Economic 'Hopium'—Or Signs Things May Be Improving
Viewers of "Street Signs" know that for the past few months we’ve been pushing what we call economic "hopium."
That’s our playful concept that even amid some very dire predictions and poor consumer confidence readings, the American economy appears to be getting a much-needed economic injection.
From retail sales to ISM to the Philly Fed, nearly every major data point has come in better than expected recently.
That continued Wednesday with a "hopium" hat trick. September durable goods ex-autos orders blew out expectations, coming in more than triple the consensus estimate.
New home sales topped that, coming in at an annualized pace of 313,000 sold, better than even the highest economist estimate. Inventory of unsold homes, while still elevated, fell to 6.2 months. That’s a level BTIG economist Dan Greenhaus notes is tied with the lowest level since the recovery began.
Completing the hat trick; the American Trucking Association tonnage index jumped 1.6 percent last month and is back to near pre-recession levels.
Despite these positive data points, don’t confuse us with economic Pollyannas. We know the American economy faces major hurdles, primarily a 9.1 percent jobless rate and millions of underwater homeowners. And we acknowledge that many of the recently better data points are coming off the easy comps of historically low levels.
But even the most dour prognosticators should concede that these economic beats, a slow but steady drop in weekly unemployment claims, and a well above average number of companies reporting profit above estimates last quarter provide at least a small shot in the arm to economic optimism.
Of course, all the stuff being built and shipped around the country better be sold over the next few months. Otherwise this could turn into the greatest channel-stuff, inventory build head fake in economic history.
The jury is still out on that one. Check back in after the holidays.