Tuesday, December 22, 2015

3Q15 GDP revised downward to 2.0%.  This got more headlines than it deserved; it was not news; widely "predicted." Not only that, but look at the WSJ lede:

The U.S. economy expanded at a slightly slower pace than initially estimated in the third quarter, as steady consumer spending was offset by a slowdown in inventory investment.

Gross domestic product, the broadest measure of goods and services produced across the economy, advanced at a 2.0% seasonally adjusted annual rate in the third quarter, the Commerce Department said Tuesday. The agency last month had estimated third-quarter GDP growth of 2.1%.

The report highlighted the relative strength of the U.S. economy compared with overseas economies (see graph at this link), as domestic demand remained firm but exports slowed, a trend economists expect to continue into next year.

Economists surveyed by The Wall Street Journal estimated the latest revision would show 1.9% growth. [Hardly bad news.]

US existing home sales plunge: new rules seen as drag.

U.S. home resales posted their sharpest drop in five years in November, a potential warning sign for the health of the U.S. economy although new regulations on paperwork for home purchases may have driven the decline.

The National Association of Realtors said on Tuesday existing home sales plunged 10.5 percent to an annual rate of4.76 million units. That was the sharpest decline since July 2010. October's sales pace was revised slightly lower to 5.32 million units.

NAR economist Lawrence Yun said most of November's decline was likely due to regulations that came into effect in October aimed at simplifying paperwork for home purchasing. Yun said it appeared lenders and closing companies were being cautious about using the new mandated paperwork. [Really?]

Also potentially weighing on home sales, the median price for a U.S. existing home rose to $220,300 in November, up 6.3 percent from the same month in 2014. Yun said the steep rise in prices and shrinking inventories could also be constraining home purchases. [That makes more sense.]

Energy jumps 1.5%. WTI and Brent now at parity in the "front month." The definition of a "front month":

Used in futures trading to refer to the contract month with an expiration date closest to the current date, which is often in the same month. In other words, this would be the shortest duration contract that could be purchased in the futures market. Contracts that are a month or more behind the front month contracts are referred to as back month contracts.

Cowboy in a Continental Suit, Marty Robbins