Photograph by Victor J. Blue/Bloomberg

Customers shop at a Macy’s Inc. store in New York.

That’s the Bloomberg Consumer Comfort Index for the week ended May 12.

The index, which is based on Americans’ opinions about the economy, the buying climate and their own finances, fell from minus 29.5 in the prior week. It can range from plus 100 to minus 100.

In a separate monthly gauge of economic expectations, 32 percent said the economy is getting worse and 31 percent said it’s getting better. The minus 1 reading was the best in five months and rose from minus 4 in April.

“Rising home values and stock prices gains may be underpinning expectations and bolstering consumer spending, which accounts for about 70 percent of the economy,” Bloomberg’s Jeanne Smialek reported yesterday. “Nonetheless, the lagged effect of higher payroll taxes are crimping the discretionary budgets of low- to middle-wage earners, preventing total demand from accelerating.”

Original post is Bloomberg by the Numbers: -30.2 by Political Capital.

Photograph by David Paul Morris/Bloomberg

Construction crews work on new homes being built in San Ramon, California, on April 12, 2013.

Applications to build homes climbed in April to the highest level since June 2008, helping alleviate concern that a slump the same month in construction starts on new houses would mean less support for the economy in the second half of the year.

Building permits surged 14.3 percent to a 1.02 million annualized rate, while housing starts plummeted 16.5 percent to an 853,000 pace, Commerce Department data released today showed. The annualized rate of permit applications filed by builders exceeded the pace of actual ground-breaking by the most since March 2005.

When permits outpace the rate at which foundation crews are preparing home sites with backhoes and bulldozers, it’s a signal that builders will likely stay busy in the ensuing months. And demand shows few signs of stumbling as Americans take advantage of near record-low mortgage rates.

Details of today’s report show that building permits for apartments and other multifamily homes, which are volatile month to month, surged to the highest level since June 2008. The difference between April’s annualized rates of permits and multifamily starts was also the biggest since that time.

The increase in multifamily permitting is a sign that builders have enough faith in the market to take on bigger construction projects.

Permits for single-family dwellings exceeded starts for the first time since July. While the difference is less than that of multifamily units, economists at Credit Suisse point out that some builders may be limiting construction of single-family homes in order to maximize price. Builders are after all paying plenty more for construction materials than a year ago.

Original post is Building Permits Dwarf Ground-Breaking by Political Capital.

Photograph by Victor J. Blue/Bloomberg

A customer browses shoes at a Coach Inc. store in New York.

The outlook for consumer spending may hinge on what 55 percent of American households do next.

That’s the share of respondents who noticed their paychecks had gotten smaller at the start of the year when the payroll tax reverted to the 2010 level of 6.2 percent from 4.2 percent, according to results of a survey commissioned by the Federal Reserve Bank of New York. About 13 percent said their pay increased and the rest noticed no change.

Of those that did see a reduction, a whopping 79 percent said they planned to reduce spending as a result.

The numbers bear watching because of the consistency of responses between surveys. The latest findings represent follow-up questions to a similar poll done in early 2011 that asked what consumers had done with the windfall when the tax was originally reduced.

In the latest survey, the results indicated a household earning $50,000 a year would spend about $380 of the $1,000 in tax savings. That is identical to the findings in the survey two years ago that canvassed a completely different set of households. The rest would either be used to rebuild nest eggs or pay down debt.

Now for the bad news. When the question was reversed this year, the results showed households earning $50,000 a year will cut spending by about $720.

So far, the data suggest households aren’t following through. Consumer spending climbed at a 3.2 percent annual pace in the first quarter, the best performance in two years. Revisions in the retail sales report for April released this week signal the gain will be even bigger when the quarterly figures are updated later this month.

Of course, a big chunk of the jump in spending last quarter was due to a surge in utility use as colder-than-normal temperatures prompted households to turn up the heat. Keeping warm is far from a discretionary expenditure, which means that consumers may soon redouble efforts to make up for that tax increase.

It may also be a case of respondents saying what they think the questioner wants to hear. After all, frugality is now in.

Finally, the 45 percent who said they were doing the same or better may still carry the day.

Original post is Payroll Tax Cut Most Paychecks: Survey by Political Capital.

Photograph by Ronda Churchill/Bloomberg

The Strip in Las Vegas, Nevada.

DJ Steve Aoki sprayed champagne on attendees before selecting some to surf the crowd on an inflatable raft during opening week of the Hakkasan night club in Las Vegas last month.

The five-story, $100 million-plus addition to the MGM Grand symbolizes a revival of the unbridled partying Sin City was known for before the real-estate bust turned Las Vegas into the foreclosure capital of the U.S. It also created 500 jobs in a state that had an unemployment rate of 9.7 percent in March, the highest in the nation.

“The domestic customer is coming back, they’re spending a bit more money,” MGM Resorts International Chairman and Chief Executive Officer James Murren said in a telephone interview. “When you see a strong housing number, that bodes very well. People feel they’re wealthy.”

Years of dipping in backyard pools and exploring neighborhood festivals during so-called summer staycations are over. New attractions, such as Walt Disney Co.’s Cars Land at its California Adventure Park in Anaheim, California, or Jimmy Buffett’s Margaritaville, a beach-front casino in Atlantic City, New Jersey, may again draw crowds as Americans feel more secure in their jobs and home prices rebound.

Home prices climbing at the fastest pace since 2006 are helping repair household finances, while unemployment at a four-year low of 7.5 percent boosts confidence. The Bloomberg Consumer Comfort Index reached a five-year high in the week ended April 28.

With travel expenditures projected to increase 3.6 percent this year, faster than economic growth, the share of gross domestic product coming from the industry may approach 3 percent in 2013, up from about 2.7 percent in 2010, David M. Huether, vice president for research at the U.S. Travel Association, said in an interview. The world’s largest economy is forecast to expand 2 percent this year, according to the median estimate of 81 economists surveyed by Bloomberg.

Orlando, Florida, New York and Los Angeles are among this year’s top visitor destinations, Simon Bramley, Travelocity.com Inc. vice president for transportation and lodging, said in a telephone interview.

“We saw people traveling further from home,” said Travelocity’s Bramley. “The austerity years of the staycation are behind us at this point.”

See the full report on Staycations fading, at Bloomberg.com.

Christopher Palmeri contributed reporting. 

Original post is Staycations Yield to Vegas, Margaritaville: Sure Rebound Signs by Political Capital.

Photograph by Kristian Helgesen/Bloomberg

Maersk Line, the world’s biggest container shipping company, will stop plying through the Panama Canal to move goods from Asia to the U.S. east coast as bigger ships help the company move it profitably through Suez Canal.

To anyone worried about global disinflation, today’s Labor Department report on the cost of goods imported into the U.S. will prove sobering.

The import-price index dropped 0.5 percent in April from the prior month as fuel costs retreated 1.7 percent.

If it had stopped with the slump in energy prices, the figures could be dismissed as reflecting the usual volatility in those markets. The declines, however, were broad-based.

The cost of non-fuel imports fell 0.2 percent last month and were down 0.7 percent from April 2012. That is the biggest 12-month decrease since the year ended November 2009.

Declines over a 12-month period for non-fuel commodities aren’t common. For perspective, prices never dropped during that time-frame from 2003 through 2008. The biggest year-over-year plunge of 5.3 percent occurred in July 2009, reflecting the aftermath of the global recession.

It is difficult to pinpoint any category exhibiting pricing power. Imported food prices fell 0.5 percent in April. The cost of imported cars dropped 0.3 percent, the most since December 2011. Capital goods, including machinery, computers and electrical equipment, declined 0.2 percent, the most since October 2011.

Breaking the products down by geographic origin produced similar results. Goods from Canada cost 0.6 percent less; Mexico, down 0.9 percent; the European Union, down 0.1 percent; China, down 0.1 percent; and Japan, down 0.6 percent – the biggest drop since September 2008.

While the cost of imports don’t necessarily translate into total consumer prices, it’s hard to believe American companies will try to push through price increases given the competition from goods overseas.

With so little pricing power, it will be easier for Federal Reserve policy makers to fend off criticism that their policies risk stoking inflation.

“Inflation is not likely to be a driver for any change in policy for quite some time,” concluded Joel Naroff, president and founder of Naroff Economic Advisors Inc. in Holland, Pennsylvania.

Original post is Import Prices: Disinflation Concern by Political Capital.

Photograph by Andrew Harrer/Bloomberg via Getty Images

Pedestrians carrying shopping bags cross the street in the Georgetown neighborhood of Washington, D.C.

Americans shopped for more clothing, electronics and sporting goods and frequented more restaurants in April, leading to an unexpected 0.1 percent gain in total receipts, according to a Commerce Department report.

Economists today raised tracking estimates for consumer spending for the second quarter.

While the 0.1 percent gain may not seem like much, a 4.7 percent plunge in spending at service stations held back the gain. The data aren’t adjusted for changes in prices, so the drop probably reflected the decrease in gasoline costs. Excluding gas stations, the increase in sales was 0.7 percent.

Economists projected a 0.3 percent drop in total sales, according to the median forecast in a Bloomberg survey.

Consumers are also shopping more from the comfort of their homes. Sales at non-store retailers, which include Internet merchants, have climbed 9.6 percent over the past six months, the biggest gain since the six months ended April 2011.

The data point to consumer spending rising at closer to a 2 percent annualized rate from April through June, a couple tenths more than previously projected. What’s more: The figures used to calculate gross domestic product were revised up for both March and February, pointing to a stronger reading for the first quarter than the previously reported 3.2 percent advance. The first-quarter data are updated at the end of this month.

So, while a slowdown is still projected for this quarter, the drop is looking less severe and from a higher starting point.

As usual with economics, there is one big caveat. Retail sales account for about 44 percent of total consumer spending. The missing element is services, and that’s where the disappointment may set in.

Spending on services climbed at a 3.1 percent annualized rate in the first quarter, the biggest gain in almost eight years. The main reason was that a cold snap led to a jump in outlays on utilities as households turned up their thermostats.

That is likely to reverse this quarter as milder temperatures prompt Americans to turn off heating, and for those in the South, cooling systems. The data on spending for services such as utilities will come out on May 31 with the April personal income and spending figures.

One clue will come earlier. The April industrial production figures in two days track utility output. A slump would mean consumers cut utility use, which will prompt another round of changes in consumer spending forecasts that may wipe out the improvement penciled in today.

Original post is Consumer Spending Off to Unexpected Good Start by Political Capital.

Photograph by Ryan Anson/Bloomberg

Two of four 1,060-foot catwalks connect to the 525-foot main tower from the eastern end of the San Francisco-Oakland Bay Bridge.

So dozens of over-sized bolts built into the soon-to-be-opened $6.4 billion San Francisco-Oakland Bay Bridge snapped when they were tightened earlier this year.

What does California Gov. Jerry Brown have to say about it?

“Look, s— happens,” Brown said when asked today by a reporter whether the public should be concerned or lose faith in the project.

He had just finished delivering remarks at a memorial service for highway patrol officers killed on the job.

The Golden State is replacing the eastern span of the bridge, which was damaged when a 6.9-magnitude earthquake struck in October 1989, killing one motorist. It’s supposed to open in September after a decade of construction.

Earlier this year, more than 30 of the rods, each three inches wide and up to 24 feet long and a critical component of the new bridge’s earthquake safety features, snapped after they were tightened.

The state is testing the rest of the rods on the bridge and is developing a plan to fix those that failed.

“Very professional engineers are looking into it,” Brown said.

Remember, this is the governor who wants to “get s— done.’‘

That’s what he said at a press conference  last year announcing plans to build two massive, 40-mile underground tunnels to ship water to Southern California. He had asked the Legislature to build a canal for the same purpose 30 years ago, he noted, when he was California’s youngest governor. Now that he is back, as its oldest, he said in July:  “Analysis paralysis is not why I came back 30 years later to handle some of the same issues. At this stage in my life, as I see many of my friends dying — I just went to the funeral of my best friend a couple of weeks ago — I want to get s— done.”

Original post is Jerry Brown Channels Forrest Gump by Political Capital.

Photograph by Spencer Platt/Getty Images

Job seekers wait in line to meet with employers at the 25th Annual CUNY big Apple Job and Internship Fair at the Jacob Javits Convention Center on April 26, 2013 in New York City.

Consumer confidence in the U.S. improved in April, reaching a five-month high, a report from the Conference Board showed today.

Chalk up a good portion of the elation to gains in wealth from improving property values and stock portfolios. In fact, 38.6 percent of those surveyed said they expected equities to head higher in the next 12 months, the biggest share since May 2007.

Americans are less sanguine about the labor market. The private research group’s so-called labor market differential — the share of those reporting jobs are currently plentiful minus the share of consumers who say jobs are hard to get — declined to a three-month low.

The outlook isn’t any better, as just 14.2 percent expect there will be more employment opportunities in the next six months, down from a recent high of 19.7 in October.

This indicates the Federal Reserve’s record monetary policy stimulus in the form of $85 billion-a-month in purchases of Treasury securities and mortgage-backed securities is having a bigger bang for the buck on Wall Street than Main Street.

“The Fed’s exceptionally low interest rate policy is boosting asset prices rather dramatically but having a less profound impact on employment and earnings,” economists Mark Vitner and Michael Brown of Wells Fargo & Securities LLC said in a note to clients.

To be sure, higher stock prices tend to make workers feel more secure about their jobs and income prospects, Vitner and Brown said. That was evident in today’s report as the six-month outlooks for jobs and incomes both improved from March.

Original post is Consumer Confidence Up — Not in Jobs by Political Capital.

Photograph by Nati Harnik/AP Photo

Employees load a washer and dryer into customer’s car at the loading docks of Nebraska Furniture Mart in Omaha, Neb.

That’s the annualized rate at which the U.S. economy grew in the first quarter, according to an estimate by the Commerce Department’s Bureau of Economic Analysis.

The figure refers to the rise in the gross domestic product — the value of goods and services produced. It’s a major gauge of the health of the economy.

GDP grew by 0.4 percent in the fourth quarter of 2012 and by 3.1 percent in that year’s third quarter.

“Consumer spending, accounting for about 70 percent of the economy, climbed at a 3.2 percent pace in the first quarter, the most since the fourth quarter of 2010,” Bloomberg’s Shobhana Chandra reported.

A drop in defense spending hampered growth. Defense spending fell at an 11.5 percent annualized rate in the fourth quarter.

Original post is Bloomberg by the Numbers: 2.5% by Political Capital.

Photograph by Scott Eells/Bloomberg

A welder welding the frame of a modular housing unit at the Brooklyn Navy Yard in the Brooklyn borough of New York.

The lower-than-expected reading this morning for U.S. economic growth in the first quarter has revealed a few victims even as growth picked up — among them, factories.

“Manufacturing activity remains weak relative to the larger economy,” in part due to federal budget cuts and tax increases, Chad Moutray, chief economist at the National Association of Manufacturers, said in a statement after the GDP release. “We need to get back to a position where the manufacturing sector is once again making significant contributions to output and employment. This means that we need higher GDP growth to get back on track.”

The U.S. economy grew less than forecast in the first quarter as a drop in defense outlays undercut the biggest increase in consumer spending in two years. Business investment also slowed. GDP rose at a 2.5 percent annual rate, lower than forecast, after a 0.4 percent fourth-quarter advance, according to the Commerce Department data.

The GDP figures cap a week of slumping production data, including readings from the Kansas City and Richmond Federal Reserve banks showing contraction in those regions. The Markit Economics preliminary index of U.S. manufacturing fell to 52 in April from a final reading of 54.6 a month earlier, the London-based group said earlier this week.

Disappointing April production figures from the Euro zone, Germany and China are also weighing on the U.S., Scott Anderson, chief economist at Bank of the West in San Francisco, said in a research note.

“The data suggest the U.S. economy is participating in a synchronized global manufacturing slowdown,” Anderson said.

Next week will bring results from the Dallas Federal Reserve, Chicago’s business barometer and the Institute for Supply Management’s manufacturing survey. This will confirm if things are indeed turning for the worse.

Original post is Behind the Growth: Manufacturing Lags by Political Capital.