Monthly Archives: February 2014

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – February 28, 2014 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 twelve sources :

Other past notable year 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 28, 2014 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the February 28 release, indicating data through February 21, 2014.

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

ECRI WLI

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

Dshort 2-28-14 - ECRI-WLI-YoY 2.1 percent

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

ECRI 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 1856.78 as this post is written

Consumer Confidence Surveys – As Of February 28, 2014

Doug Short had a blog post of February 28, 2014 (“Michigan Consumer Sentiment:  A Modest Increase Despite Bad Weather“) 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

Michigan Consumer Sentiment

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 1866.76 as this post is written

St. Louis Financial Stress Index – February 27, 2014 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 27, incorporating data from December 31,1993 to February 21, 2014, on a weekly basis.  The February 21, 2014 value is -.981:

(click on chart to enlarge image)

STLFSI

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

STLFSI 1-year chart

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 27, 2014:

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 1846.84 as this post is written

Durable Goods New Orders – Long-Term Charts Through January 2014

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

For reference, below are charts depicting this measure.

First, from the St. Louis Fed site (FRED), a chart through January, last updated on February 27, 2014.  This value is 224,975 ($ Millions) :

(click on charts to enlarge images)

Durable Goods New Orders

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

Durable Goods New Orders 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 February 27, 2014;

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 1845.43 as this post is written

Economic Expansion, Recession Or Depression?

On April 29, 2011, I wrote a post titled “Recovery, Recession, Or Depression?” in which I highlighted the issue of whether the U.S. economy was then in an economic recovery, economic recession, or economic depression.

Now, almost three years since that post, and nearly five years since the end of June 2009 NBER Business Cycle Dating Committee’s (BCDC) “end of the recession,”  the issue of what part of the business cycle the U.S. economy is in still seems debatable.

While many will find the defining and classification of the business cycle to be semantics – figuring that economic activity “is what it is” – I believe that for many reasons the correct determination of where we are in the business cycle has important implications in understanding future economic activity.

Of course, many economic indicators – perhaps most notably real GDP growth – continues to show “economic expansion.” As well, many other economic indicators, including those that (purportedly) most influence the NBER BCDC’s official classification of the business cycle, support the current “economic expansion” classification.  Some indicators, including aggregate corporate profits are at all-time record highs and have performed strongly.  And, of course, various U.S. and international stock markets are very close to record highs, after having performed strongly in 2013.

However, against this backdrop of indicators that (strongly) support the U.S. “economic expansion” classification are many other indicators that indicate (very) problematical economic conditions.  The list is long.  One area that is notable is that of consumer confidence and consumer sentiment, which continue to show subdued levels relative to that of past periods of economic expansions.  I find the long-term chart depicting the Bloomberg Consumer Comfort Index to be particularly interesting.  Here is a recent chart (updated through February 21, 2014) from the SentimenTrader site, showing the Index (which was formerly called the “ABC News Consumer Comfort Index”) compared against the S&P500:

ABC News Consumer Comfort Index

Also supporting these various subdued consumer confidence readings are various surveys that continually indicate that respondents don’t seem to believe that the U.S. economy is in an expansion.  One of these was the Marist Poll results of February 5, in which 61% of respondents believe that the U.S. economy is in a recession.

Interestingly, despite the various economic indicators, surveys, and other factors that support a “recession” classification, very few prominent economic forecasters or economic models indicate such a “recession” classification.  In fact, not only do these various economic forecasters and models affirm that the U.S. economy is not in a recession, but they also indicate that the probability of the U.S. economy entering a recession in the near-term is low, if not very much so.  One notable exception is ECRI, which has repeatedly reaffirmed that the U.S. continues to be in a recession.

As to whether the U.S. economy is in an economic depression is a complex topic.  One of the issues, as I explain in the “Defining An Economic Depression” post, is that the NBER BCDC does not define an economic depression, nor does it use the term as a classification.

While I am not aware of any prominent parties who believe that the U.S. is currently experiencing an economic depression, if one believes that the U.S. is not experiencing an economic expansion, the question as to whether we are experiencing an economic depression should (at least) be contemplated.

As I mentioned in the “Defining An Economic Depression” post mentioned above, perhaps the main “unofficial” guidepost of an economic depression is a 10% decline in economic output.  While the U.S. certainly has not experienced such a decline, if one takes a longer-term view of the economic history, and includes a broad list of economic indicators, factors, and surveys, one can make an argument that there is a protracted period of economic weakness in various indicators, as well as many other highly disturbing signs that should reside outside of even a “recession” classification.  I discuss my continuing view on how I interpret the ongoing economic situation in the “A Special Note On Our Economic Situation” page.

Of course, the paramount question is “what happens next?” Will the U.S. economy continue to avoid (as almost universally forecast) widespread economic weakness – or will widespread economic weakness occur?

I continue to believe, based upon various analyses, that various underlying “unresolved issues” – including many exceedingly large asset bubbles – and trends both in the economy and financial system continue to be vastly problematical.  On an “all things considered” basis, the underlying dynamics bode very poorly for the future economic situation.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1847.71 as this post is written

Current Economic Situation

With regard to our current economic situation, my thoughts can best be described/summarized by the posts found under the 33 “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.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1849.85 as this post is written

Updates Of Economic Indicators February 2014

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 February 2014 Chicago Fed National Activity Index (CFNAI)(pdf) updated as of February 24, 2014:

CFNAI-MA3

The ECRI WLI (Weekly Leading Index):

As of February 21, 2014 (incorporating data through February 14, 2014) the WLI was at 133.2 and the WLI, Gr. was at 2.5%.

Here is a chart of the ECRI WLI,Gr., from Doug Short’s February 21, 2014 post titled “ECRI Recession Watch:  Weekly Update” :

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 February 15, 2014:

ADS Index

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

As per the February 20, 2014 press release, the LEI was at 99.5 and the CEI was at 108.1 in January.

An excerpt from the February 20 release:

“The increase in the Leading Economic Index reflects an economy that is expanding moderately, although the pace is somewhat held back by persistent and severe inclement weather in most parts of the country,” said Economist Ken Goldstein. “If the economy is going to move on to a faster track in 2014 compared to last year, consumer demand and especially investment will need to pick up significantly from their current trends.

Here is a chart of the LEI from Doug Short’s blog post of February 23 titled “Conference Board Leading Economic Index Edged up in January“ :

Conference Board 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 1856.26 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – February 21, 2014 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 twelve sources :

Other past notable year 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 21, 2014 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the February 21 release, indicating data through February 14, 2014.

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

Dshort 2-21-14 - ECRI-WLI 132.2

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

Dshort 2-21-14 - ECRI-WLI-YoY 2.3 percent

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

Dshort 2-21-14 - ECRI-WLI-growth-since-1965 2.5

 

_________

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 1836.25 as this post is written

Markets During Periods Of Federal Reserve Intervention – February 20, 2014 Update

In the August 9, 2011 post (“QE3 – Various Thoughts“) I posted a chart that depicted the movements of the S&P500, 10-Year Treasury Yield and the Fed Funds rate spanning the periods of various Federal Reserve interventions since 2007.

For reference purposes, here is an updated chart from Doug Short’s blog post of February 21, 2014 (“ECRI Weekly Leading Index“) :

(click on chart to enlarge image)

Dshort 2-21-14 - ECRI-recession-call-crushed-by-the-Fed

 

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1843.61 as this post is written

St. Louis Financial Stress Index – February 20, 2014 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 20, incorporating data from December 31,1993 to February 14, 2014, on a weekly basis.  The February 14, 2014 value is -.97:

(click on chart to enlarge image)

STLFSI_2-20-14 -.97

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

STLFSI_2-20-14 -.97 1-year

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 20, 2014:

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 1839.97 as this post is written