Velocity Of Money – Charts Updated Through January 30, 2015

Here are three charts from the St. Louis Fed depicting the velocity of money in terms of the MZM, M1 and M2 money supply measures.

All charts reflect quarterly data through the 4th quarter of 2014, and were last updated as of January 30, 2015.  As one can see, two of the three measures are at an all-time low for the periods depicted:

Velocity of MZM Money Stock, current value = 1.379 :

MZM money velocity

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 30, 2015:

http://research.stlouisfed.org/fred2/series/MZMV

Velocity of M1 Money Stock, current value = 6.148 :

M1 money velocity

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 30, 2015:

http://research.stlouisfed.org/fred2/series/M1V

Velocity of M2 Money Stock, current value = 1.531 :

M2 money velocity

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 30, 2015:

http://research.stlouisfed.org/fred2/series/M2V

 

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1994.99 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – January 30, 2015 Update

As I stated in my July 12, 2010 post (“ECRI WLI Growth History“):

For a variety of reasons, I am not as enamored with ECRI’s WLI and WLI Growth measures as many are.

However, I do think the measures are important and deserve close monitoring and scrutiny.

Below are three long-term charts, from Doug Short’s blog post of January 30, 2015 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the January 30 release, indicating data through January 23, 2015.

Here is the ECRI WLI (defined at ECRI’s glossary):

ECRI WLI

This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:

Dshort 1-30-15 - ECRI-WLI-YoY -2.2 percent

This last chart depicts, on a long-term basis, the WLI, Gr.:

ECRI WLI,Gr.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2015.86 as this post is written

Consumer Confidence Surveys – As Of January 30, 2015

Doug Short had a blog post of January 30, 2015 (“Michigan Consumer Sentiment Remains at an Eleven-Year High“) in which he presents the latest Conference Board Consumer Confidence and Thomson/Reuters University of Michigan Consumer Sentiment Index charts.  They are presented below:

(click on charts to enlarge images)

Conference Board Consumer Confidence

Michigan Consumer Sentiment

There are a few aspects of the above charts that I find highly noteworthy.  Of course, until the recent sudden upswing, the continued subdued absolute levels of these two surveys was disconcerting.

Also, I find the “behavior” of these readings to be quite disparate as compared to the other post-recession periods, as shown in the charts between the gray shaded areas (the gray areas denote recessions as defined by the NBER.)

While I don’t believe that confidence surveys should be overemphasized, I find these readings to be very problematical, especially in light of a variety of other highly disconcerting measures highlighted throughout this site.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2008.50 as this post is written

Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI) is one index that is supposed to measure stress in the financial system.  Its reading as of the January 22, 2015 update (reflecting data through January 16) is -.807.

Of course, there are a variety of other measures and indices that are supposed to measure financial stress and other related issues, both from the Federal Reserve as well as from private sources.

Two other indices that I regularly monitor include the Chicago Fed National Financial Conditions Index (NFCI) as well as the Chicago Fed Adjusted National Financial Conditions Index (ANFCI).

Here are summary descriptions of each, as seen in FRED:

The National Financial Conditions Index (NFCI) measures risk, liquidity and leverage in money markets and debt and equity markets as well as in the traditional and “shadow” banking systems. Positive values of the NFCI indicate financial conditions that are tighter than average, while negative values indicate financial conditions that are looser than average.

The adjusted NFCI (ANFCI). This index isolates a component of financial conditions uncorrelated with economic conditions to provide an update on how financial conditions compare with current economic conditions.

For further information, please visit the Federal Reserve Bank of Chicago’s web site:

http://www.chicagofed.org/webpages/publications/nfci/index.cfm

Below are the most recently updated charts of the NFCI and ANFCI, respectively.

The NFCI chart below was last updated on January 28, 2015 incorporating data from January 5,1973 to January 23, 2015, on a weekly basis.  The January 23, 2015 value is -.65:

(click on chart to enlarge image)

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 28, 2015:

http://research.stlouisfed.org/fred2/series/NFCI

The ANFCI chart below was last updated on January 28, 2015 incorporating data from January 5,1973 to January 23, 2015, on a weekly basis.  The January 23 value is -.01:

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 28, 2015:

http://research.stlouisfed.org/fred2/series/ANFCI

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2036.93 as this post is written

Durable Goods New Orders – Long-Term Charts Through December 2014

Many people place emphasis on Durable Goods New Orders as a prominent economic indicator and/or leading economic indicator.

For reference, below are charts depicting this measure.

First, from the St. Louis Fed site (FRED), a chart through December, updated on January 27, 2015.  This value is 230,525 ($ Millions) :

(click on charts to enlarge images)

Durable Goods New Orders December 2014

Here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis:

durable goods new orders percent change from year ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Manufacturers’ New Orders:  Durable Goods [DGORDER]; U.S. Department of Commerce: Census Bureau; accessed January 27, 2015;

http://research.stlouisfed.org/fred2/series/DGORDER

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2034.40 as this post is written

U.S. Deflation – January 27, 2015 Update

This post provides an update to various past posts discussing deflation and “deflationary pressures.”  I have extensively written of “deflationary pressures” and deflation as I continue to believe that U.S. deflationary conditions are on the horizon, and that such deflationary conditions will cause, as well as accompany, inordinate economic hardship. [note: to clarify, for purposes of this discussion, when I mention “deflation” I am referring to the CPI going below zero. Also, I have been using the term “deflationary pressures” as a term to describe deflationary manifestations within an environment that is still overall inflationary but heading towards deflation.]

As one can see in the various professional economic forecasts mentioned in this site – as well as the continually negligible readings from the Federal Reserve Bank of Atlanta’s series titled “Deflation Probabilities” – economic forecasters continue to  have virtually no expectation of U.S. deflation either in the near-term or for the next few years.  However, at the same time, as the Wall Street Journal mentioned in a January 16 article, “The Fed has fallen short of its inflation goal for 2 1/2 years…”

I continue to believe that deflationary conditions will have serious direct and indirect adverse consequences, and would both accompany and cause severe economic hardship.  As I wrote in the July 11, 2013 post titled “Would Deflation Be Beneficial?“:

Also of note is various pernicious dynamics that would likely accompany deflation.  While these, of course, would vary with the extent of deflation, many would be inimical to today’s U.S. economic and financial structure.

These dynamics are numerous and many are complex, and as such aren’t suitably discussed in a brief manner.  (For those interested, the Bloomberg article of January 21, 2015, titled “Why Falling Prices Are Actually a Really Bad Thing” does discuss various problems that arise with deflation, although I am not necessarily in total agreement with various aspects of the article, including its points and scope.)

For reference purposes, below are three charts showing the CPI, commodities, and inflation expectations:

Here is a chart of the CPI as seen in Doug Short’s update of January 16, 2015 titled “December Headline Consumer Price Index At Its Lowest Since October 2009” :

CPI headline and core

Here is a chart of the GSCI Commodity Index, shown on a weekly basis since 2003 on a LOG scale:

(chart courtesy of StockCharts.com; chart creation and annotation by the author)

GSCI Weekly

Here is a chart of the 10-Year Breakeven Inflation Rate, with a last value of 1.61% as of the January 23, 2015 update (for those unaware of this measure, an excerpt from the FRED description: “The latest value implies what market participants expect inflation to be in the next 10 years, on average.”)

10-year inflation breakeven

Source:  Federal Reserve Bank of St. Louis, 10-Year Breakeven Inflation Rate [T10YIE], retrieved from FRED, Federal Reserve Bank of St. Louis: https://research.stlouisfed.org/fred2/series/T10YIE/, January 25, 2015.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2057.09 as this post is written

Median Household Income Chart

I have written many blog posts concerning the worrisome trends in income and earnings.

Doug Short, in his January 26, 2015 post titled “Real Median Household Income Rose a Significant 1.0% in December” produced the chart below.  It is based upon data from Sentier Research, and it shows both nominal and real median household incomes since 2000, as depicted.  As one can see, post-recession real median household income (seen in the blue line since 2009) is especially worrisome.

(click on chart to enlarge image)

median household income

As Doug mentions in his aforementioned blog post:

As the excellent data from Sentier Research makes clear, the mainstream U.S. household was struggling before the Great Recession. At this point, real household incomes are in worse shape than they were four years ago when the recession ended.

Among other items seen in his blog post is a chart depicting each of the two (nominal and real household incomes) data series’ percent change over time since 2000.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2057.09 as this post is written

Updates Of Economic Indicators January 2015

Here is an update of various indicators that are supposed to predict and/or depict economic activity. These indicators have been discussed in previous blog posts:

The January 2015 Chicago Fed National Activity Index (CFNAI) updated as of January 23, 2015:

cfnai-monthly-ma3 1-23-15

The ECRI WLI (Weekly Leading Index):

As of January 23, 2015 (incorporating data through January 16, 2015) the WLI was at 130.5 and the WLI, Gr. was at -5.0%.

A chart of the WLI,Gr., from Doug Short’s post of January 23, 2015, titled “ECRI Recession Watch:  Update“:

ECRI WLI,Gr.

The Aruoba-Diebold-Scotti Business Conditions (ADS) Index:

Here is the latest chart, depicting the ADS Index from December 31, 2007 through January 17, 2015:

ads index

The Conference Board Leading (LEI) and Coincident (CEI) Economic Indexes:

As per the January 23, 2015 press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Increased Again,” the LEI was at 121.1 and the CEI was at 111.4 in December.

An excerpt from the January 23 release:

“December’s gain in the LEI was driven by a majority of its components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum,” said Ataman Ozyildirim, Economist at The Conference Board. “Still, a lack of growth in residential construction and average weekly hours in manufacturing remains a concern. Current economic conditions measured by the coincident indicators show employment and income gains are helping to keep the U.S. economy on a solid expansionary path despite some weakness in industrial production.”

Here is a chart of the LEI from Doug Short’s blog post of January 23 titled “Conference Board Leading Economic Index Increased Again in November“ :

Conference Board LEI

 

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2062.85 as this post is written

Money Supply Charts Through December 2014

For reference purposes, below are two sets of charts depicting growth in the money supply.

The first shows the MZM (Money Zero Maturity), defined in FRED as the following:

M2 less small-denomination time deposits plus institutional money funds.
Money Zero Maturity is calculated by the Federal Reserve Bank of St. Louis.

Here is the “MZM Money Stock” (seasonally adjusted) chart, updated on January 16, 2015 depicting data through December 2014, with value $12,919.9 Billion:

MZM chart

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis:

MZM chart YoY

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 23, 2015:

https://research.stlouisfed.org/fred2/series/MZMSL

The second set shows M2, defined in FRED as the following:

M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

Here is the “M2 Money Stock” (seasonally adjusted) chart, updated on January 22, 2015, depicting data through December 2014, with value $11,625.4 Billion:

M2SL December 2014

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis:

M2 seasonally adjusted percent change from year ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed January 23, 2015:

https://research.stlouisfed.org/fred2/series/M2SL

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2063.15 as this post is written

The U.S. Economic Situation – January 23, 2015 Update

Perhaps the main reason that I write of our economic situation is that I continue to believe, based upon various analyses, that our economic situation is in many ways misunderstood.  While no one likes to contemplate a future rife with economic adversity, current and future economic problems must be properly recognized and rectified if high-quality, sustainable long-term economic vitality is to be realized.

There are an array of indications and other “warning signs” – many readily apparent – that current economic activity and financial market performance is accompanied by exceedingly perilous dynamics.

I have written extensively about this peril, including in the following:

Building Financial Danger” (ongoing updates)

A Special Note On Our Economic Situation

Forewarning Pronounced Economic Weakness

Thoughts Concerning The Next Financial Crisis

Was A Depression Successfully Avoided?

Has the Financial System Strengthened Since the Financial Crisis?

The Next Crash And Its Significance

My analyses continues to indicate that the growing level of financial danger will lead to the next stock market crash that will also involve (as seen in 2008) various other markets as well.  Key attributes of this next crash is its outsized magnitude (when viewed from an ultra-long term historical perspective) and the resulting economic impact.  This next financial crash is of tremendous concern, as my analyses indicate it will lead to a Super Depression – i.e. an economy characterized by deeply embedded, highly complex, and difficult-to-solve problems.

For long-term reference purposes, here is a chart of the Dow Jones Industrial Average since 1900, depicted on a monthly basis using a LOG scale (updated through January 16, 2015, with a last value of 17511.57):

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

DJIA since year 1900

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2063.15 as this post is written