New Deal democrats Weekly Indicators for April 6 – 10 at Seeking Alpha
– by New Deal democrat
While inflation and interest rates took a whack at some of the data, most of the financial-related series (like the yield curve in the bond market and credit conditions) remain very positive. And consumer spending, likely by the uppermost income groups, actually posted one of its very best YoY comparisons in the last 3+ years!
As usual, clicking over and reading should bring you up to the virtual minute as to the state of the economy, and reward me a little bit for my efforts.
Consumer Continues to Spend Like There’s No Tomorrow
Summary
- High-frequency weekly indicators remain broadly positive across long leading, short leading, and coincident categories, with financial metrics notably strong.
- Yield curves and credit spreads are supportive, while mortgage applications have weakened but real estate loans and money supply have turned positive.
- Short leading indicators are stable, with low layoffs and positive regional Fed new orders, but commodity price spikes signal supply-driven negatives.
- Coincident data shows robust consumer spending and tax withholding, though real economy signals are more mixed versus financial indicators.
Recap of Monthly Reports
March data included record low University of Michigan consumer sentiment, and sharply higher consumer inflation. The ISM non-manufacturing index was solidly positive.
February data included positive core capital goods orders, but negative total durable goods orders. Nominally personal spending was sharply higher, but barely positive in real terms. Personal income was negative nominally, and sharply negative in real terms.
Employment metrics
Initial jobless claims
- 219,000, up +16,000 w/w, down -1.8% YoY.
- 4-week average 209,500, up +1,500 w/w, down -6.1% YoY.
Jobless claims were positive for most of 2024, except for hurricane-influenced weeks during the autumn. Then they turned moderately negative through midyear this year. But since the beginning of last July, more often than not readings have been lower YoY, generally turning this metric positive. Seasonality is likely no longer an issue, although I suggest some caution because they may be affected by the disappearance of some immigrant employees
Temporary staffing index (from the American Staffing Association) (graph at link)
- Unchanged at 87 w/w.
- Up +5.1% YoY (low -13.6%- high 4/3/26 +5.1%).
This series had been negative since early 2023. YoY comparisons continued to be negative throughout 2024. I suspect this was due to a secular change and giving a false signal as a result. The YoY reading was trending “less bad” for many months, then neutral, and finally in late last summer it turned positive. The big downturn at the end of last year was seasonal; and has it has rebounded since.
Oil prices and usage (from the E.I.A.)
- Oil down -$15.29 to $96.25 w/w, up +60.4% YoY ($54.98 – $11.54).
- Gas prices up +0.13 to $4.12 w/w, up +$.88 YoY.
- Usage 4-week average up +1.5% YoY.
(Information can be found at “This Week In Petroleum” at the E.I.A.’s website.)
Oil prices first declined into the bottom 1/3rd of their 3 year range, and so turned positive late in 2024, and declined even further in 2025. Late last month they made a new 3 year low, which was very positive for consumers. Last week they rose to yet another new three year high, which needless to say is negative.
Gas prices also recently made new 3 year lows, but that totally reversed with the war on Iran. This week gas prices made yet another new three year high, and so are negative.
In 2024, mileage driven had been generally negative. It turned neutral and then positive early in 2025, but recently turned back down. Last week it improved to neutral again and this week turned positive.
Note: given this measure’s extreme volatility, I believe the best measure is against their 3-year average.
Bank lending rates
- 3.58% Secured Overnight Financing Rate (SOFR), down -0.08% w/w.
The TED Spread has been discontinued, and as of last September so was LIBOR. At the suggestion of a reader, I began to track the SOFR instead. Unfortunately, SOFR has only been in existence since 2018, so there is no track record has to how it might behave around normal recessions (vs. the pandemic). Over the past 5 years, it does appear to have matched the trend in LIBOR. Given the alternatives, I have included it in my list of indicators in the conclusion.
All time frames remained positive this week.
Among the long leading indicators yield spreads remain positive, even as across the spectrum they declined. Spreads between Treasurys and corporates, which came close to triggering a rating change, retreated back into their normal territory this week. On the other hand, the increase in interest rates finally caused a sharp change in rating for mortgage applications this week.
The short leading indicators also remained stable, buoyed by the continuing fact that (relatively speaking) almost nobody is getting laid off. Skyrocketing commodity prices are almost certainly about supply shortages, not a surge in demand, so I recommend taking those as big negatives.
The coincident indicators continue to show strong consumer spending, and tax withholding improved. So far – surprisingly – there is no evidence of consumers “pulling in their horns.”
Interestingly, many of the very positive indicators are financial (e.g., the yield curve). “Real” economy indicators are much more mixed. Also, some time ago I mentioned that the monthly data has been diverging – in some cases sharply – from this weekly data. The “high frequency” data I update is only one of three “top line” systems I use, and with Friday’s sharply higher CPI, one of my other top line systems is giving a very different reading. Stay tuned.