Personal income increased $57.4 billion, or 0.4 percent, ... according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $12.8 billion, or 0.1 percent.On inflation: The PCE price index increased 0.8 percent year-over-year due to the sharp decline in oil prices. The core PCE price index (excluding food and energy) increased 1.6 percent year-over-year in March (slightly lower than in February).
...
Real PCE -- PCE adjusted to remove price changes -- increased less than 0.1 percent in March, compared with an increase of 0.3 percent in February. ... The price index for PCE increased 0.1 percent in March, in contrast to a decrease of 0.1 percent in February. The PCE price index, excluding food and energy, increased 0.1 percent, compared with an increase of 0.2 percent.
The March PCE price index increased 0.8 percent from March a year ago. The March PCE price index, excluding food and energy, increased 1.6 percent from March a year ago.
Nonfarm payroll growth likely posted a solid 200,000 in April, driven once more by service-providing firms. Of this, government hiring likely contributed 5,000, which is a more modest clip than the 20,000 pop in March. ...Friday:
We look for the unemployment rate to hold at 5.0%, assuming the participation rate holds steady. However, there is a risk it heads higher, following the recent trend, which could boost the unemployment rate. The participation rate has seen an impressive recovery since September of last year, rising to 63% from 62.4%. A robust labor market has attracted many workers back into the labor market, and it is more likely than not that this trend generally continues in the near term. However, increased labor supply also means delayed wage pressures: we are looking for only 0.2% monthly growth in average hourly earnings. This would leave the yoy growth rate unchanged at 2.3%, though this is still greater than the 2% pace seen earlier in this cycle. ...
The Federal Reserve Bank of Kansas City released the April Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined modestly.The Kansas City region was hit hard by lower oil prices and the stronger dollar, but the impact is fading.
“Factories reported a modest decline in activity in April, but expectations for future activity increased to their highest reading of the year”, said Wilkerson.
...
Tenth District manufacturing activity continued to decline modestly, while producers’ expectations for future activity improved considerably. Most price indexes moved slightly higher in April, but remained at low levels.
The month-over-month composite index was -4 in April, up from -6 in March and -12 in February ...
emphasis added
Click on graph for larger image.
Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 0.5 percent in the first quarter of 2016, according to the "advance" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 1.4 percent.The advance Q1 GDP report, with 0.5% annualized growth, was below expectations of a 0.7% increase.
...
The increase in real GDP in the first quarter reflected positive contributions from personal consumption expenditures (PCE), residential fixed investment, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment, private inventory investment, exports, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the first quarter reflected a larger decrease in nonresidential fixed investment, a deceleration in PCE, a downturn in federal government spending, an upturn in imports, and larger decreases in private inventory investment and in exports that were partly offset by an upturn in state and local government spending and an acceleration in residential fixed investment.
emphasis added
I read and then re-read a recent article that I came across quite by accident in Scoop.it titled Procurement Technology: Why is the Public Sector Absent from the Table?
He then goes on to trumpet the billions that companies such as Coupa, Bravo and Tamr are spending to innovate and create commercial technologies that streamline and improve the procurement process, while simultaneously calling out the government for being laggards because they are not embracing what these innovators have to offer.
Sharma then writes“it is critical that the public sector make it a priority to explore and leverage commercial technologies to the maximum intent.” In short, governments should stop wasting time building customized solutions, get a better understanding of commercial procurement technologies and, create pilots to test multiple solutions.
Perhaps Mr. Sharma has never heard of Virginia’s eVA, which is an enduringly successful government eProcurement initiative. One of the main reasons for eVA’s success is that technology was not the center of its universe.
While you can read about eVA in my post Revised Forrester Wave Report confirms what I have been saying since 2007 . . . eVA is tops in public procurement, my point is simply this; technology is not the end all, be all that Sharma suggests in terms of public sector procurement. It is a component of a successful overall strategy to be certain, but it is not the difference maker.
The high rate of technology-centric initiative failures provides testimony to this truth.
Examples over the years include multi-million dollar flops such as the Oracle and J.D. Edwards VHA initiative. Besides costing taxpayers $650 million, this undertaking ultimately led to the Bay Pines congressional hearings.
However, and perhaps ironically, said failures are not limited to the public sector. The private sector has had its share of missteps. Hershey Food Corp and Fox Meyer Drug immediately come to mind.
There are of course many more examples to which I could refer. In short, the private sector doesn’t have the answers.
Hewlett-Packard – SAP Procurement For Public Sector White Paper
Other similar stories including Hewlett-Packard’s “lost $400 million in revenue from a failed SAP rollout” (Appendix C) and the £12 million hit that Cadbury Scwheppes took in 2006 as a result of a “bad SAP supply chain” project (Appendix D) are also worth noting. And not just because of the apparent size and resources of the companies in question. Although the HP case study should be somewhat disconcerting given that organization’s level of sophistication and supposed expertise as an SAP integrator.
As RedMonk analyst James Governor put it, “HP is trying to build an application management business to rival IBM’s. What better case study in proving your R/3 and Netweaver capability” . . . by showing “everyone how to merge two SAP systems.”
The analyst concluded by saying “Who would want to go to HP now for large scale SAP integration? The CEO just publicly said HP can’t effectively manage such a project.”
All this being said, what bothered me most about the Sharma post was the sense of the underlying arrogance and condescension of his “authoritative” tone, that suggests he knows what the public sector really needs.
It is representative of the same attitude that private sector technology companies have used over the years, to try and bully public sector clients. Remember the old no one ever got fired for buying IBM axiom?
Unfortunately, and whether intentionally or not, it is this manner in which Sharma presents his position, that stokes a level of simmering resentment on the part of those who have been on the receiving end for such a long time.
What is interesting, is that such attitudes will not likely be tolerated as the up and coming generation of procurement professionals step into more senior positions. Let’s face it, Generation Next procurement professionals are far more technologically savvy than their predecessors. In fact, I would be reasonably comfortable in suggesting that over the next 5 to 10 years, it is the end clients in the public sector who will be teaching the private sector technology companies a thing or two about improving “procurement and acquisition.”
Just as a side note . . .
Two of the highlights of the technology Sharma witnessed includes:
Before he starts championing them, Sharma should maybe track and quantify the success of the Bravo Solutions Ontario Government implementation that is presently under way, as well as the recent policy ruling by the Indian Government regarding marketplaces such as Amazon.
Just a suggestion . . .
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Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports.This was changed from the March FOMC statement:
emphasis added
Inflation picked up in recent months; however, it continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports.Note: I was expecting a change in the statement characterizing risks as "nearly balanced", but that wasn't included (I think that would have suggested a rate hike in June was more likely).
Click on graph for larger image.
Information received since the Federal Open Market Committee met in March indicates that labor market conditions have improved further even as growth in economic activity appears to have slowed. Growth in household spending has moderated, although households' real income has risen at a solid rate and consumer sentiment remains high. Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft. A range of recent indicators, including strong job gains, points to additional strengthening of the labor market. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to closely monitor inflation indicators and global economic and financial developments.
Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.
emphasis added
All three headline S&P/Case-Shiller Home Price Indices grew at a slightly slower pace in February compared to January, and the slowdown should extend into March, according to Zillow’s March Case-Shiller forecast.The year-over-year change for the 10-city and 20-city indexes will probably be lower in the March report than in the February report. The change for the National Index will probably be about the same.
The March Case-Shiller National Index is expected to gain another 0.3 percent in March from February, down from 0.4 percent growth in February from January. We expect the 10-City Index to grow 4.3 percent year-over-year in March, and the 20-City Index to grow 5 percent over the same period, down from annual growth of 4.6 percent and 5.4 percent in February, respectively. The National Index looks set to rise 5.3 percent year-over-year in March, equal to February’s annual growth.
Zillow’s March Case-Shiller forecast is shown in the table below. These forecasts are based on today’s February Case-Shiller data release and the March 2016 Zillow Home Value Index (ZHVI). The March Case-Shiller Composite Home Price Indices will not be officially released until Tuesday, May 31.
The beauty about telling the truth is that it cuts through distractions such as a $3.5 million lawsuit, and places the focus on where it belongs . . . the facts of a story.
Back on August 7th, 2015 I wrote a post titled The Ohio Effect: Why SciQuest’s condition may be terminal.
In the post, which you can access through the above link, I wrote how a highly placed source informed me that Ohio was looking to make a move away from SciQuest. While I was provided with a number of reasons for the State’s dissatisfaction, the main problem was that the SciQuest method for catalog creation and maintenance was both complicated and costly.
Now I am not sure if this is the post that ultimately led SciQuest to sue me for liable, but it must have been a point of contention for CEO Stephen Wiehe. So much so, that during the company’s Q2 Scoop session, Mr. Wiehe made the statement that my post was wrong, that I was being less than truthful, and that Ohio in his words “love us.”
By the way, here is the link to the post in which excerpts from the Q2 Scoop session – which was sent to me by company insiders – provide the audio of both the VP of Finance and CEO Wiehe himself, talking about the challenges with their technology; A Material Change at SciQuest?
Turning my attention back to Ohio and my August 7th post, this is one of the articles that SciQuest has challenged as being libelous and/or slanderous.
As is the case with all 17 or 18 posts they have listed in the $3.5 million action, I stand by my multiple sources, my research and everything I have written.
The news out of Ohio, is yet another example of the veracity of my coverage of SciQuest.
Without giving away too much information, the State did not renew the contract with SciQuest when it expired in March. In the interim, and as outlined on the web site;
Ohio is currently in the process of updating its financial system which includes the website used to post electronic bid opportunities.
Along with this effort, the state is requesting all current companies who are registered as Bidders register their companies as Suppliers (formerly known as Vendors) in the new system.
While the new system is not currently available, you can still register your company as a Supplier by completing the required forms and remitting to Ohio Shared Services.
In terms of the RFP for the new system, I have not been given a definitive date as to when it will be publicized.
That said, what I do find most interesting, is that despite SciQuest offering a favorable pricing scheme to extend the contract until I presume a new platform was selected, Ohio chose to go with the present “interim system.”
I guess the term “love” means different things to different people.
Regarding the SciQuest Case: For those who want to support this cause so that we can continue to fight for the truth, you can by making a small donation through the following link: http://ift.tt/1RJRHSt
You can follow my coverage of this story on Twitter using the hashtag #SQSLAPP.
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"Fourteen of 20 cities reported increases in February before seasonal adjustment; after seasonal adjustment, only 10 cities increased for the month."The NSA count is correct (14 of 20 cities increased before seasonal adjustment), but the SA number is incorrect. After seasonal adjustment, all 20 cities increased in February (not 10).
The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through February) in nominal terms as reported.
The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.
Here is a similar graph using the Case-Shiller National, Composite 20 and CoreLogic House Price Indexes.
The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 5.3% annual gain in February, unchanged from the previous month. The 10-City Composite increased 4.6% in the year to February, compared to 5.0% previously. The 20-City Composite’s year-over-year gain was 5.4%, down from 5.7% the prior month.
...
Before seasonal adjustment, the National Index posted a gain of 0.2% month-over-month in February. The 10-City Composite recorded a 0.1% month-over-month increase while the 20-City Composite posted a 0.2% increase in February. After seasonal adjustment, the National Index recorded a 0.4% month-over-month increase. The 10-City Composite posted a 0.6% increase and the 20-City Composite reported a 0.7% month-over-month increase after seasonal adjustment. Fourteen of 20 cities reported increases in February before seasonal adjustment; after seasonal adjustment, only 10 cities increased for the month.
emphasis added
Click on graph for larger image.
The second graph shows the Year over year change in all three indices.
Texas factory activity increased for a second month in a row in April, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 3.3 to 5.8, suggesting a slight pickup in output growth.This is the second consecutive month of manufacturing growth in Texas.
Most other indexes of current manufacturing activity also reflected growth this month. The new orders index rebounded into positive territory after four months of negative readings, coming in at 6.2. ...
Labor market indicators reflected persistent weakness in April. The employment and hours worked indexes remained negative for the fourth straight month but rose to -3.7 and -1.0, respectively. Fourteen percent of firms noted net hiring, and 18 percent noted net layoffs in April.
Click on graph for larger image.
The "distressing gap" graph shows existing home sales (left axis) and new home sales (right axis) through March 2016. This graph starts in 1994, but the relationship had been fairly steady back to the '60s.
• U.S. home prices showed stronger monthly gains than they have since last April, rising 0.7% from January, and were up 5.3% from last yearThe year-over-year increase in the index has been about the same for the last year.
• National home prices are now 27.5% above where they were at the bottom of the market at the start of 2012
• At $254K, the national level HPI is now just 5% off its June 2006 peak of $267K
• Strong upward monthly price movement was observed in many states and metro areas in February
• Of the nation’s 40 largest metros, 10 hit new peaks:
◦Austin, TX ($291K)
◦Dallas, TX ($224K)
◦Denver, CO ($339K)
◦Houston, TX ($223K)
◦Kansas City, MO ($174K)
◦Nashville, TN ($224K)
◦Portland, OR ($332K)
◦San Antonio, TX ($195K)
◦San Francisco, CA ($745K)
◦San Jose, CA ($891K)
Home prices in the Dallas metro area, historically one of the nation’s most stable and affordable markets, have climbed at one of the fastest rates in the U.S. since 2014. Inventories of houses on the market are under two months’ supply, the lowest in 25 years.With prices "escalating", where is the supply? There are probably several reasons supply hasn't picked up. As housing economist Tom Lawler noted several years, there has been a significant number of single family houses that have been converted to rentals. These properties are mostly still being rented, reducing the potential pool.
...
“The demand is staggering,” said Ms. Durnal, an agent with real-estate brokerage firm Redfin.
The escalating prices and tightening availability of homes in Dallas point to the challenges facing many of the nation’s largest real-estate markets as the crucial spring selling season heats up.
10:00 AM: New Home Sales for March from the Census Bureau.
9:00 AM: S&P/Case-Shiller House Price Index for February. Although this is the February report, it is really a 3 month average of December, January and February prices.
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for March 2016. In the past month, the indexes increased in 41 states, decreased in seven, and remained stable in two, for a one-month diffusion index of 68. Over the past three months, the indexes increased in 42 states and decreased in eight, for a three-month diffusion index of 68.Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
Click on graph for larger image.
Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is mostly green now.
Click on graph for larger image.
Over the years I have been a passionate advocate for the procurement profession.
While I dutifully covered stories such as the 2007 CPO Agenda Roundtable, in which participating executives expressed the believe that the best person to run a purchasing department was someone who doesn’t have a purchasing background I, like most in our profession, took exception to such statements.
Such sentiments are nothing new. In fact, and as reflected in Kelly Barner’s opening quote for the first chapter of our new book Procurement At A Crossroads, “Some executives used to think of procurement as the place you send staff away in order to never see them again.”
Just to be clear, these were not Kelly’s words. They are from the book Leading Procurement Strategy by Carlos Mena, Remko van Hoek and Martin Christopher.
The point is, I always believed that procurement – both the individual professional and the industry as a whole – got a bum rap.
You may have noted my use of the word believe in the “past tense.”
I still think that the majority of procurement professionals are top notch, hard working people, who care about doing a good job. However, I now have a better understanding of why both Dr. Robert Handfield and Kate Vitasek have little faith in the contributory value of the older generation of professionals. In fact, Vitasek went so far as to suggest that the profession will never come into its own until all of the old dinosaurs have died off.
But who are these old dinosaurs?
Based on the “official” NASPO response to the call out of the association in my recent post, it appears that the dinosaurs can be found in positions of leadership, such as State CPOs. At least from the standpoint of their attitudes and mindsets.
a mindset (also known as mental inertia) is a set of assumptions, methods, or notations held by one or more people or groups of people that is so established that it creates a powerful incentive within these people or groups to continue to adopt or accept prior behaviors, choices, or tools – Wikipedia
As an interesting aside, countless studies show that the up and coming generation of procurement professionals i.e. Millennials, have a greater sense of social responsibility than previous generations. In fact it is a top priority with them. I doubt that their reaction would mirror that of their present day “leaders.” This creditability gap will make it increasingly difficult for Millennials to take organizations such as NASPO and the NIGP seriously.
The following, which is from my e-mail exchange with NASPOs Executive Director DeLaine Bender, CAE, will illustrate my point:
Hello Jon. As you requested, I read your posts today. I wanted to share with you NASPO’s core values and mission, which describe our approach to association governance. You can find them at http://ift.tt/1VEhf8h.
As you may or may not be aware, NASPO and NIGP are two separate and distinct organizations. NIGP is in a better position to comment regarding their operations, which are outside NASPO’s scope.
Thanks,
DeLaine
I must admit that I wasn’t completely surprised by the response, although I did hold out the hope that there would be a more substantive reason than the perfunctory “it is none of our business.”
That said, here was my reply:
Thank you, Ms. Bender.
Unfortunately, your response is not nearly sufficient.
To begin, your members oversee the purchasing departments of their respective states. This means that they spend taxpayer dollars to procure goods and services – including electronic procurement platforms. Any external factors, be it questions surrounding NIGP strategic relationships or any other points of influence that have an impact on said purchasing decisions, is something with which NASPO should have a great deal of interest. Especially if it threatens to compromise the integrity of public sector procurement. On this point I am certain that you will agree.
Sadly, your initial response reflects an attitude similar to a person waiting on tables who, despite a patron’s request for service, tells them sorry but you are not sitting at one of my tables. Like the patrons of a restaurant, the taxpayers that public sector procurement serves, cannot be confined to artificially created silos. Or to put it another way, when there is a breakdown in the procurement process that affects one area it affects all areas – especially when taxpayer money is involved.
Within the above context, if and when a problem occurs, you have to ask yourself will your response be sufficient? I do not believe it will. In fact I believe that you will discover that should news report that there is a serious problem, your reference to NASPO’s “scope” will mean very little.
So before I print your response, I will ask you; is this your official position?
Thank you.
Now, and this may be purely subjective on my part but, when I make a statement – such as the one Ms. Bender made, I do so having done the prerequisite research to support my position.
As a result, and being totally confident in said response, had I been asked the question are you sure that this is your “official position” I would have, without hesitation, immediately responded YES!
Unfortunately, all NASPO has to offer is continuing silence.
So . . . what do you think about the NASPO response (or lack thereof)?
30
Most analysts are looking for starts to increase to around 1.25 million in 2016, and for new home sales around 560 thousand. This would be an increase of around 12% for both starts and new home sales.So far housing starts are up 14.5% year-over-year for the comparable period (January through March). I expect the year-over-year change to slow sharply. To reach the bottom of my predicted range (4% year-over-year), starts could be flat for the rest of the year compared to the same period in 2015. That will still be decent growth all things considered (slow down in oil producing areas and in multi-family).
I think there will be further growth in 2016, but I'm a little more pessimistic than some analysts. Some key areas - like Houston - will be hit hard by the decline oil prices. And I think growth will slow for multi-family starts. Also, to achieve double digit growth for new home sales in 2016, the builders would have to offer more lower priced homes (the builders have focused on higher priced homes in recent years). There has been a shift to offering more affordable new homes, but it takes time.
My guess is growth of around 4% to 8% in 2016 for new home sales, and about the same percentage growth for housing starts. Also I think the mix between multi-family and single family starts will shift a little more towards single family in 2016.
