Friday, August 29, 2014

Consumer Confidence Surveys – As Of August 29, 2014

Doug Short had a blog post of August 29, 2014 (“August Michigan Consumer Sentiment Bounced Back“) 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
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University of Michigan Consumer Sentiment
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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 1999.98 as this post is written

Thursday, August 28, 2014

Corporate Profits As A Percentage Of GDP

In the last post (“2nd Quarter 2014 Corporate Profits“) I displayed, for reference purposes, a long-term chart depicting Corporate Profits After Tax.
There are many ways to view this measure, both on an absolute as well as relative basis.
One relative measure is viewing Corporate Profits as a Percentage of GDP.  I feel that this metric is important for a variety of reasons.  As well, the measure is important to a variety of parties, including investors, businesses, and government policy makers.
As one can see from the long-term chart below (updated through the first quarter), (After Tax) Corporate Profits as a Percentage of GDP is at levels that can be seen as historically (very) high.  While there are many reasons as to why this is so, from a going-forward standpoint I think it is important to recognize both that such a notable condition exists, as well as contemplate and/or plan for such factors and conditions that would come about if (and in my opinion “when”) a more historically “normal” ratio of Corporate Profits as a Percentage of GDP occurs.  This topic can be very complex in nature, and depends upon myriad factors.  In my opinion it deserves far greater recognition.
(click on chart to enlarge image)
Corporate Profits As A Percentage Of GDP
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed August 28, 2014
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1997.91 as this post is written

2nd Quarter 2014 Corporate Profits

Today’s GDP release (Q2, 2nd Estimate)(pdf) was accompanied by the BLS Corporate Profits report for the 2nd Quarter.
Of course, there are many ways to adjust and depict overall Corporate Profits.  For reference purposes, here is a chart from the St. Louis Federal Reserve (FRED) showing the Corporate Profits After Tax (last updated August 28, 2014, with a value of $1839.8 Billion) :
Corporate Profits
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Here is the Corporate Profits After Tax measure shown on a Percentage Change from a Year Ago perspective:
Corporate Profits Percent Change From Year Ago
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Corporate Profits After Tax [CP]; U.S. Department of Commerce: Bureau of Economic Analysis; accessed August 28, 2014; https://research.stlouisfed.org/fred2/series/CP
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The Special Note summarizes my overall thoughts about our economic situation
SPX at 1997.61 as this post is written

Wednesday, August 27, 2014

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 August 21, 2014 update (reflecting data through August 15) is -1.266.
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:
Below are the most recently updated charts of the NFCI and ANFCI, respectively.
The NFCI chart below was last updated on August 27, incorporating data from January 5,1973 to August 22, 2014, on a weekly basis.  The August 22, 2014 value is -.94:
(click on chart to enlarge image)
NFCI
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed August 27, 2014:
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The ANFCI chart below was last updated on August 27, incorporating data from January 5,1973 to August 22, 2014, on a weekly basis.  The August 27, 2014 value is -.48:
(click on chart to enlarge image)
Adjusted National Financial Conditions Index
Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed August 27, 2014:
_________
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 2000.03 as this post is written

Tuesday, August 26, 2014

Durable Goods New Orders – Long-Term Charts Through July 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 July, last updated on August 26, 2014.  This value is 300,123 ($ Millions) :
(click on charts to enlarge images)
Durable Goods New Orders July 2014
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Here is the chart depicting this measure on a “Percentage Change from a Year Ago” basis:
DGORDER_8-26-14 300123 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 August 26, 2014;
_________
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 2003.44 as this post is written

Monday, August 25, 2014

Updates Of Economic Indicators August 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 August 2014 Chicago Fed National Activity Index (CFNAI)(pdf) updated as of August 25, 2014:
cfnai_monthly_MA3 8-25-14
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As of August 22, 2014 (incorporating data through August 15, 2014) the WLI was at 134.3 and the WLI, Gr. was at 2.8%.
Here is a chart of the ECRI WLI,Gr., from Doug Short’s August 22, 2014 post titled “ECRI Recession Watch:  Weekly Update” :
Dshort 8-22-14 - ECRI-WLI-growth-since-2000 2.8 percent
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Here is the latest chart, depicting the ADS Index from December 31, 2007 through August 16, 2014:
ADS Index
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As per the August 21, 2014 press release, the LEI was at 103.3 and the CEI was at 109.6 in July.
An excerpt from the August 21 release:
“The LEI improved sharply in July, suggesting that the economy is gaining traction and growth should continue at a strong pace for the remainder of the year,” said Ataman Ozyildirim, Economist at The Conference Board. “Although housing has been one of the weakest components this year, the sharp gain in building permits helped boost the LEI in July. Financial markets and labor market conditions have also supported recent gains, but business spending indicators remain soft and their contribution marginal.”
_________
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 1998.60 as this post is written

Friday, August 22, 2014

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – August 22, 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 publicly available 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:
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Below are three long-term charts, from Doug Short’s blog post of August 22, 2014 titled “ECRI Recession Watch:  Weekly Update.”  These charts are on a weekly basis through the August 22 release, indicating data through August 15, 2014.
Here is the ECRI WLI (defined at ECRI’s glossary):
ECRI WLI
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This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:
Dshort 8-22-14 - ECRI-WLI-YoY - 3.0 percent
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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 1990.24 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 39 “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 1991.84 as this post is written