Monthly Archives: May 2012

Consumer Confidence Surveys – As Of May 31, 2012

Doug Short had a blog post of May 29 (“May Consumer Confidence:  The Third Month of Shrinkage“) in which he presents the Conference Board Consumer Confidence and Thomson/Reuters University of Michigan Consumer Sentiment Index charts.  They are presented below:

(click on charts to enlarge images)

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.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1313.32 as this post is written

Trends In Real Personal Income Growth

In various posts I have commented about the troubling long- and short-term trends in income growth.  (Many of these past posts are seen under the “household income” tag)

While there are many ways to measure these income trends, regardless of the measurement or time period used, the trends appear worrisome.

As I highlighted in the May 14 post (“ECRI Statements From The Week Of May 7, 2012“), ECRI commented upon Real Personal Income growth in their May 9 release titled “Revoking Recession:  48th Time’s The Charm?

Here is an excerpt from that release:

For the last three months, year-over-year growth in real personal income has stayed lower than it was at the beginning of each of the last ten recessions. In other words, this is what personal income growth typically looks like early in a recession.

Has personal income growth ever remained this low for three months without the economy going into recession? The answer is no.

The release also contains a chart of U.S. Real Personal Income, presented on a Year-over-Year Growth (%) basis from 1952.

In his May 26 post titled “ECRI Recession Call Update:  Weekly Leading Index Declines Again,” Doug Short features a chart depicting Real Personal Income on a Year-over-Year basis.  Here is the chart for reference:

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1332.42 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – May 25, 2012 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 reaffirmed that view since, including a notable statement on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements the week of May 6, including:

Bloomberg video, May 9:  ”Lakshman Achuthan on Renewed U.S. Recession Call: Video

ECRI, May 9:  ”Revoking Recession:  48th Time’s The Charm?

Wall Street Journal video, May 9: “Free Market Economies Have Business Cycles

ECRI, May 11, “Rising GDP Doesn’t Rule Out Recession.”

Below are three long-term charts, from Doug Short’s blog post of May 26 titled “ECRI Recession Call Update:  Weekly Leading Index Declines Again.”  These charts are on a weekly basis through the May 25 release, indicating data through May 18.

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

(click on charts to enlarge images)

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

This last chart depicts, on a long-term basis, the 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 1317.82 as this post is written

St. Louis Financial Stress Index – May 24, 2012 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the  STLFSI (St. Louis Fed’s Financial Stress Index) 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 May 24, incorporating data from 12-31-93 to 5-18-12 on a weekly basis.  The 5-18-12 value is .368 :

_________

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 1320.68 as this post is written

Durable Goods New Orders – Long-Term Charts Through April 2012

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

For reference, here are a few charts depicting this measure.

First, from the St. Louis Fed site (FRED), a chart through April, last updated on May 24.  This value is 215,527 ($ Millions) :

(click on charts to enlarge images)

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

Lastly, a chart from Doug Short’s post of May 24 titled “Durable Goods Orders Up .2%, But Below Expectations” showing the Durable Goods New Orders vs. the S&P500′s monthly average of daily closes:

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1320.68 as this post is written

The Importance Of Revenue Growth To Hiring

Last Thursday, the Philadelphia Federal Reserve released the May 2012 Business Outlook Survey.

One aspect I found particularly notable was a chart indicating responses to “Factors Restraining Hiring.”  As indicated, the foremost response was “Expected growth of sales is low.”

In various blog posts – including the April 24 post titled “The Unemployment Situation Facing The United States” – I have commented upon the lagging nature of corporate revenue growth, and how corporate revenue growth appears to be a notable driver of hiring, or lack thereof.

The responses from the May 2012 Business Outlook Survey is yet another confirmation that (expected) revenue growth is a major factor for hiring.  This relationship appears to lack widespread recognition.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1318.86 as this post is written

Updates On Economic Indicators May 2012

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 May Chicago Fed National Activity Index (CFNAI)(pdf) updated as of May 21, 2012:

The USA TODAY/IHS Global Insight Economic Outlook Index:

An excerpt from the April 26 update titled “Index forecasts weaker growth” :

The April update of the USA TODAY/IHS Global Insight Economic Outlook Index shows real GDP growth, at a six-month annualized growth rate, increasing to 2.5% in February and March and then slowing to 2.0% during the summer months. While employment, housing (mostly the multifamily sector) and consumer spending are slowly recovering, concerns about the Eurozone and world growth continue.

The ECRI WLI (Weekly Leading Index):

As of 5/18/12 (incorporating data through 5/11/12) the WLI was at 124.5 and the WLI, Gr. was at .4%.

A chart of the WLI, Gr. since 2000, from Doug Short’s blog of May 18 titled “ECRI Recession Call Update:  WLI Declines, But Growth Improves Slightly” :

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

Here is the latest chart, depicting 5-12-10 to 5-12-12:

 

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

As per the May 17 release, the LEI was at 95.5 and the CEI was at 104.3 in April.

An excerpt from the May 17 release:

Says Ataman Ozyildirim, economist at The Conference Board: “The LEI declined slightly in April. Falling housing permits, rising initial claims for unemployment insurance and subdued consumer expectations offset small gains in the remaining components. The LEI’s six-month growth rate fell slightly, but remains in expansionary territory and well above its growth at the end of 2011. The CEI, a measure of current economic conditions, has also increased for five consecutive months.”

 

_________

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 1317.73 as this post is written

Walmart’s Q1 2013 Results – Comments

I found various notable items in Walmart’s Q1 2013 earnings call transcript (pdf) dated May 17, 2012.  I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Mike Duke, page 7:

I’m pleased that Walmart U.S. grew comp sales 2.6 percent. It was our best quarterly comp performance in three years and was well above the top end of our guidance range. Walmart U.S. not only delivered top line, they also delivered impressive profitability, with operating income growing faster than sales.

comments from Bill Simon, page 14:

Price was the focus of our first quarter marketing, and this will continue to be a key message this year.

comments from Bill Simon, page 14:

Let’s review the financial details for the first quarter. Net sales were up 5.9 percent to $66.3 billion for the quarter. Gross profit was up 4.9 percent to $18 billion. Gross profit rate was down 24 basis points versus last year as we continue strategic price investment. We expect this trend to continue during the year.

comments from Bill Simon, page 16:

While grocery inflation moderated slightly to approximately 3 percent for the quarter, customers are still trading down to lower price points and smaller pack sizes. Trade down and other initiatives reduced the net inflation impact on our customers to between 50 and 150 basis points.

comments from Bill Simon, page 18:

The overall economy is still our customers’ main concern. In particular, they remain concerned about job security or the availability of jobs, followed by gas and energy prices, and rising food costs. Food is consistently the top monthly expense outside of housing and vehicle payments.

comments from Bill Simon, page 19:

Our price investment strategy will gradually reduce what our customers pay, and thus our gross margin rate as well.  We will focus on productivity initiatives and expense management, which will continue to drive results to the bottom line.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1309.18 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – May 18, 2012 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 reaffirmed that view since, including a notable statement on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements last week, including:

Bloomberg video, May 9:  ”Lakshman Achuthan on Renewed U.S. Recession Call: Video

ECRI, May 9:  ”Revoking Recession:  48th Time’s The Charm?

Wall Street Journal video, May 9: “Free Market Economies Have Business Cycles

ECRI, May 11, “Rising GDP Doesn’t Rule Out Recession.”

Below are three long-term charts, from Doug Short’s blog post of May 18 titled “ECRI Recession Call Update:  WLI Declines, But Growth Improves Slightly.”  These charts are on a weekly basis through the May 18 release, indicating data through May 11.

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

(click on charts to enlarge images)

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

This last chart depicts, on a long-term basis, the 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 1295.22 as this post is written

St. Louis Financial Stress Index – May 17, 2012 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the  STLFSI (St. Louis Fed’s Financial Stress Index) 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 May 11, incorporating data from 12-31-93 to 5-11-12 on a weekly basis.  The 5-11-12 value is .204 :

_________

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 1304.86 as this post is written