-Year Durable Goods Shipments
Source: Census Bureau
International Purchasing Managers' Reports Stabilizing Too Hidden in all of the week's data was an improvement in the Chinese PMI and a stable reading for Europe. At a minimum, I think this means manufacturing is not completely falling off. But by no means are things as strong as they were a year ago. For example, the China PMI registered an improvement to 49.8 from 49.2, though still down from readings in the mid-50s several months ago. That type of reading for China is still consistent with industrial production growth of 13%, not too shabby. The European index also did better than expectations, basically holding steady at 51.1. According to our industrials team, the report showed improved momentum in Germany and slower results in France. Unfortunately, the new orders component of both reports suggested that there could be some slowing in the index in the months ahead.
Home Prices Up? Believe it or not, home prices increased for the second month in a row according to the Federal Housing Finance Agency. Prices increased 0.9% in June after a 0.4% increase in May, which should bode well for the more closely watched Case-Shiller home price index due next week. But on a year-over-year basis, prices are still down about 4% and about 19% from the April 2007 peak. Stabilizing prices, along with greater home affordability and lower mortgages, should eventually fuel increased home purchases. By regions, price appreciation ranged from a negative 0.8% in the Western region to a stunning 3.3% gain in the East North Central region.
New Home Sales Stuck in the Mud That was not the case with this week's new home sales report, which showed new home sales fell 0.7% to 298,000 units roughly in line with expectations. Foreclosures and relatively high prices compared to existing homes are keeping a lid on new home sales. In fact, those sales remain perilously close to multidecade lows. Inventories sound particularly skinny at 165,000 units. That level looks infinitesimally small compared with the 110 million or so existing households. If the market ever regains momentum, there is almost no supply.
Next Week: Personal Income, Purchasing Managers' Report, Jobs, and Autos Next week, the national Purchasing Managers' report will get a lot of attention--perhaps more than it deserves. Based primarily on poor regional results announced earlier this month and fears of slowing exports, experts are expecting the PMI report to show a decrease from 50.9 for the July release to 49.7. I can picture the headlines now: "PMI Drops to a 24-Month Low, Below Critical 50% Level, Indicating Declining Manufacturing Sector." Wrong!
To greatly simplify, managers are asked whether things are getting better, getting worse, or staying the same in this survey in several different categories (orders, production, employment, and so on). The ISM adds all the "getting better" responses and adds half the "staying the same" responses, producing a total that generally ranges between 30 and 70. While much importance is attached to the 50 number, the statistical work by the ISM suggests that the reading has to dip into the low 40s to indicate an upcoming recession.
The ratio dipped below the magic 50 four times in the 1990s, and only at the end of the decade did we actually get a recession.
Also, while constructing an index this way gets to a quick answer, it does suffer some statistical problems. What the index fails to capture is if a few industries are doing really, really well while the majority are muddling along the flat line, the index will show a poor result. This week's durable goods report highlighted that very same issue. While categories representing 60% (in dollar value) of durable goods were down and only 40% were up, the total dollar value of orders was up an impressive 4%. That's because the transportation sector was up 14.6%, which swamped the down categories that were down mostly in the low-single-digit range.
Personal Income and Spending Report Could Be Interesting Just last month in the annual GDP revisions, the real disposable income report was revised sharply lower, which came as a bit of a surprise. It changed the picture from one where the consumer was spending relatively in line with incomes to one in which it looked like the consumer was dependent on savings and stock market gains. Lo and behold, this week buried deep in the technical section of the GDP revision was a footnote that real disposable income would be revised up again based on new data concerning bonuses. Now instead of growing at annualized rate of 0.7% in the first half, it now looks like the growth rate was 1.1%.
Anyway, based on better employment data for July and relatively high inflation, the consensus is for personal income to be up a strong 0.4% and spending to be up 0.5%. The bad news is that the CPI for the same period was also up 0.5%, potentially wiping out most of those gains. I am hopeful that the income and spending gains will be a little better than consensus and the price deflator used for personal income and spending will turn out to be a little less than the CPI, producing real disposable income growth of a tenth or two. The numbers should look a lot better for August when inflation could get near the zero mark again.
Auto Still Affected by Supply Issues You know the auto supply issues have to be bad when competitors start poking fun at Honda and Toyota displayPTip('TM', 'TM','YTD', '', '', '', '', '', '','msg','P'); in their television commercials. Nissan displayPTip('NSANY', 'NSANY','YTD', '', '', '', '', '', '','msg','P'); is currently running a couple of ads highlighting supply problems and Honda and Toyota. Here's a link to one of those Nissan commercials.
All of this is long-winded way to say that August auto sales won't be anything to write home about with high prices and low supply, not to mention a slightly scared consumer. July sales were about 12.2 million units and the consensus for August is the same, which strikes me as just a bit high. Numbers should begin to look better in September and October as increased production hits the showroom floor.
Jobs Report Will Be Stung by Verizon Strike The consensus is for job growth to fall from 117,000 in July to 55,000 in August. At least part of that decline is due to the Verizon strike mentioned above. But a generally weakening economy suggests to some economists that things may get so bad we could see an outright decline in jobs. Based on modestly improved weekly claims numbers and respectable manufacturing numbers I don't think a decline is in the cards, but as with all government reports anything is possible. Even though a small decline isn't that much different from a small increase from an economics standpoint, an outright decline would put investors in a very foul mood.
Return to DiscussBe Seen. Be Heard. Become a Morningstar Contributor.Reach a readership of advisors, professionals, and active investors. Submit your commentaries for publication on Morningstar.com.
Securities mentioned in this article Ticker Price($) Change(%) Morningstar Rating Morningstar Analyst Report With Morningstar Analyst reports you can get our expert Buy/Sell opinions on over 3,900 Stock and Funds Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies. Video Reports Deja Vu All Over Again? More Videos... Most Popular Related News Also in Investing Specialists Our Ultimate Stock-Pickers' Top 10 Buys and Sells $(".bloomreach-wrap").load("/GHeaderFooter/BloomreachWidget.aspx"); .br-related-heading, .br-found-heading { border-top: 3px solid #666666; font-weight: bold; font-size:10px; padding: 2px 0 7px; color:#000000; } Sponsored Links Buy a Link Now Sponsor Center Please Wait... ECONOMY USA_VZ,USA_BAC,USA_UBS,USA_NSANY,USA_TM,USA_HMC E0_USA_VZ E0_USA_BAC E0_USA_UBS E0_USA_NSANY E0_USA_TM E0_USA_HMC &primaryKeyword=ECONOMY 2 {CommentWebService} OAS_AD('Bottom'); Content Partners Site Directory Site Map Our Products Corrections Help Advertising Opportunities Licensing Opportunities Glossary RSS Mobile Portfolio Affiliate Careers Company News International Sites: Australia Canada China France Germany Hong Kong Italy The Netherlands Norway Spain U.K. Switzerland Independent. Insightful. Trusted. Morningstar provides stock market analysis; equity, mutual fund, and ETF research, ratings, and picks; portfolio tools; and option, hedge fund, IRA, 401k, and 529 plan research. Our reliable data and analysis can help both experienced enthusiasts and newcomers. © Copyright 2011 Morningstar, Inc. All rights reserved. Please read our Terms of Useand Privacy Policy.Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time. var HeaderBox = initBoxQuote("AutoCompleteBox","AutoCompleteDropDown"); HeaderBox.IdleDisplayMsg = ""; HeaderBox.LocalRegion="USA"; HeaderBox.SetPreference('USA','EN',32); var FooterBox = initBoxQuote("AutoCompleteBoxFooter","AutoCompleteDropDownFooter"); FooterBox.IdleDisplayMsg = ""; FooterBox.LocalRegion="USA"; FooterBox.SetPreference('USA','EN',32); //clears all content/image boxes-------------------------------------------------------------------------------------- var imageIDs=new Array('siteDirectoryContent', 'siteMapContent', 'productsContent'); //content boxes .mi_row3{display: none} var _gaq = _gaq || []; _gaq.push(['_setAccount', 'UA-16669347-1']); _gaq.push(['_setDomainName', '.morningstar.com']); _gaq.push(['_trackPageview']); (function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })(); var Name = $('meta[name=DC.Creator]').attr("content").split(','); var Title = $('meta[name=DC.Title]').attr("content"); var URL = window.location.href; var Author = Name[1] + " " + Name[0]; var PubDate = $('meta[name=DC.Date]').attr("content"); _gaq.push(['_trackEvent', 'Article Title From Morningstar', Title, URL]); _gaq.push(['_trackEvent', 'Author Name From Morningstar', Author, URL]); _gaq.push(['_trackEvent', 'Article URL From Morningstar', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date From Morningstar', PubDate, URL]); _gaq.push(['_trackEvent', 'Article Title', Title, URL]); _gaq.push(['_trackEvent', 'Author Name', Author, URL]); _gaq.push(['_trackEvent', 'Article URL', URL, Title + "(by " + Author + " on " + PubDate + ")"]); _gaq.push(['_trackEvent', 'Publish Date', PubDate, URL]);All of this is long-winded way to say that August auto sales won't be anything to write home about with high prices and low supply, not to mention a slightly scared consumer. July sales were about 12.2 million units and the consensus for August is the same, which strikes me as just a bit high. Numbers should begin to look better in September and October as increased production hits the showroom floor.
Jobs Report Will Be Stung by Verizon Strike The consensus is for job growth to fall from 117,000 in July to 55,000 in August. At least part of that decline is due to the Verizon strike mentioned above. But a generally weakening economy suggests to some economists that things may get so bad we could see an outright decline in jobs. Based on modestly improved weekly claims numbers and respectable manufacturing numbers I don't think a decline is in the cards, but as with all government reports anything is possible. Even though a small decline isn't that much different from a small increase from an economics standpoint, an outright decline would put investors in a very foul mood.
Be Seen. Be Heard. Become a Morningstar Contributor.Reach a readership of advisors, professionals, and active investors. Submit your commentaries for publication on Morningstar.com.
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