Wednesday, March 31, 2010

The Consumer Metrics Institute

In the previous blog post I wrote of the issues and implications regarding the current economic growth rate.

There are a variety of sources and methods one may use in trying to gauge current and future economic growth. In this blog I frequently highlight and discuss many I feel are prominent and/or noteworthy. However, I am constantly searching for new sources as I feel that many of the well established, existing indices and methodologies have inherent weaknesses. These weaknesses, in many cases, are being magnified and exacerbated in our current economic environment.

One source of forecasting economic trends that I have recently become aware of is called "The Consumer Metrics Institute." This site uses proprietary methodologies that appear quite disparate from those used by others. I'll probably comment more on these methodologies later; however, for those interested the FAQs section as well as various other pages on the site provide an overview.

Their methods are yielding statistics that I find most interesting, both with regard to our current economic condition, as well as those pre-dating the 3Q/4Q 2008 financial maelstrom and aftermath.

In aggregate, I interpret the data shown by The Consumer Metrics Institute to show that current economic growth is not as strong as widely depicted and believed. Based upon their data, I infer (based on this data) that the economy may be far more vulnerable to significant economic weakness than widely envisioned.

It is always hazardous to place too much reliance on one data source, especially when it comes to economic forecasting. As well, it is easy to view the non-confirming (vs. highly established economic forecasting sources and widely held economic expectations) nature of this Consumer Metrics Institute data with skepticism as it belies many underlying consensus beliefs and associated data sources.

However, I think this is a potentially very valuable source of information and I plan on monitoring it diligently. It will be included in my frequent updates of economic indicators.

In the next post I will display a few charts from the site that I find especially noteworthy...

SPX at 1171.80 as this post is written

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