Monthly Archives: July 2013

Current Economic Situation

With regard to our current economic situation,  my thoughts can best be described/summarized by the posts found under the 26 “Building Financial Danger” posts.

My thoughts concerning our ongoing economic situation – with future implications – can be seen on the page titled “A Special Note On Our Economic Situation,” which has been found near the bottom of every blog post since August 15, 2010.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1695.93 as this post is written

Updates Of Economic Indicators July 2013

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

The July 2013 Chicago Fed National Activity Index (CFNAI)(pdf) updated as of July 22, 2013:

cfnai_monthly_MA3 7-22-13

The ECRI WLI (Weekly Leading Index):

As of 7/19/13 (incorporating data through 7/12/13) the WLI was at 131.2 and the WLI, Gr. was at 4.5%.

A chart of the WLI, Gr. since 2000, from Doug Short’s blog of July 19 titled “ECRI Recession Watch:  Weekly Update” :

Dshort 7-19-13 ECRI-WLI-growth-since-2000 4.5

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

Here is the latest chart, depicting 12-31-07 through 7-13-13:

ads_12-31-07 through 7-13-13

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

As per the July 18 press release, the LEI was at 95.3 and the CEI was at 105.9 in June.

An excerpt from the July 18 release:

Says Ataman Ozyildirim, economist at The Conference Board: “The U.S. LEI was flat in June. Declines in building permits, new orders and stock prices were offset by gains in consumer expectations, initial claims for unemployment insurance, and other financial indicators. However, the LEI’s six-month growth rate remains positive, suggesting the economy will continue expanding through the end of the year.”

Here is a chart of the LEI from Doug Short’s blog post of July 18 titled “Conference Board Leading Economic Index:  Unchanged In June” :

Dshort 7-18-13 CB-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 1691.52 as this post is written

Congressional Accolades For Ben Bernanke

Last week, during his Congressional testimony, Ben Bernanke received various accolades from members of Congress.

While the official transcript is not yet available, the Wall Street Journal, in a July 19 Real Time Economics post titled “Congress Gives Ben Bernanke A Hero’s Send-Off” provides various highlights.

While I don’t necessarily agree with any or all of the following statements from members of Congress below, I do find them notable and post them for reference purposes.

Excerpts from the Real Time Economics post include:

In Mr. Bernanke’s two days of delivering the Fed’s semi-annual monetary policy report to Congress, at least 13 members of the House Financial Services Committee and seven members of the Senate Banking Committee prefaced their questions to Mr. Bernanke by thanking him for steering the economy through the Great Recession and its aftermath.

“You acted boldly, decisively and creatively,” Rep. Jeb Hensarling (R., Texas) told Mr. Bernanke Wednesday. “Under your leadership, the Fed took a number of actions that certainly staved off even worse economic” pain, said Mr. Hensarling, who is chairman of the House committee and has been an outspoken critic of some Fed policies.

also:

Sen. Pat Toomey (R., Pa.), who has offered his share of criticism about U.S. economic policy in recent years, told Mr. Bernanke: “Your quiet but strong leadership has been instrumental in keeping our economy from falling into an abyss and repeating the devastation of a Great Depression. And we are now, because of your leadership, on the path towards turning the economy around.”

also:

Sen. Charles Schumer (D., N.Y.) told Mr. Bernanke that 2014 and 2015 “will be stronger economically than our present time, and that will be in large part because of the building blocks that you put into place, even if you’re no longer chairman of the Fed.”

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1692.09 as this post is written

Brookings Institution’s “2013 Economic Values” Survey – Notable Aspects

The Brooking Institution released a study on July 18, 2013 titled “2013 Economic Values Survey.”

I found various aspects of the survey’s results to be notable, especially those relating to “Perceptions Of Economic Mobility” (among various generations) and capitalism.  As well, the roll of government is included.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1692.09 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – July 19, 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 five sources :

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 July 19 titled “ECRI Recession Watch:  Weekly Update”  These charts are on a weekly basis through the July 19 release, indicating data through July 12, 2013.

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

(click on charts to enlarge images)

Dshort 7-19-13 ECRI-WLI 131.2

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

Dshort 7-19-13 ECRI-WLI-YoY 7.0 percent

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

Dshort 7-19-13 ECRI-WLI-growth-since-1965 4.5

_________

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 1688.93 as this post is written

St. Louis Financial Stress Index – July 18, 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 July 18, incorporating data from December 31,1993 to July 12, 2013, on a weekly basis.  The July 12, 2013 value is -.351:

(click on chart to enlarge image)

STLFSI_7-18-13 -.351

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

STLFSI_7-18-13 -.351 1-year

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 19, 2013:

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

_________

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 1687.70 as this post is written

The July 2013 Wall Street Journal Economic Forecast Survey

The July Wall Street Journal Economic Forecast Survey was published on July 19, 2013.  The headline is “Yellen Seen as Front-Runner for Top Fed Post.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the Q&A found in the spreadsheet.

As to the question (seen in the spreadsheet detail) “Please estimate on a scale of 0 to 100 the probability of a recession in the U.S. in the next 12 months,” the average was 13%.

The current average forecasts among economists polled include the following:

GDP:

full-year 2013:  2.1%

full-year 2014:  2.8%

full-year 2015:  3.0%

Unemployment Rate:

December 2013: 7.3%

December 2014: 6.7%

December 2015: 6.2%

10-Year Treasury Yield:

December 2013: 2.70%

December 2014: 3.30%

December 2015: 3.82%

CPI:

December 2013:  1.7%

December 2014:  2.1%

December 2015:  2.3%

Crude Oil  ($ per bbl):

for 12/31/2013: $98.61

for 12/31/2014: $99.13

(note: I highlight this WSJ Economic Forecast survey each month; commentary on past surveys can be found under the “Economic Forecasts” category)

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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 necessarily 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 1688.16 as this post is written

Chicago Fed National Financial Conditions Index (NFCI)

Each week I have been posting two charts of the St. Louis Fed’s Financial Stress Index (STLFSI), which is supposed to measure stress in the financial system.

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

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

This NFCI chart was last updated on July 17, incorporating data from January 5,1973 to July 12, 2013, on a weekly basis.  The July 12, 2013 value is -.71:

(click on chart to enlarge image)

NFCI_7-17-13 -.71

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 18, 2013:

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

This ANFCI chart was last updated on July 17, incorporating data from January 5,1973 to July 12, 2013, on a weekly basis.  The July 12, 2013 value is -.23:

(click on chart to enlarge image)

ANFCI_7-17-13 -.23

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed July 18, 2013:

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 1688.49 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – July 12, 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 five sources :

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 July 12 titled “ECRI Recession Watch:  Weekly Update”  These charts are on a weekly basis through the July 12 release, indicating data through July 5, 2013.

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

(click on charts to enlarge images)

Dshort 7-12-13 ECRI-WLI 130.3

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

Dshort 7-12-13 ECRI-WLI-YoY 7.1 percent

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

Dshort 7-12-13 ECRI-WLI-growth-since-1965 4.6

_________

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 1680.19 as this post is written