The COVID-19 pandemic led to many broken economic data records…none of them good. Here are the five things we learned from U.S. economic data released during the week ending April 17.
Forward-looking economic indicators suffered its biggest decline ever in March. The Conference Board’s Leading Economic Index (LEI) shed 6.7 percent during the month to a seasonally adjusted reading of 104.2 (2016=100). This was the LEI’s largest single-month decline in the measure’s 60-year history. Seven of ten LEI components pulled down the headline index, led by jobless claims, stock prices, and building permits. The coincident index lost a full point to a reading of 106.6, hurt by components tied to industrial production and nonfarm payrolls. The lagging index jumped 1.2 percent to a reading of 110.2 (but then, it is a backward-looking measure). In noting a “halting in business activity,” the press release states the “sharp drop” in the LEI “suggests the U.S. economy will be facing a very deep contraction.”
Jobless claims fell but remained hugely inflated. The Department of Labor reports there were a seasonally adjusted 5.245 million first-time claims made for unemployment insurance benefits during the week ending April 11, down 1.37 million from the prior week but still the third most ever and up 2,484 percent from a year ago. There were 11.976 million continuing jobless claims during the week ending April 4 (+618 percent versus a year earlier). This translated into an insured unemployment rate 8.2 percent, well above the 1.2 percent reported for the same week one year ago.
Sales plunged at most retailers in March. Retail and food services sales hemorrhaged 8.7 percent during the month to a seasonally adjusted $483.1 billion (itself 6.2 percent below its year-ago pace). (This was the biggest decline for the Census Bureau measure going back to its inception in 1992.) Among the retail categories seeing large declines were auto dealers/parts stores (-25.6 percent) and gas stations (17.2 percent, partially due to sharply lower prices at the pump). Net of both autos and gas, core retail sales fell 3.1 percent. Among the big decliners were retailers focused on apparel (-50.5 percent), furniture (-26.8 percent), sporting goods/hobbies (-23.3 percent), and electronics/appliances (-15.1 percent). Restaurants/bars reported a 26.5 percent drop in sales. On the flip side, other segments reported sales gains; including, grocery stores (+26.9 percent), general merchandisers (+6.4 percent), health/personal care retailers (+4.3 percent), and building materials/garden stores (+1.3 percent). Nonstore (e.g., online) retailers saw sales jump 3.1 percent.
Industrial production hit a wall in March. The Federal Reserve finds industrial production slowed a seasonally adjusted 5.4 percent during the month, its largest decline since January 1946(!). Manufacturing output sank 6.3 percent (the most significant decline since February 1946), with reductions for durable and nondurable goods of 9.1 percent and 3.2 percent, respectively. Automobile production fell 28.0 percent. Utilities output dropped 3.9 percent in March (electric utilities: -3.8 percent; natural gas utilities: -4.5 percent). Mining output declined 2.0 percent, with significant decreases seen for crude oil, natural gas liquids, and coal. Industrial production was 5.5 percent below that of a year earlier with manufacturing’s 12-month comparable at -6.6 percent.
Housing starts plummeted in March. The Census Bureau estimates that housing starts fell 22.3 percent during the month to a seasonally adjusted annualized rate of 1.216 million units. Despite being the measure’s largest drop in 36 years, starts were still 1.4 percent ahead of their year-ago pace. Single-family homes starts slumped 17.5 percent in March while those for multi-family units plunged 32.1 percent. Looking towards the future, the annualized count of issued building permits dropped 6.8 percent to 1.353 million, including a 12.0 percent fall for single-family home permits. Housing completions declined 6.1 percent to 1.227 million (9.0 percent vs. March 2019).
Other U.S. economic data released over the past week:
– Import Prices (March 2020, All Imports): -2.3% vs. February 2020, -4.1% vs. March 2019. Nonfuel Imports: Unchanged vs. February 2020, -0.5% vs. March 2019.
– Export Prices (March 2020, All Exports): -1.6% vs. February 2020, -3.6% vs. March 2019. Nonagricultural Exports: -1.5% vs. February 2020, -3.7% vs. March 2019.
– Housing Market Index (April 2020, Index(>50= More Homebuilders View Conditions as “Good” than “Poor,” seasonally adjusted): 30 (vs. March 2020: 72, vs. April 2019: 62).
– State Employment (March 2020, Nonfarm Payrolls, seasonally adjusted): vs. February 2020: Decreased in 31 states and was essentially unchanged in 19 states and the District of Columbia. Vs. March 2019: Increased in 13 states, decreased in 2 states, and was essentially unchanged in 35 states and the District of Columbia.
– Business Inventories (February 2020, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.013 trillion (-0.4% vs. January 2020, -0.1% vs. February 2019).
– Treasury International Capital Flows (February 2020, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$35.3 billion (vs. January 2020: +$28.9 billion, February 2019: +$35.4 billion).
– Beige Book (April 2020): “Economic activity contracted sharply and abruptly across all regions in the United States as a result of the COVID-19 pandemic. The hardest-hit industries…were leisure and hospitality, and retail aside from essential goods.”
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What We Learned About the U.S. Economy Last Week 