Q1 was looking OK thru February. And then came March...

What's happened to the country's economy and financial markets over the last month is still shocking. It's not like things were booming before the word coronavirus was on any of our minds, but it was definitely growing, as evidenced by the new home sales report from February that came out today.

Sales of new single-family houses in February 2020 were at a seasonally adjusted annual rate of 765,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.4 percent (±14.8 percent)* below the revised January rate of 800,000, but is 14.3 percent (±17.5 percent)* above the February 2019 estimate of 669,000.

Sales Price
The median sales price of new houses sold in February 2020 was $345,900. The average sales price was $403,800.

That median sales price increase is 8% over what it was a year ago, and while that's very bubbly, it went along with an increase in new manufacturing orders and shipments for February (mostly in defense and aircraft, but still...). It helps explain why the Atlanta Fed was saying Q1's GDP growth was on track to be surpassing 3%, based on the data coming from the first 2 months of the year.

And then....

It's not news to say that March will be brutal economically, but yesterday we got one of the first indications of just how bad.

Data firm IHS Markit said on Tuesday its flash U.S. Composite Output Index, which tracks the manufacturing and services sectors, dropped to a reading of 40.5 this month. That was an all-time low and followed 49.6 in February. A reading below 50 indicates contraction.

The survey was conducted between March 12-23. Since last week, governors in at least 18 U.S. states accounting for nearly half the country’s population have issued directives requiring residents to stay mostly indoors, except for necessary trips to grocery stores, pharmacies, gas stations and doctors’ offices. “Non-essential” businesses have also been ordered closed....

The survey’s services sector flash Purchasing Managers Index dropped to an all-time low reading of 39.1 from 49.4 in February, the biggest monthly decline since October 2009 in the sector accounting for roughly two-thirds of the U.S. economy.

Economists polled by Reuters had forecast a reading of 42.0 in March, down from February’s final reading of 49.4.

Though manufacturing activity contracted this month, the size of the decline was modest. The flash manufacturing PMI dipped to a reading of 49.2 in March, a 127-month low, from 50.7 in February. A measure of new orders received by factories dropped below the 50 threshold.

Then tomorrow we will find out just how many new unemployment claims were filed in America during our first full week of coronavirus layoffs. We know Wisconsin had over 100,000 new claims between Sunday the 15th and Monday the 23rd, and national estimates have last week's number zooming well above 1 million and probably over 2 million.

What this tells me is just how fragile and hollow our economic "growth" really was, where it takes one outside shock to drop demand, cause a corporate debt crisis, tank the stock market, and set off all of these job losses. And it shows just how dumb it is to tie so much of our economic and societal security to the job that we have. Because it can go away so fast.