Gardner Intelligence Blog

Monetary Base Grows Faster than 50% for 7th Month

Monetary Base Grows Faster than 50% for 7th Month

In March 2021, the monetary base was $5.839 trillion, which was the highest level ever and 7% higher than the previous all-time high in February 2021. Compared with one year ago, March’s monetary base was up 50.4%, which was the seventh month in a row and ninth in the last 11 months with faster than 50% growth. This was the 12th consecutive month that the month-over-month rate of change was faster than 44%. And March was the 16th month in a row of month-over-month growth. 

Much of the coronavirus stimulus from the government is still in place. Further, as of this writing, President Biden will announce his third $1 trillion stimulus plan since he took office at the beginning of the year.

As the threat of COVID-19 subsides, the team at Gardner Intelligence eagerly anticipates getting back on the speaking circuit.  Here are some of the highlights from Michael Guckes’ presentation at the Carbon Fiber 2019 event showing what the Gardner Business Index (GBI) has to offer manufacturers looking to optimize their business success.

March Housing Permits at Pre Bubble Bursting Level

March Housing Permits at Pre Bubble Bursting Level

There were 157,600 housing permits filed in March 2021, which was the highest total since August 2006. It has taken 15 years, unprecedented government stimulus, and a pandemic that drove virtually all office workers to work from home and move out of big cities for housing permits to return to levels seen prior to the housing bubble bursting in late 2006 and early 2007. This is leading to strong growth in the appliance and off-road/construction machinery industries, in particular.

Permits filed in March increased 36.0% compared with one year ago, which was the fastest rate of growth since June 2015. Housing permits grew nine of the last 10 months, and in eight of those months, the growth was faster than 11.5%.

Vehicle Market is Red Hot

Prices for new and used vehicles continue to move higher as a result of a combination of influences.  On the demand side, consumer spending has been bolstered by stimulus money which has supported an unprecedented increase in median family income.  Further bolstering total spending is the rebounding jobs market which is seeing employers offering ever higher wages to fill critical vacant positions.

From the perspective of supply, production was not disrupted just once at the onset of the COVID-19 pandemic.  Rather, vehicle production (supply) has experienced a string of supply-chain after-shocks since the initial COVID-19 shock of nearly a year ago, which saw factories forced to close and output fall to nearly nothing.  The current combination of heightened income and limited output has created a very lucrative situation for the automotive industry as evidenced by the rising average price for new vehicles as well as for the pre-owned segment.  The latest pricing data recorded an average new vehicle price in excess of $40,000 as consumers flock to large vehicles loaded with optional equipment. Manufacturers who can help to alleviate the production constraints for OEMs and their tier suppliers could find themselves in a lucrative position.

Durable Goods Production Grows for First Time Since August 2019

In March, the index for production of durable goods was 107.8. Compared with one year ago, the index increased 6.8%, which was the first month of growth since August 2019 and the fastest rate of month-over-month growth since June 2012. Of course, part of the reason for this growth was March 2020 was affected by the early stages of the economy being shut down. And, the comparisons will get even easier in April and May. 

The annual rate of change, which is easier to correlate with other data points, contracted 8.2%. This was the 13th consecutive month of contraction but the first where the contraction decelerated. The key leading indicator of production – durable goods new orders – has bottomed out, according to its rate of change, and is indicating that production has likely done the same. Also, consumer durable goods spending, which leads durable goods new orders, grew more than 11% from June to November 2020, 9.5% in December 2020, and more than 16% in January and February this year. This seemingly means production needs to increase significantly to keep from eating too far into inventories.

Reports

Top Shops

‘Top Shops’ is a benchmarking and recognition program designed to help shops build their business.

World Machine Tool Survey

An independent annual survey that collects statistics from machine tool consuming and producing countries and compares them in real U.S. dollars.

Capital Spending Survey

An annual survey that collects statistics regarding budgeted spending on machine tools, testing equipment, software and more.

Gardner Business Index

A diffusion index measuring month-to-month changes in activity at durable goods and discrete parts manufacturing facilities.