Economists’ Thoughts On Today’s News

Here are some thoughts on the various pieces of this morning’s economic news from the WSJ Real Time Economics blog.


  • The labor market looks even worse than our already weak read. Initial jobless claims increased to 667,000, easily the high for the cycle, and a break higher from the 630,000 range they had sat in for the past three weeks. This substantial increase indicates that the employment situation continues to get even worse, which means that the vicious cycle downward between the labor market and demand continues. Along with this, continuing claims moved over 5 million, also the high for the cycle, as laid off workers have a difficult time finding new jobs. –Goldman Sachs
  • New Home Sales

  • We thought December’s rise in mortgage applications and the uptick in buyer traffic reported by the NAHB survey might be reflected in a modest rise in sales, but alas not. We do think, though, that sales are now very close to their floor. Activity … can’t fall much further; sales will not drop to zero. The absolute level of inventory continues to fall, down 29.9% y/y, but because sales are falling even faster the months supply is still rising, up to 13.3 in January from 12.2 in December. This will keep prices falling for the rest of this year at least. –Ian Shepherdson, High Frequency Economics
  • Durable Goods

  • The durable goods report shows demand evaporating both domestically and globally for big-ticket capital equipment investments. The decline in orders was severe and almost across the board… The only thing even resembling a chink of light was that companies did manage to reduce their inventories, the first decline in this cycle. But sales are still falling so fast that the inventory reduction wasn’t enough to keep the inventory/sales ratio from rising yet again. So companies have much more work to do before their inventory levels will be comfortable. –Nigel Gault, IHS Global Insight
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