The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

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June 03, 2007

Taking It Slow

The recent spate of relatively good economic news has some people thinking rosier scenarios.  From the Wall Street Journal (page A3 in yesterday's print edition):

The latest data show employment and manufacturing growing at a vigorous rate, suggesting the U.S. economy is regaining momentum after a slow start to 2007...

Nonfarm employers added 157,000 jobs to their payrolls in May, nearly double the 80,000 new jobs recorded in April, the Labor Department said Friday. Led by the service sector, the rebound brought the three-month average job gain to about 137,000, a pace strong enough to keep unemployment low and wages rising. The unemployment rate held steady at 4.5%.

Meanwhile, the Institute for Supply Management, a purchasing managers' trade group, reported that its index of manufacturing activity came in at 55 in May, up from 54.7 in April, indicative of expanded factory production. That is a stark contrast to earlier this year, when manufacturing activity was contracting.

Economists saw the reports as confirmation that the economy is regaining momentum despite the pain that high gasoline prices and the housing slump are inflicting on the consumer...

How quickly the economy rebounds will depend to a large extent on how U.S. consumers, whose purchases make up more than two-thirds of all economic activity, respond to the conflicting influences of high gasoline prices, falling house prices, a robust stock market and rising incomes. Friday, the latest reading on the University of Michigan's consumer sentiment index suggested they were still in relatively good spirits: The index rose to 88.3 in May from 87.1 in April.

It does feel like we've gained a little breathing room, but this picture sticks in my mind:




That second quarter of 2000 should remind us that it sometimes looks pretty sunny before the storm.

June 3, 2007 in Data Releases , This, That, and the Other | Permalink


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Interesting chart and always worth remembering. Although...

January 1, 2000 Fed Funds Rate: 5.5%
May 16, 2000 Fed Funds Rate: 6.5%


I do agree that we're not quite out of the woods yet, but I do think we can see the edge of the forest from where we are.

Posted by: Steve | June 03, 2007 at 10:56 PM

"sometimes looks sunny before a storm"...now see Dave if you were a sailor this might B penned a wee bit different...but who cares really about squalls or calms? Tis the tanning season when we roast our butts on the sand and gawk at the sails out there from a safer and drier perspective.
Ok then.
Part of that drier perspective (Shall we just skip that gratuitous "wages rising"? We shall.) includes:
"Economists saw the reports as confirmation that the economy is regaining momentum despite the pain that high gasoline prices and the housing slump are inflicting on the consumer.."
a retroactive recognition that the housing market has spilled over, no? That pain from the "high gasoline prices" is nothing on the pain I feel reading spill containment blurbs like this from folks whose portfolios are quite capable of handling $3 gas...who might appreciate the thinning of traffic congestion with $5 gas.
Last cotton pickin (very dry) thing:
"Friday, the latest reading on the University of Michigan's consumer sentiment index suggested they were still in relatively good spirits: The index rose to 88.3 in May from 87.1 in April."

Let it B known that I will never consent to this index being used as a guide to my spirits. Can you imagine the crafting that goes into teasing out the seasonal adjustments, the weekly adjustments, the personal adjustments? And the audacity to carry that one off to 3 significant digits...with the straightest of faces. (Jamie's Plonking Type I, no?)

Posted by: calmo | June 04, 2007 at 01:53 AM

A man falls out of a very tall building. As he is falling past the 40th floor, someone asks “How is it going?” The man answers, “So far, so good.”

Posted by: Oracle of Cleveland | June 04, 2007 at 08:39 AM

This is on a different topic, but I was wondering if someone had an explanation for the disconnect between advance durable goods new orders/shipments and unfilled orders since 2005? See: http://www.ny.frb.org/research/directors_charts/pi_10.pdf. Thanks in advance, Sam

Posted by: SamK | June 04, 2007 at 10:56 AM

On the one hand the inventory correction -- except for housing -- seems to be over and production is rebounding. On the other hand final demand continues to weaken. So is the extra production going back into inventories?

Posted by: spencer | June 04, 2007 at 12:59 PM


I get a dead page ("you are not allowed...") when I hit your link. However, I think I know what disconnect you mean. The rapid rise in unfilled orders vs more moderate gains in new orders and shipments? Boeing accounts for a lot of it. Boeing orders are running massively ahead of shipments in just about every month. Boeing seems to have a maximum capacity of around 37 full-sized commercial aircraft completed per month, and monthly orders are running way ahead of that, on average. The result is a growing pile of unfilled orders.

There are other factors at work, but I think that explains nearly half of the growth in unfilled orders over the past year. Unfilled orders of factory goods were up 19.9% y/y in April while orders ex-transport were up just 11.8%. Unfilled non-defense aircraft orders were up 40.2%, vehicles and parts up just 6.6%.

Posted by: kharris | June 04, 2007 at 01:48 PM


That's it! It makes perfect sense ... Thanks a lot for the explanation,


Posted by: SamK | June 04, 2007 at 04:58 PM

White House Lowers Growth Estimate
Wednesday June 6, 12:25 pm ET

he White House on Wednesday lowered its forecast for economic growth this year even as it slightly upgraded its outlook for unemployment.

Under the administration's new forecast, gross domestic product, or GDP, will grow by 2.3 percent as measured from the fourth quarter of last year to the fourth quarter of this year. That's down from a previous projection of 2.9 percent.

Posted by: Barry Ritholtz | June 06, 2007 at 01:20 PM

TradeTheNews Economic Forecast: INT'L TRADE
Cargo Execs: April Trade Gap Narrows as Oil Imports Plateau, Dlr Softens
•Import Rebound from the Chinese New Year Lull Fails to Impress
•Oil-Related Imports Flat Versus March, But Seen Shooting Up Again in May
•Auto Imports Softened in April, Nosedived in May

NEW YORK (EconoPlay) June 6 – Export growth remained on a consistent upward trajectory in April, influenced by a weakening dollar – spelling relief for the monthly trade gap in defiance of continuing, heavy petroleum-related imports, cargo officials say.

Imports are presenting a fuzzy and fractured portrait these days. Consumer goods from Asia rebounded from the Chinese New Year hiatus but failed to match year-ago levels. Auto imports slowed in April then took a stunning dive in May.

Petroleum-related imports in April were about even with heavy March inflows. But the trade gap could widen again in May as gasoline imports spiked ahead of the summer drive season at record prices.

The U.S. Commerce Department is scheduled to release international trade data for April on Friday at 8:30 a.m. ET. The above commentary also explored May on a preliminary basis

Posted by: Mark | June 07, 2007 at 03:23 PM

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