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Money Supply Charts Through May 2017

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 June 16, 2017 depicting data through May 2017, with a value of $14,892.7 Billion:

MZMSL_6-16-17

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 5.1%:

MZMSL percent change from a year ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 21, 2017:

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 June 15, 2017, depicting data through May 2017, with a value of $13,495.5 Billion:

M2SL

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 5.9%:

M2SL percent change from year ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed June 21, 2017:

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

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2437.43 as this post is written

U.S. Deflation – June 14, 2017 Update

This post provides an update to various past posts discussing deflation and “deflationary pressures,” including the most recent post, that of June 28, 2016 titled “U.S. Deflation – June 28, 2016 Update.”   I have extensively written of “deflationary pressures” and deflation as I continue to believe that prolonged and deep 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.]

The subject of deflation contains many complex aspects, and accordingly no short discussion can even begin to be a comprehensive discussion of such.  For reference, my past posts concerning U.S. deflation can be found under the “deflation” tag.

In this post I would like to highlight some recent notable developments.

Trying to assess and/or predict the possibility of U.S. deflation is very challenging for many reasons.  Among these reasons is that there are many different measures that are supposed to predict and/or depict the possibility of deflation, and they can show apparently contradictory readings.  Among these measures are both survey-based as well as market-based measures.

Another challenge is that deflation in the U.S. has been relatively non-existent since the beginning of the 20th Century.  As such, knowledge and “practical experience” with deflation is lacking.  As seen in the below chart (from Doug Short’s May 15, 2017 post titled “A Long-Term Look at Inflation“) with the exception of The Great Depression prolonged periods of pronounced deflation have practically been nonexistent, especially after 1950:

U.S. inflation long-term chart

Of note, the shortfall between the Federal Reserve’s stated inflation target (2% on the PCE Price Index) and the actual inflation reading continues.  For years there has been a continued inability for the 2% inflation target to be sustained.  For reference, here is a chart of the PCE Price Index from Doug Short’s post of May 30, 2017, titled “PCE Price Index Headline and Core Down Again in April“:

PCE Price Index Headline and Core

There are many reasons that I believe that U.S. deflation of a pronounced and lasting nature will occur.  Among the reasons for such are the following:

  • As mentioned above, the continuing inability to “create” inflation to rise above the 2% goal.
  • Prolonged and pronounced economic low- and no-growth levels experienced globally.   While there is widespread consensus that U.S. economic growth will remain positive for the foreseeable future, my analyses indicates that the economy continues to have many highly problematical areas and that the widespread consensus concerning current and future economic growth is (substantially) incorrect.
  • A renewed “flattening” of the Yield Curve.  While, for many reasons, I believe that the “Yield Curve” and its various proxies have to viewed with caution, the current trends are notable.  Below is a chart of a yield curve proxy,  showing the spread between the 10-Year Treasury and 2-Year Treasury, using constant maturity securities.  This daily chart is from June 1, 1976 through June 8, 2017, with recessionary periods shown in gray. The current value is .86%:

Yield Curve chart

source:  Federal Reserve Bank of St. Louis, 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity [T10Y2Y], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed June 12, 2017:  https://research.stlouisfed.org/fred2/series/T10Y2Y

  • Continual indications of “deflationary pressures.”  I have written extensively concerning these persistent “deflationary pressures,” which have manifested in a variety of areas.
  • I continue to believe that the many continuing signs of “deflationary pressures” is a foreboding.  Among these signs is the pronounced weakness in many commodities.  One such measure is the Bloomberg Commodity Index, as seen below:  (chart courtesy of StockCharts.com; chart creation and annotation by the author)

Bloomberg Commodity Index chart

In conclusion, I continue to believe that significant (in extent and duration) U.S. deflation is on the horizon.  As discussed in the November 14, 2013 post (“Thoughts Concerning Deflation”), deflation often accompanies financial system distress.  My analyses continue to show an exceedingly complex future financial condition in which an exceedingly large “financial system crash” will occur, during  and after which outright deflation will both accompany and exacerbate economic and financial conditions.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2440.35 as this post is written

Total Household Net Worth As Of 1Q 2017 – Two Long-Term Charts

In the last post (“Total Household Net Worth As A Percent Of GDP 1Q 2017“) I displayed a long-term chart depicting Total Household Net Worth as a percentage of GDP.

For reference purposes, here is Total Household Net Worth from a long-term perspective (from 1945:Q4 through 2017:Q1).  The last value (as of the June 8, 2017 update) is $94.83540 Trillion:

(click on each chart to enlarge image)

Total Household Net Worth

Also of interest is the same metric presented on a “Percent Change from a Year Ago” basis:

Total Household Net Worth Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Board of Governors of the Federal Reserve System; accessed June 9, 2017:

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

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2445.05 as this post is written

Total Household Net Worth As A Percent Of GDP 1Q 2017

The following chart is from the CalculatedRisk post of June 8, 2017 titled “Fed’s Flow of Funds:  Household Net Worth increased in Q4.” It depicts Total Household Net Worth as a Percent of GDP.  The underlying data is from the Federal Reserve’s Z.1 report, “Financial Accounts of the United States“:

(click on chart to enlarge image)

Total Household Net Worth As A Percent Of GDP

As seen in the above-referenced CalculatedRisk post:

Household net worth was at $94.8 trillion in Q1 2017, up from $92.5 trillion in Q4 2016.

The Fed estimated that the value of household real estate increased to $23.5 trillion in Q1. The value of household real estate is now above the bubble peak in early 2006 – but not adjusted for inflation, and this also includes new construction.

As I have written in previous posts concerning this Household Net Worth (as a percent of GDP) topic:

As one can see, the first outsized peak was in 2000, and attained after the stock market bull market / stock market bubbles and economic strength.  The second outsized peak was in 2007, right near the peak of the housing bubble as well as near the stock market peak.

also:

I could extensively write about various interpretations that can be made from this chart.  One way this chart can be interpreted is a gauge of “what’s in it for me?” as far as the aggregated wealth citizens are gleaning from economic activity, as measured compared to GDP.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2431.56 as this post is written

June 6, 2017 Gallup Poll Results On Economic Confidence – Notable Excerpts

On June 6, 2017 Gallup released the poll results titled “Confidence In Economy in May Lowest Since November 2016.”

Notable excerpts include:

Though still historically high, Americans’ confidence in the economy fell to a six-month low in May, largely dragged down by Democrats’ worsening economic attitudes. Gallup’s U.S. Economic Confidence Index averaged a score of +3 in May, down slightly from April (+5) but eight points below January’s record monthly high (+11).

Gallup’s U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they believe the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all were to say the economy is doing poorly and getting worse.

also:

Even as some Americans become more pessimistic about the economy overall, attitudes about the economy’s current conditions have been relatively stable. Last month, 32% of Americans assessed the economy as “excellent” or “good,” while 22% said the economy was “poor.” Overall, the current conditions component averaged +10 in May, similar to +11 in April and three points shy of the nine-year high (+13) the measure hit in February and March.

Meanwhile, perceptions about the economy’s outlook have more clearly deteriorated. In May, slightly more Americans (49%) said the economy was “getting worse” than said it was “getting better” (45%). The economic outlook component stood at -4 for the month, representing a slight dip from April when the component averaged -1, and it is down notably from its record high in January of +11.

Here is an accompanying chart of the two components of the Gallup Economic Confidence Index, discussed above:

Gallup U.S. Economic Confidence Index Components

Here is an accompanying chart of the Gallup Economic Confidence Index:

Gallup U.S. Economic Confidence Index - Monthly Averages

 

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2429.33 as this post is written

Average Hourly Earnings Trends

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

Along these lines, one of the measures showing disconcerting trends is that of hourly earnings.

While the concept of hourly earnings can be defined and measured in a variety of ways, below are a few charts that I believe broadly illustrate problematic trends.

The first chart depicts Average Hourly Earnings Of All Employees: Total Private (FRED series CES0500000003)(current value = $26.22):

(click on chart to enlarge image)(chart last updated 6-2-17)

CES0500000003

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of All Employees:  Total Private [CES0500000003] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed June 2, 2017:

http://research.stlouisfed.org/fred2/series/CES0500000003

This next chart depicts this same measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 6-2-17)

CES0500000003 Percent Change From Year Ago

There are slightly different measures available from a longer-term perspective. Pictured below is another measure, the Average Hourly Earnings of Production and Nonsupervisory Employees – Total Private (FRED series AHETPI)(current value = $22.00):

(click on chart to enlarge image)(chart last updated 6-2-17)

AHETPI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of Production and Nonsupervisory Employees:  Total Private [AHETPI] ; U.S. Department of Labor: Bureau of Labor Statistics;  accessed June 2, 2017:

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

Pictured below is this AHETPI measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 6-2-17)

AHETPI Percent Change From Year Ago

I will continue to actively monitor these trends, especially given the post-2009 dynamics.

_________

I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site 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 2437.53 this post is written

Consumer Confidence Surveys – As Of May 30, 2017

Doug Short had a blog post of May 30, 2017 (“Michigan Consumer Confidence Down, Remains Optimistic“) 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 Index

University of Michigan Consumer Sentiment Index

There are a few aspects of the above charts that I find highly noteworthy.  Of course, until the sudden upswing in 2014, 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 2412.91 as this post is written

Durable Goods New Orders – Long-Term Charts Through April 2017

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

For reference, below are two charts depicting this measure.

First, from the St. Louis Fed site (FRED), a chart through April 2017, updated on May 26, 2017. This value is $231,168 ($ Millions):

(click on charts to enlarge images)

DGORDER_5-26-17

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

DGORDER 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 May 26, 2017;

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 site 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 2415.58 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 May 23, 2017 post titled “April Real Median Household Income Shows Encouraging Growth,” 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) remains worrisome.

(click on chart to enlarge image)

Monthly Median Household Income chart

As Doug mentions in his aforementioned post, regarding the change in real median household incomes:

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 about where they were during the Great Recession.

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

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site 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 2398.42 as this post is written

Money Supply Charts Through April 2017

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 May 19, 2017 depicting data through April 2017, with a value of $14,809.5 Billion:

MZMSL_5-19-17

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 5.2%:

MZMSL_5-19-17 5.2 Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 23, 2017:

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 May 18, 2017, depicting data through April 2017, with a value of $13,431.3 Billion:

M2SL_5-18-17

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 6.0%:

M2SL_5-18-17 Percent Change From Year Ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed May 23, 2017:

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

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2394.02 as this post is written