The Clinton Herald, Clinton, Iowa

Opinion

October 29, 2012

HELSCHER: Economically, it is a mixed bag of tricks and treats

CLINTON — This time of year, we take an opportunity to try to scare ourselves or others under the guise of Halloween.  This past weekend I observed a group of walking skeletons preparing to run in Charlotte and several children made up as M&Ms.  In keeping with the theme, each was in search of treats and was prepared to trick if unsuccessful.

Our economic bag has a collection of treats, comparatively, and potential tricks, possibly too gentle a term.  Housing appears to be on the mend or at least coming off its bottom.  Housing starts jumped by 15 percent month-to-month in September, stronger than expected and at its highest level in four years.  The National Association of Home Builders Index moved up to its best reading since June 2006.  Building permits were up 11.6 percent with single family permits at their highest level since July 2008.  Inventories have shrunk to below six-month supply for the first time since March 2006.  Even though existing home sales slipped in September, the average price year over year increased 11.3 percent, the biggest increase since September 2005.

Retail sales came in at a stronger than expected 1.1 percent increase from August.  The previous two months’ sales figures were also revised higher.  Part of the increase was due to higher gasoline sales, but increases were also reported in furniture, apparel, autos and electronic (iPhone 5?) sales.  The time period corresponds with the crucial, to retailers, back to school sales.  The strength of sales numbers should provide a positive contribution to third quarter GDP.  Historically there has been an 80-90 percent correlation between back to school sales and Christmas sales.  The strength of third quarter retail sales is a positive omen for fourth quarter retail sales.  

Consumer confidence is also on the increase, as reported by the University of Michigan’s Consumer Sentiment Index for October, moving to a five-year high.  Consumers may be feeling better as a result of a wealth effect, with rising stock markets, increases in house prices and values and, thanks to declining debt service costs, an increase in consumers’ free cash flow.

Unemployment continues to decrease, albeit modestly.  The headline unemployment rate declined to 7.8 percent for September.  Initial jobless claims continue to trend lower, with weekly variations, to post crisis lows.  The Institute for Supply Management’s manufacturing index had been indicating contraction in the manufacturing sector for most of the summer, before moving into expansion territory in September.  The ISM’s nonmanufacturing activity index soared to its highest reading of the year, further evidence consumer spending is in much better shape than manufacturing activity.

Not everything in our bag of goodies is treats.  There are a few lumps of coal, oops, wrong holiday.  As mentioned above, manufacturing has been under pressure of late.  The headline consumer price index inched higher in September, but still too early to set off the inflation goblin.  

Although the European debt problems have left the headlines of late, the progress is slow and the potential for a misstep leaves the area vulnerable to further crisis.  

Early indications of a trough in the engineered Chinese economic slowdown are insufficient to convince investors that China has avoided an economic hard landing.  China also has its own version of elections in several months.  World oil prices have moderated some of late, but some risk premium remains due to sanctions on Iranian exports and diplomatic attempts are made to diffuse military resolution of their nuclear program.

If the ghosts and monsters are not enough to provoke fright, we have our own election in a few weeks.  At stake are the nature and direction of the “fiscal cliff” and sequestration, in the near term, and tax policy and entitlement spending over the longer term.  If you follow the ads, flyers, speeches and proxies for the candidates, there is plenty to frighten the average voter.  It is probably time to dig into the bag of goodies and consume enough sugar to keep me awake until after the election.

David Helscher is a senior vice president and trust officer with Clinton National Bank.

 

1
Text Only
Opinion
  • Off and on the record Let us now praise anonymous sources.The new White House press secretary got into a familiar old spat with the White House press corps the other day over the use of anonymous sources.Josh Earnest — has there ever been a more perfectly named White Hous

    July 25, 2014

  • Be more informed

    Blame the city.That is a favorite pastime of many, including me at times. Driving over that pesky pothole or paying that annual property tax bill can lead to some choice words referencing the city. Nobody takes the brunt of being the scapegoat more t

    July 25, 2014

  • CCC thanks community, collaborators for successful movie night Clinton Community College would like to thank those who participated in the free outdoor movie showing of “Captain America – Winter Soldier” on the evening of Friday, July 18.We are grateful to have such wonderful community collaborators in the Erick

    July 25, 2014

  • Lindley, Tom.jpg Better police needed for college teams enticed to cheat

    The NCAA once cracked down on colleges that went too far luring top prospects, then it targeted teams that lathered players with special treatment. That was until the NCAA's get-tough approach backfired, rendering it ineffective and creating an opportunity for those who want to play dirty.

    July 24, 2014 1 Photo

  • Lindley, Tom.jpg Expectations too high for a rehabbing Woods

    Tiger Woods finished near bottom last weekend at Royal Liverpool, drawing out his drought of major tournament wins. Despite the disappointing showing, Woods' return to form remains a matter of when, not if.

    July 22, 2014 1 Photo

  • Todd Akin's back again to talk of rape So, Todd Akin is back and he’s talking rape again.You remember what happened last time. The would-be Missouri senator torpedoed his campaign two years ago after suggesting in a TV interview that if a woman is a victim of “legitimate rape,” she is unl

    July 22, 2014

  • Sadness remains as two-year mark passes in cousins' case As most citizens of the Cedar Valley are well aware, July 13 marked two years since the disappearance of cousins Elizabeth Collins and Lyric Cook-Morrissey of Evansdale.The passage of time provides some semblance of healing, but the sadness, particul

    July 22, 2014

  • UI needs to keep its admission standards high There’s been a lot of talk lately — most of it coming from the leadership of the Iowa state Board of Regents — about the University of Iowa not being passionate enough about its recruitment of in-state undergraduates. Regent president Bruce Rastetter

    July 21, 2014

  • Vote fraud myths meet voting rights reality Before she was allowed to register and vote for the first time in Franklin County, North Carolina, Rosanell Eaton had to read the entire preamble to the U.S. Constitution out loud in front of three men in the county courthouse.Eaton is black. The thr

    July 21, 2014 1 Story

  • 7-21-14 David Helscher mug Prepare for possible effects of Fed's decisions It has been more than 5 years since the Federal Reserve has taken unprecedented steps to support the economy through purchases of Treasury and mortgage-backed debt securities. This has generally been called quantitative easing and has not been withou

    July 21, 2014 1 Photo

Poll

With the Clinton County Justice Coordinating Commission and the Clinton County Board of Supervisors discussing proposals to construct a new jail, do you think the time has come for Clinton County to construct such a facility?

Yes
No
     View Results
Facebook