Slowing Data or Economic Rebound?

Its funny how these headlines all arrive at the same time:  I came across 3 items this weekend, which taken together make you go hmmmm.

In the order they arrived:

Wachovia – Outlook 2006

Job Growth Slows In Sign Economy Might Be Cooling

Bush, Other Officials Take to Road To Tout U.S. Economic Prospects

Let’s start with the Wachovia piece — a mainstream bulge bracket Wall Street firm (Over the years, Wachovia has absorbed Prudential and First Union).

In his Outlook 2006 year-in-preview, Chief Equity Strategist Doug Sandler included this chart:

click for larger graphic


courtesy of Wachovia

That reflects an across the board slowing in most key sectors. Job growth slowed in December, a sign the economy may have lost some steam, but the labor market was still healthy enough for wage growth to pick up. This past week also saw a slow down in job creation and manufacturing activity — both unexpected developments in

At the same time, the White House has begun Touting U.S. Economic prospects:

"President Bush traveled to Chicago to talk up what he views as America’s rosy economic future. To make sure no one missed the point, the White House dispatched 23 other administration officials to do the same thing around the country.

The extraordinary traveling shows were aimed at closing what the White House views as a troubling disconnect between the robust U.S. economy and many ordinary Americans’ wariness. That is especially worrisome to Republicans as they head into a congressional election year when jobs, immigration, health care and pensions are likely to be big issues . . .  But as their itineraries suggested, there are still a lot of sources of concern, despite strong growth and employment numbers."

The disconnect between official spin and consumer uneasiness may be a key for how strong the economy really is, and the prospects for the stock market. 

One last, related item: Mike at Melduke points out some oddities in the hours worked in December; Looking at the longer term chart of index of aggregate weekly hours index, it appears that hours worked keeps rising:

click for larger charts

25 years


5 years 


I am having a hard time wrapping my head around this: Given the huge productivty improvements we have seen over the past 10 years, why are hours worked in the U.S. going up?

Intriguing . . .

Wachovia – Outlook 2006

Job Growth Slows In Sign Economy Might Be Cooling
THE WALL STREET JOURNAL, January 7, 2006; Page A3

Bush, Other Officials Take to Road To Tout U.S. Economic Prospects
THE WALL STREET JOURNAL, January 7, 2006; Page A4

Category: Economy

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Category: Financial Press

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Category: Trading

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More on Holiday 2005

Category: Retail

Good — Not Great — Holiday Shopping Season

Back on December 1, I mentioned that "Holiday sales increases can be in the 3 to 4% range." This modestly Bullish call was at the very low end of Wall Street projections.

The prime motivation for that range was the decreasing gasoline prices post Katrina, and the love affair with Plasma Screen TVs (that was the good news). Keeping the Bullishness modest was the negative real income for the middle class; on the other end, the increasing take home pay for the ultra wealthy supported the relative strength of the luxury retailer.

The WSJ reports that "overall, Retail Sales rose 3.2%." And, the big winners were the luxury stores. Its a pleasant surprise anytime projections like this end up that accurate.

I also wish to remind you (again) how the silly NRF projection of 22% was; Their absurdity was a statistical abomination (and they were chastised in this space for it)

Here’s the Journal’s summary:

Holiday shoppers spent big on a few products last month, but held out for last-minute deals, resulting in mixed performances from U.S. retailers. Cash registers rang at luxury retailers and teen specialty shops, but sales at Wal-Mart Stores Inc. disappointed.

Overall, sales at stores open at least a year, a measure known as same-store sales, rose 3.2% in December from a year earlier, according to an index of 66 chains compiled by the International Council of Shopping Centers. The trade group, based in New York, had expected same-stores sales growth between 3% and 3.5%. According to the tally, same-store sales at luxury stores grew 6.4%, while discounters ticked up just 2.6%.

"All combined it was good, not great," said Jeff Klinefelter, senior research analyst at Piper Jaffray. "When we finally got the last-minute rush, it was the higher-end consumer that followed through with spending."


Luxury Stores Were Holidays’ Stars
Overall Retail Sales Rose 3.2%, Slowed by Discounters; Holdout Shoppers Also Hurt
THE WALL STREET JOURNAL,January 6, 2006; Page A2

Mixed Stockings for Retailers

See the WSJ’s retailer chart here:

Read More

Category: Retail

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Category: Fixed Income/Interest Rates