INDICATOR: October Existing Home Sales, Leading Economic Indicators and November Philadelphia Fed NonManufacturing Index

KEY DATA: Sales: +1.9%; Prices (Over-Year): +6.2%/ LEI: -0.1%/ Phyla. Fed (NonMan.): +4.8 points; Orders: -17.8 points; Hiring: -11.4 points

IN A NUTSHELL: “Modest housing sales gains, coupled with weakening indications of future growth are a worrisome combination.”

WHAT IT MEANS: The drama that is playing out in Congress is not the only stage where concerns are growing. On the economic front, the data are just not looking great. Housing is okay, but just okay. Existing home demand improved moderately in October. The gains were concentrated mostly in the South, with a smaller increase in the Midwest. On the other hand, demand fell in the Northeast and the West. As far as prices go, they are rising strongly again. A combination of firming demand and a paucity of homes for sale is driving up costs to buyers.

It doesn’t appear as if housing is improving enough to offset the weakness in other sectors. The Conference Board’s Leading Economic Index posted its third consecutive decline in October. For the first time in nearly three and a half years, the six-month growth rate was negative. That is not good news and, as the report notes, “the LEI suggests that the economy will end the year on a weak note”.

The Philadelphia Fed’s survey of nonmanufacturing companies posted a nice gain in early November. But that was for general economic activity. When it came to the firm itself, the details were not good. New orders, backlogs, hiring and hours worked all expanded more slowly. Optimism remains reasonably high, though.

Weekly jobless claims were flat, but they are still at a five-month high. I don’t want to read too much into that, but it does need to be watched.

MARKETS AND FED POLICY IMPLICATIONS: And the beat goes on, and the beat goes on. The current quarter is not setting up to be very good. Thankfully, we have not only turkey coming up, but the biggest shopping period as well. Consumers just might save the day, but it is not clear they can turn a mediocre quarter into something satisfying. That the Conference Board’s leading index points clearly to a slowdown (no recession yet) is not to be taken lightly since the other economic numbers support that conclusion. But, as Mr. Powell has noted, Fed actions take up to a year to have full effect, so maybe the rate cuts will cause the economy to accelerate. If you believe that, contact me and I will sell you my share of the Broadway play I am producing. So, there is only one thing to do. Start your Black Friday shopping early and buy, buy, buy and then go out and eat like crazy next Thursday. At least when it comes to the eating part, I will follow it as best as I can. As for the shopping, nah, not so much. Meanwhile, investors seem to be hiding under rocks and not taking any bold positions. Given the growing uncertainty over the mini-trade deal, that makes sense. Meanwhile the Fed keeps crowing (or is it gobbling?) about how great they are doing. It was made clear in the minutes from the October FOMC meeting, which were released yesterday, that the Committee expects to be on hold for an extended period.

Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm.