Signs of Deflation Are Mounting in the United States

 

M3 is contracting, while M2 and M1 are growing at a slow pace.

 

Source: Shadowstat.com

 

 

 

Even the Austrian definition is showing some weakness in recent months.

 

Source: Michael Pollaro

Commercial paper is barely growing, while consumer credit and bank credit are contracting

 

 

 

The curcial ECRI leading indicator is falling like a rock

And so is the Philly Fed leading economic indicator:

 

 

 

 

 

 

 

“Results from the Business Outlook Survey suggest that regional manufacturing activity weakened in August, after two months of slowing activity. Indexes for general activity, new orders, and shipments all registered negative readings this month. Firms also reported declines in employment and work hours. The survey’s broad indicators of future activity continue to suggest that the region’s manufacturing executives expect growth in business over the next six months, but optimism has waned notably in recent months.

Indicators Suggest Weakness

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a reading of 5.1 in July to ?7.7 in August. The index turned negative, marking a period of declining monthly activity for the first time since July 2009 (see Chart). Indexes for new orders and shipments also suggest a slowing this month; the new orders index fell slightly, to ?7.1, while the shipments index turned negative, declining to ?4.5. Indicating weakness, indexes for both delivery times and unfilled orders remained negative this month.

The percentage of firms reporting a decline in employment (23 percent) was higher than the percentage (20 percent) reporting an increase. More concerning was the significant drop in the average employee workweek index from 1.7 in July to ?17.1 in August.

Firms Report Lower Prices for Products

On balance, firms reported declines in prices for their own manufactured goods: More firms reported decreases in prices (19 percent) than reported increases (6 percent). The largest percentage, 70 percent, reported no change in prices for their manufactured goods. Firms reported somewhat less cost pressures over the past three months. The prices paid index decreased 1 point this month, to 11.8.

Manufacturers Expect Continued Growth

The future general activity index remained positive for the 20th consecutive month but weakened slightly (see Chart). The future new orders index increased to 25.7 and shipments remained unchanged. Information about future inventories suggests that drawdowns are expected in the next six months. The percentage of firms expecting employment to decrease over the next six months (22 percent) slightly exceeded the percentage expecting increases (21 percent). The future employment index decreased 14 points, moving the index into negative territory.

In special questions this month, firms were asked about exporting activity and any changes to production outsourcing or “insourcing,” the return of operations from abroad (see Special Questions). About 30 percent of the firms indicated that the share of sales attributed to exports increased over the past year, a trend consistent with the previous two years. Among firms that reported an increase in export share, the mean response indicates that 13.6 percent of sales growth is attributable to exports.

Home sales are falling

From DataQuick:

A total of 18,946 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in July. That was down 20.6 percent from 23,871 in June, and down 21.4 percent from 24,104 for July 2009, according to MDA DataQuick of San Diego.
This was the slowest July since 2007, when 17,867 homes were sold, and the second-slowest since July 1995, when 16,225 sold.

Other reports show similar declines as home sales fell sharply all across the country in July. We are now seeing double-digit months of supply nationwide – and we might even see the months of supply metric reach 1 year. The previous months-of-supply high for this downturn was 11.2 months in 2008.

Housing economist Thomas Lawler’s preliminary estimate for existing home sales in July is 3.95 million SAAR. If so, this would be fewest sales since 1996. Lawler’s estimate for inventory in July was 4.04 million (although it is a bit of a mystery how the NAR calculates inventory). That would mean 12.3 months of supply!

And Retail Spaces Lead Drop in U.S. Commercial Property

U.S. commercial real estate prices fell the most in almost a year in June as the economic recovery showed signs of faltering, Moody’s Investors Service said.
The Moody’s/REAL Commercial Property Price Index dropped 4 percent from May, the company said today in a report. The decline was the biggest since July 2009, and pushed the gauge down 0.9 percent from the start of the year.

“We expect property prices to remain choppy for some time as commercial real estate markets and the broader economy continue their slow recovery from the recession,” Moody’s researchers said in the report.

The Moody’s index is down 41 percent from its 2007 peak, having gained 4.2 percent from the seven-year low set in October.

The value of malls and shopping centers fell almost 11 percent in the second quarter, the biggest drop of any commercial property type tracked in the Moody’s index. Apartments and offices values both gained about 4 percent, while industrial properties dropped 2.9 percent.

CPI looks ready to fall, while core inflation is at record lows.

 

 

 

We expect core CPI to fall faster, as the inflation problems in the East to keep commodity prices relatively high. Once China’s big crash will come it will take down commodity prices with it.

When that happens, get ready for some serious money printing from Uncle Ben.

Read more at: 

How to profit from the coming collapse of China

The inflation/deflation debate: The complete list of arguments for hyperinflation and deflation

Marching Towards a Yo-Yo Depression 

Read the original story at Israel’s Financial Expert

 

 

 

 

 

 

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