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THE NORTHWEST ECONOMIC MAINLINE 06·15·2009
What to Watch This Week
- Here's a mouthful: On Monday morning, Net Long-Term Treasury International Capital System (TIC) flows, if you are familiar and comfortable with such statistics, will provide some very interesting pieces of information relative to foreign investment in U.S. debt. Last week, Treasury auctions were, essentially, market dictators as investors continue to question the United States' borrowing ability, the impact of increasing interest rates and the probability of inflation in the short-term.
- Preliminary employment statistics for the month of May are set to be released by the Washington State Employment Security Department on Tuesday. Given that April state unemployment figures remained flat on a month-to-month basis, and declined by a tenth of a percent in King County, preliminary figures for May will be interesting to watch. I would not be surprised if King County's unemployment edged down, yet again, in the preliminary May figures.
- Initial unemployment claims are released on Thursday and will be important to pay attention to. Initial claims for the week ending June 6 dropped a fairly substantial 24,000 from the previous week and, if analyst anticipation is correct, look for weekly claims to drop yet again. Let's just hope that, much like the progression of unemployment increases from Nov. 2008 to March 2009, the pace of decline in new claims is dropping at even a faster pace!
What I Saw Last Week
- The advertising budget for Bing.com was money very well spent by Microsoft. Within days, I could not visit a site without seeing the name and reading about the growing competition between Microsoft, Yahoo, and Google. It will be interesting to see where this goes!
- Fed. survey results on Wednesday hinted at the prospect of moderation and easing in the recession with five of the 12 regions surveyed stating "the downward trends is showing signs of moderating."
- Mass media outlets began reporting that former Federal Reserve Chairman Alan Greenspan's favorite economic metric finally showed stabilization during February and March. Men's underwear sales, after posting a 12-month, 12 percent decline through the end of January appears to be improving! Mintel, the indicator's creator, claims that, based on their metrics, economic recovery will occur in 2013. I am personally not much of a believer in this metric!
- The early release of the Reuters/University of Michigan Survey of Consumers indicated that consumer's mood improved to 69.0 in June, up from 68.7 in May, yet slightly below analyst's expectation of 69.5. An interesting statement, but buried within the report was verbiage stating that consumers believe inflation was now a concern but, even so, confidence remains at a nine-month high. I am asked a lot about the possibility of inflation, and I cannot see that it should be a concern in the current environment. Why? Demand. Consumer spending has been declining for months, and the personal savings rate is on an upward march. Incomes have been rising, moderately, and the retirement population is growing, a demographic who generally spend less. To tell you the truth, I am actually more worried about deflation! More about that another time.
- The massive acquisition by Blackrock Inc. of Barclay's investment unit for $13.5 billion has created the world's largest money manager, now said to control $2.7 trillion in assets. To put this figure into perspective, that dollar amount is more than that of the Federal Reserve!
- On a local level, attention grabbing headlines included Microsoft's early move into the second tower of the Bravern; Domaine has begun preleasing in Seattle after the failed condominium was sold through foreclosure; mortgage rates reached their highest levels in seven months; and retail sales grew 0.5 percent in May, beating analyst expectation.
Quote/Link of the Week
The media has started to pick up on the MBA's Centennial Celebration and this videoCongratulations to both the Association on such a grand achievement, and to its members that continue to make this achievement possible!
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