US Equity And Economic Review: Could We Rally From Here?


On Monday, the BEA reported income and consumption expenditures:

Personal income increased $23.7 billion, or 0.2 percent, and disposable personal income (DPI) increased $23.7 billion, or 0.2 percent, in February, according to the Bureau of Economic Analysis.Personal consumption expenditures (PCE) increased $11.0 billion, or 0.1 percent.In January, personal income increased $72.7 billion, or 0.5 percent, DPI increased $57.2 billion, or 0.4 percent, and PCE increased $10.7 billion, or 0.1 percent, based on revised estimates.

Real PCE — PCE adjusted to remove price changes — increased 0.2 percent in February, in contrast to a decrease of less than 0.1 percent in January.Purchases of durable goods increased 0.3 percent, in contrast to a decrease of 0.8 percent.Purchases of motor vehicles and parts accounted for about half of the increase. Purchases of nondurable goods decreased 0.3 percent in February, compared with a decrease of 0.1 percent in January.Purchases of services increased 0.3 percent, compared with an increase of 0.1 percent.

The NBER uses personal income less transfer payments to date recessions.The number continues increasing:

The following table shows the monthly change in real PCEs:

Goods purchases contracted for the last three months, with two negative months each from durable and non-durable purchases.Service expenditures continue at a moderate pace.

The ISM manufacturing index was bullish. The headline number increased 2.3 points to 51.8. The best news was the surge in new orders, which rose a strong 6.8, printing at 58.3.The production number increased 2.5 points to 55.3.Perhaps most importantly, the anecdotal comments were very strong:

  • “Unemployment rate is low in our county, making it hard to find workers. We are understaffed and running lots of overtime.” (Plastics & Rubber Products)
  • “Business in telecom is booming. Fiber plant is at capacity.” (Chemical Products)
  • “Current trends remain steady. No issues with delivery or costs.” (Computer & Electronic Products)
  • “Capital equipment sales are steady.” (Fabricated Metal Products)
  • “Requests for proposals for new equipment [are] very strong.”(Machinery)
  • “Government is spending again. Have received delivery orders.” (Transportation Equipment)
  • “Things are starting to pick up. Our business is seasonal and it is that time of year.” (Printing & Related Support Activities)
  • “Business conditions are stable, little change from last month.” (Miscellaneous Manufacturing)
  • “Incoming sales are improving.” (Furniture & Related Products)
  • “Our business is still going strong.” (Primary Metals)
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