Thursday, April 24, 2008

Mixed economic news

This morning brought some mixed economic news. There was a glimmer of light in the insured unemployment data, as new UI benefit claims unexpectedly fell by about 10 percent from the week before. The overall number of people receiving jobless benefits also fell. Given other indicators in the economy and recent trends, these numbers had been expected to climb.

While that news is good, it's too soon to break out the party balloons. The number of people claiming new jobless benefits and the total number of people receiving benefits are both up substantially from a year ago. Also, the UI claims data were accompanied by some other negative indicators.

The Census Bureau reported that new orders for durable goods fell 0.3 percent in March, following declines in January and February. At the same time, inventories of durable goods increased 1.1 percent to their highest level since the Bureau started tracking them using the current industrial classification in 1992.

The Bureau also reported that new home sales in March dropped another 8.5 percent from the month before and were down an eye-popping 36.6 from the year before. Sales were estimated to be 60 percent below their levels from March 2005 and at a 16-year low. So despite declines in home prices and the Fed's lowering of interest rates, the housing market continues to spiral down.

The many negative reports over the last few months have been indicative of a decline in economic activity. Next Wednesday, we'll see whether that has actually occurred when the Commerce Department reports the prelimary 1st quarter gross domestic product numbers.