Monthly Archives: February 2013

Consumer Confidence Surveys – As Of February 15, 2013

Doug Short had a blog post of February 15 (“Michigan Consumer Sentiment Again Beats Expectations“) 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)

Dshort 2-15-13 - Conference-Board-consumer-confidence-index

Dshort 2-15-13 Michigan-consumer-sentiment-index

There are a few aspects of the above charts that I find highly noteworthy.  Of course, the continuing subdued absolute levels of these two surveys is 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 blog.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1519.79 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – February 15, 2013 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.

The movement of the ECRI WLI and WLI, Gr. is particularly notable at this time, as ECRI publicly announced on September 30, 2011 that the U.S. was “tipping into recession,” and ECRI has reiterated the view that the U.S. economy is currently in a recession, seen most recently in these two media sources of December 7, 2012:

“Reviewing the indicators used to officially decide U.S. recession dates, it looks like the recession began around July 2012.”

Other past notable 2012 reaffirmations of the September 30, 2011 recession call by ECRI were seen (in chronological order)  on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements the week of May 6, including:

Also, subsequent to May 2012:

Below are three long-term charts, from Doug Short’s blog post of February 15 titled “ECRI ‘Recession’ Update:  Proprietary Indicators Take a Pause.”  These charts are on a weekly basis through the February 15 release, indicating data through February 8, 2013.

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

(click on charts to enlarge images)

Dshort 2-15-13 ECRI-WLI 129.6

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

Dshort 2-15-13 ECRI-WLI-YoY 5.6 percent

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

Dshort 2-15-13 ECRI-WLI-growth-since-1965 8.3

 

_________

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 1518.61 as this post is written

St. Louis Financial Stress Index – February 14, 2013 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the  St. Louis Fed’s Financial Stress Index (STLFSI) which is supposed to measure stress in the financial system.  For reference purposes, the most recent chart is seen below.  This chart was last updated on February 14, incorporating data from December 31,1993 to February 8, 2013 on a weekly basis.  The February 8, 2013 value is -.52 :

(click on chart to enlarge image)

STLFSI_2-14-13 -.52

Here is the STLFSI chart from a 1-year perspective:

STLFSI_2-14-13 1-year

_________

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 1521.99 as this post is written

NFIB Small Business Optimism – February 2013

The February NFIB Small Business Optimism report was released yesterday, February 12.  The headline of the Press Release is “Small-Business Owner Confidence Barely Budges.”  The subtitle is “The New Year begins with low expectation for future growth.”

The Index of Small Business Optimism rose .9 points in January to 88.9.

Here are some excerpts from the Press Release that I find particularly notable:

Small-business owner confidence continues to drag, according to the National Federation of Independent Business (NFIB) Small Business Optimism Index. The Index gained 0.9 points, rising to 88.9, failing to regain the losses caused by last month’s “fiscal cliff” scare. Expectations for improved business conditions increased by five points, but remain overwhelmingly low—negative 30 percent—the fourth lowest reading in survey history. Actual job creation and job creation plans improved nominally, but still not enough to keep up with population growth.

“The Optimism Index barely budged in January. The only good news is that it ‘budged’ up, not down. If small businesses were publicly traded companies, the stock market would be in shambles. While corporate profits are at record levels as a share of GDP, small businesses are still struggling to turn a profit,” said NFIB chief economist Bill Dunkelberg. “With the dismal news that our economy actually contracted in the fourth quarter of 2012, it isn’t any wonder that more small firms expect their real sales volumes to fall, few have plans to invest in new inventory, and hardly any owners are expanding or hiring.

also:

Sales trends remain overwhelmingly negative for small employers, with still more owners reporting declining sales than experiencing positive sales trends.

Also, an excerpt regarding “Credit Markets” from a different document regarding the February small business economic trends:

Six percent of the owners reported that all their credit needs were not met, unchanged from December. Thirty-one (31) percent reported all credit needs met and 3% reported that financing was their top business problem. Thirty-one (31) percent of all owners reported borrowing on a regular basis, up 2 points from December and historically low. A net 7% reported loans “harder to get” compared to their last attempt (asked of regular borrowers only), 2 points lower than December. The average rate paid on short maturity loans was 5.5%, stuck at much the same level for years.

Here is a chart of the NFIB Small Business Optimism chart, as seen in Doug Short’s February 12 post titled “Small Business Sentiment:  Up Fractionally But Still One of the Lowest Readings in Survey History” :

(click on chart to enlarge image)

Dshort 2-12-13 NFIB-optimism-index

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1519.43 as this post is written

The State of the Union Address – Notable Excerpts

I found President Obama’s State of the Union Address last night to contain some noteworthy comments.  While I could comment extensively on many parts of the speech, for now I will indicate excerpts that I found most relevant with regard to the economic situation, and may comment upon them at a future point.  I am highlighting these excerpts for many reasons; it should be noted that I do not necessarily agree with all of them.

Here are the excerpts I found most relevant, in the order they occurred in the speech:

But we gather here knowing that there are millions of Americans whose hard work and dedication have not yet been rewarded.  Our economy is adding jobs — but too many people still can’t find full-time employment.  Corporate profits have skyrocketed to all-time highs — but for more than a decade, wages and incomes have barely budged.

It is our generation’s task, then, to reignite the true engine of America’s economic growth — a rising, thriving middle class.  (Applause.)

It is our unfinished task to restore the basic bargain that built this country — the idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, no matter what you look like, or who you love.

It is our unfinished task to make sure that this government works on behalf of the many, and not just the few; that it encourages free enterprise, rewards individual initiative, and opens the doors of opportunity to every child across this great nation.  (Applause.)

also:

Now, most of us agree that a plan to reduce the deficit must be part of our agenda.  But let’s be clear, deficit reduction alone is not an economic plan.  (Applause.)  A growing economy that creates good, middle-class jobs — that must be the North Star that guides our efforts.  (Applause.)  Every day, we should ask ourselves three questions as a nation:  How do we attract more jobs to our shores?  How do we equip our people with the skills they need to get those jobs?  And how do we make sure that hard work leads to a decent living?

also:

Our first priority is making America a magnet for new jobs and manufacturing.  After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three.  Caterpillar is bringing jobs back from Japan.  Ford is bringing jobs back from Mexico.  And this year, Apple will start making Macs in America again.  (Applause.)

also:

America’s energy sector is just one part of an aging infrastructure badly in need of repair.  Ask any CEO where they’d rather locate and hire — a country with deteriorating roads and bridges, or one with high-speed rail and Internet; high-tech schools, self-healing power grids.  The CEO of Siemens America — a company that brought hundreds of new jobs to North Carolina — said that if we upgrade our infrastructure, they’ll bring even more jobs.  And that’s the attitude of a lot of companies all around the world.  And I know you want these job-creating projects in your district.  I’ve seen all those ribbon-cuttings. (Laughter.)

also:

And part of our rebuilding effort must also involve our housing sector.  The good news is our housing market is finally healing from the collapse of 2007.  Home prices are rising at the fastest pace in six years.  Home purchases are up nearly 50 percent, and construction is expanding again.

But even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected.  Too many families who never missed a payment and want to refinance are being told no.  That’s holding our entire economy back.  We need to fix it.

also:

Now, even with better high schools, most young people will need some higher education.  It’s a simple fact the more education you’ve got, the more likely you are to have a good job and work your way into the middle class.  But today, skyrocketing costs price too many young people out of a higher education, or saddle them with unsustainable debt.

also:

We know our economy is stronger when we reward an honest day’s work with honest wages.  But today, a full-time worker making the minimum wage earns $14,500 a year.  Even with the tax relief we put in place, a family with two kids that earns the minimum wage still lives below the poverty line.  That’s wrong.  That’s why, since the last time this Congress raised the minimum wage, 19 states have chosen to bump theirs even higher.

Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour.  (Applause.) We should be able to get that done.  (Applause.)

also:

Tonight, let’s also recognize that there are communities in this country where no matter how hard you work, it is virtually impossible to get ahead.  Factory towns decimated from years of plants packing up.  Inescapable pockets of poverty, urban and rural, where young adults are still fighting for their first job.  America is not a place where the chance of birth or circumstance should decide our destiny.  And that’s why we need to build new ladders of opportunity into the middle class for all who are willing to climb them.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1519.43 as this post is written

Charts Of Equities’ Performance Since March 9, 2009 And January 1, 1980 – February 13, 2013 Update

In the March 9, 2012 post (“Charts of Equities’ Performance Since March 9, 2009 And January 1, 1980“) I highlighted two charts for reference purposes.

Below are those two charts, updated through the last current price.

The first is a daily chart of the S&P500 (shown in green), as well as five prominent (AAPL, IBM, WFM, SBUX, CAT) individual stocks, since 2005.  There is a blue vertical line that is very close to the March 6, 2009 low.  As one can see, both the S&P500 performance, as well as many stocks including the five shown, have performed strongly since the March 6, 2009 low:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

EconomicGreenfield-2-13-13-SPX-vs-AAPL-IBM-WFM-SBUX-CAT

This next chart shows, on a monthly LOG basis, the S&P500 since 1980.  I find this chart notable as it provides an interesting long-term perspective on the S&P500′s performance.  The 20, 50, and 200-month moving averages are shown in blue, red, and green lines, respectively:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

EconomicGreenfield 2-13-13 SPX Monthly LOG Since 1980

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1519.43 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2012 & 2013 – As Of February 6, 2013

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  (My posts concerning their estimates can be found under the S&P500 Earnings tag)

For reference purposes, the most current estimates are reflected below, and are as of February 6, 2013:

Year 2012 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $97.20/share

-From a “top down” perspective, operating earnings of N/A

-From a “top down” perspective, “as reported” earnings of $87.96/share

Year 2013 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $111.36/share

-From a “top down” perspective, operating earnings of $107.20/share

-From a “top down” perspective, “as reported” earnings of $100.71/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1517.01 as this post is written

Recession Probability Models

There are a variety of economic models that are supposed to predict the probabilities of recession.

While I don’t agree with the methodologies employed or probabilities of impending economic weakness as depicted by the following two models, I think the results of these models should be monitored.

Please note that each of these models is updated regularly, and the results of these – as well as other recession models – can fluctuate significantly.

The first is the “Yield Curve as a Leading Indicator” from the New York Federal Reserve.  I wrote a blog post concerning this measure on March 1, 2010, titled “The Yield Curve as a Leading Indicator.”

Currently (last updated February 4, using data through January) this “Yield Curve” model shows a 4.48% probability of a recession in the United States twelve months ahead.  For comparison purposes, it showed a 5.74% probability through December.

The second model is from Marcelle Chauvet and Jeremy Piger.  This model is described on the St. Louis Federal Reserve site (FRED) as follows:

Smoothed recession probabilities for the United States are obtained from a dynamic-factor markov-switching model applied to four monthly coincident variables: non-farm payroll employment, the index of industrial production, real personal income excluding transfer payments, and real manufacturing and trade sales. This model was originally developed in Chauvet, M., “An Economic Characterization of Business Cycle Dynamics with Factor Structure and Regime Switching,” International Economic Review, 1998, 39, 969-996. (http://faculty.ucr.edu/~chauvet/ier.pdf)

This model, last updated on February 1, 2013, currently shows a .22% probability using data through November.

Here is the FRED chart (last updated February 1) :

RECPROUSM156N_.22 Percent

The two models featured above can be compared against measures seen in recent blog posts.  For instance, as seen in the February 8 post titled “The February 2013 Wall Street Journal Economic Forecast Survey” economists surveyed averaged a 17% probability of a U.S. recession within the next 12 months.

Of course, there is a (very) limited number of prominent parties, such as ECRI (most recently featured in the February 8 post titled “Long-Term Charts Of The ECRI WLI & ECRI WLI,Gr. – February 8, 2013 Update“) that believe the U.S. is already experiencing a recession.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1515.46 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – February 8, 2013 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.

The movement of the ECRI WLI and WLI, Gr. is particularly notable at this time, as ECRI publicly announced on September 30, 2011 that the U.S. was “tipping into recession,” and ECRI has reiterated the view that the U.S. economy is currently in a recession, seen most recently in these two media sources of December 7, 2012:

“Reviewing the indicators used to officially decide U.S. recession dates, it looks like the recession began around July 2012.”

Other past notable 2012 reaffirmations of the September 30, 2011 recession call by ECRI were seen (in chronological order)  on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements the week of May 6, including:

Also, subsequent to May 2012:

Below are three long-term charts, from Doug Short’s blog post of February 8 titled “ECRI ‘Recession’ Update:  Leading Index Growth Sets Another Interim High.”  These charts are on a weekly basis through the February 8 release, indicating data through February 1, 2013.

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

(click on charts to enlarge images)

Dshort 2-8-13 ECRI-WLI 130.2

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

Dshort 2-8-13 ECRI-WLI-YoY 5.8 percent

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

Dshort 2-8-13 ECRI-WLI-growth-since-1965 8.9

 

_________

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 1517.48 as this post is written

St. Louis Financial Stress Index – February 7, 2013 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the  St. Louis Fed’s Financial Stress Index (STLFSI) which is supposed to measure stress in the financial system.  For reference purposes, the most recent chart is seen below.  This chart was last updated on February 7, incorporating data from December 31,1993 to February 1, 2013 on a weekly basis.  The February 1, 2013 value is -.504 :

(click on chart to enlarge image)

STLFSI_2-7-13 -.504

Here is the STLFSI chart from a 1-year perspective:

STLFSI_2-7-13 -.504 1 year

_________

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 1516.34 as this post is written