Tag Archives: economic indicators

Durable Goods New Orders – Long-Term Charts Through February 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 February 2017, updated on March 24, 2017. This value is $235,386 ($ Millions):

(click on charts to enlarge images)

Durable Goods New Orders

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 March 24, 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 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 2353.87 as this post is written

‘Hidden’ Weakness In Consumer Spending?

Throughout this site there are many charts of economic indicators.  At this time, the readings of various indicators regarding consumer spending are especially notable.  While many are still indicating significant growth, are these indicators accurately portraying the overall situation?

Below are a small sampling of consumer spending charts that depict significant or at least stable degrees of growth, and a brief comment for each:

Retail Sales

Retail sales levels appear to be growing.  An overall long-term view is shown below, with current value (as of March 15, 2017) of $473,991 Million:

Retail and Food Service Sales

source:  U.S. Bureau of the Census, Retail and Food Services Sales [RSAFS], retrieved from FRED, Federal Reserve Bank of St. Louis March 18, 2017;

https://fred.stlouisfed.org/series/RSAFS

The same information provided on a “percent change from year ago” basis, with a current value of 5.7%:

Retail and Food Service Sales Percent Change From Year Ago

Lastly, a long-term chart with trendlines, as seen in the Doug Short post of March 15, 2017, titled “Retail Sales:  February Growth Continues to Improve, As Expected“:

Retail and Food Service Sales with trendlines

comment:  

As seen above, there doesn’t appear to be recent discernible weakness in the retail spending trend as seen in this “Retail and Food Services Sales” [RSAFS] measure.

Consumer Spending

While there are many ways to judge consumer spending, the Gallup measure for consumer spending (on a “self-reported” basis) shows higher levels relative to the post-2008, as shown below:

Gallup consumer spending through February 2017

source:  Gallup “US Consumers’ February Spending Highest Since 2008” March 6, 2017

GDP Estimates

While, of course, GDP encompasses more than consumer spending alone, current estimates of 2017 GDP remain at levels that would appear to be roughly consistent with the stable, significant spending depicted above.  For example, the Wall Street Journal Economic Forecast Survey of March 2017 (summarized in the March 16 post titled “The March 2017 Wall Street Journal Economic Forecast Survey“) shows a 2017 GDP estimate of 2.4%.  This is close to the Federal Reserve’s current (March 2017 FOMC Economic Projections (pdf)) median estimate of 2.1%.

As additional reference, the New York Federal Reserve’s GDP Nowcasting Report of March 17, 2017 shows a Q1 estimate of 2.8% for Q1 and 2.5% for Q2.

comment:  

As seen above, U.S. GDP expectations don’t appear to show discernible weakness in the trend.

Store Closings

Over the recent past there have been a substantial number of retail store closings.  While reliable statistics on the closings and announcements of such don’t appear to be readily available, the numbers – as well as the results posted by various retailers – appear to indicate a (highly) problematical trend.  The incidence and timing of such closings – in the face of seemingly solid overall retail spending, as discussed above – seem to indicate that some significant factor(s) are contributing to a decline in “bricks and mortar” retail sales.  As one might expect, the weakness appears to be largely effecting marginal stores at this point.

While many would attribute such weakness in “bricks and mortar” stores to online sales – and especially Amazon – is online sales the primary factor?  While – because of many factors – it is difficult to say with certainty, online sales is undoubtedly a factor in the physical store closures.  However, I believe that a greater factor is retail spending that is not as strong as the aggregate trends shown above.

The closure of retail stores is of great significance to the U.S. economy.  Retail stores factor into many aspects of economic and financial activity, as discussed in previous posts, including the June 13, 2011 post titled “The Changing Nature Of Retail – Economic Implications.”  The continued accelerating nature of online sales has many implications for the economy and businesses.

Along these lines, an excerpt with regard to the effect store closings have on small towns, as seen in The Wall Street Journal article of January 20, 2017, titled “Mall’s Woes Ripple Across Small Town“:

Malls in smaller U.S. cities are often linchpins of local economies and their struggles can have a ripple effect, from jobs and tax revenues to the fortunes of logistics and transportation companies that provide trucking and inventory support for stores. Creditors who invest in mortgage securities tied to troubled malls face the risk of default.

Lagging Retail Stocks

Another factor that seems to be indicating weakness in consumer spending is the ratio of retail stocks (XRT as a proxy) to the S&P500.  As seen in the 10-year chart below, XRT as a ratio to the S&P500 has been declining since roughly mid-2015:

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

XRT:S&P500 ratio

GDP Estimates – GDP Now

The GDP estimate provided by the Federal Reserve Bank of Atlanta “GDP Now” is distinctly different than that mentioned above.  As of the March 16, 2017 update, the estimate for the 1st Quarter of 2017 is .9%.  While this estimate – which has been steadily declining – may or may not prove accurate, such a level would appear to be at least somewhat inconsistent with the stable, significant aggregate retail spending depicted in the “Retail And Food Services Sales” and other measures mentioned above.

As well, many other indicators – some mentioned on this site – indicate weakness in economic growth if not outright (substantially) problematical economic conditions.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2348.45 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 March 16, 2017 update (reflecting data through March 10, 2017) is -1.360.

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 March 22, 2017 incorporating data from January 5,1973 through March 17, 2017, on a weekly basis.  The March 17, 2017 value is -.78:

NFCI_3-22-17 -.78

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed March 22, 2017:

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

The ANFCI chart below was last updated on March 22, 2017 incorporating data from January 5,1973 through March 17, 2017, on a weekly basis.  The March 17 value is -.01:

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed March 22, 2017:

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 2340.21 as this post is written

Money Supply Charts Through February 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 March 17, 2017 depicting data through February 2017, with a value of $14,671.4 Billion:

MZMSL

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 5.8%:

MZMSL percent change from year ago

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed March 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 March 16, 2017, depicting data through February 2017, with a value of $13,313.1 Billion:

M2SL

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 6.4%:

M2SL percent change from year ago

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

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

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2373.47 as this post is written

Updates Of Economic Indicators March 2017

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 March 2017 Chicago Fed National Activity Index (CFNAI) updated as of March 20, 2017:

The CFNAI, with current reading of .34:

CFNAI

Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis, March 20, 2017;

https://fred.stlouisfed.org/series/CFNAI

The CFNAI-MA3, with current reading of .25:

CFNAIMA3

Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis, March 20, 2017;

https://fred.stlouisfed.org/series/CFNAIMA3

The ECRI WLI (Weekly Leading Index):

As of March 17, 2017 (incorporating data through March 10, 2017) the WLI was at 145.5 and the WLI, Gr. was at 9.6%.

A chart of the WLI,Gr., from Doug Short’s ECRI update post of March17, 2017:

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 March 11, 2017:

ADS Index

The Conference Board Leading (LEI), Coincident (CEI) Economic Indexes, and Lagging Economic Indicator (LAG):

As per the March 17, 2017 press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Increased in February” (pdf) the LEI was at 126.2, the CEI was at 114.9, and the LAG was 123.5 in February.

An excerpt from the  release:

“After six consecutive monthly gains, the U.S. LEI is at its highest level in over a decade. Widespread gains across a majority of the leading indicators points to an improving economic outlook for 2017, although GDP growth is likely to remain moderate,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Only housing permits contributed negatively to the LEI in February, reversing gains over the previous two months.”

Here is a chart of the LEI from Doug Short’s Conference Board Leading Economic Index update of March 17, 2017:

Conference Board LEI

_________

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 2376.00 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 March 9, 2017 update (reflecting data through March 3, 2017) is -1.335.

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 March 15, 2017 incorporating data from January 5,1973 through March 10, 2017, on a weekly basis.  The March 10, 2017 value is -.77:

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed March 15, 2017:

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

The ANFCI chart below was last updated on March 15, 2017 incorporating data from January 5,1973 through March 10, 2017, on a weekly basis.  The March 10 value is -.04:

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed March 15, 2017:

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 2381.13 as this post is written

Deflation Probabilities – March 9, 2017 Update

While I do not agree with the current readings of the measure – I think the measure dramatically understates the probability of deflation, as measured by the CPI – the Federal Reserve Bank of Atlanta maintains an interesting data series titled “Deflation Probabilities.”

As stated on the site:

Using estimates derived from Treasury Inflation-Protected Securities (TIPS) markets, described in a technical appendix, this weekly report provides two measures of the probability of consumer price index (CPI) deflation through 2021.

A chart shows the trends of the probabilities.  As one can see in the chart, the readings are volatile.

As for the current weekly reading, the March 9, 2017 update states the following:

The 2015–20 and 2016–21 deflation probabilities have remained at 0 percent since November 3 and January 17, respectively. These 2015–20 and 2016–21 deflation probabilities, measuring the likelihoods of net declines in the consumer price index over the five-year periods starting in early 2015 and early 2016, are estimated from prices of the five-year Treasury Inflation-Protected Securities (TIPS) issued in April 2015 and April 2016 and the 10-year TIPS issued in July 2010 and July 2011. We will continue updating the deflation probabilities file and chart weekly but will discontinue social media and update alerts until probabilities move above 0 percent.

_________

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 2372.60 this post is written

Broad-Based Indicators Of Economic Activity

The Chicago Fed National Activity Index (CFNAI) and the Aruoba-Diebold-Scotti Business Conditions Index (ADS Index) are two broad-based economic indicators that I regularly feature in this site.

The short-term and long-term trends of each continue to be notable.

Doug Short, in his blog post of March 6, 2017, titled “The Philly Fed ADS Index Business Conditions Index Update” displays both the CFNAI MA-3 (3-month Moving Average) and ADS Index (91-Day Moving Average) from a variety of perspectives.

Of particular note, two of the charts, shown below, denote where the current levels of each reading is relative to the beginning of past recessionary periods, as depicted by the red dots.

The CFNAI MA-3:

(click on charts to enlarge images)

CFNAI-MA3

The ADS Index, 91-Day MA:

ADS Index

Also shown in the Doug Short’s aforementioned post is a chart of each with a long-term trendline (linear regression) as well as a chart depicting GDP for comparison purposes.

_________

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 2377.16 as this post is written

Recession Probability Models – March 2017

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 post concerning this measure on March 1, 2010, titled “The Yield Curve as a Leading Indicator.”

Currently (last updated March 3, 2017 using data through February) this “Yield Curve” model shows a 4.1727% probability of a recession in the United States twelve months ahead.  For comparison purposes, it showed a 4.0601% probability through January, and a chart going back to 1960 is seen at the “Probability Of U.S. Recession Predicted by Treasury Spread.” (pdf)

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)

Additional details and explanations can be seen on the “U.S. Recession Probabilities” page.

This model, last updated on March 1, 2017, currently shows a .26% probability using data through December.

Here is the FRED chart (last updated March 1, 2017):

U.S. Recession Probability

Data Source:  Piger, Jeremy Max and Chauvet, Marcelle, Smoothed U.S. Recession Probabilities [RECPROUSM156N], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed March 6, 2017:

http://research.stlouisfed.org/fred2/series/RECPROUSM156N

The two models featured above can be compared against measures seen in recent blog posts.  For instance, as seen in the February 9 post titled “The February 2017 Wall Street Journal Economic Forecast Survey“ economists surveyed averaged a 16.49% probability of a U.S. recession within the next 12 months.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 2383.12 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 February 23, 2017 update (reflecting data through February 17, 2017) is -1.274.

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 March 1, 2017 incorporating data from January 5,1973 through February 24, 2017, on a weekly basis.  The February 24, 2017 value is -.79:

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed March 1, 2017:

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

The ANFCI chart below was last updated on March 1, 2017 incorporating data from January 5,1973 through February 24, 2017, on a weekly basis.  The February 24 value is .07:

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed March 1, 2017:

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 2397.50 as this post is written