Median Household Income Chart

I have written many blog posts concerning the worrisome trends in income and earnings.

Doug Short, in his February 29, 2016 post titled “December Median Household Income at a New Post-Recession High” produced the chart below.  It is based upon data from Sentier Research, and it shows both nominal and real median household incomes since 2000, as depicted.  As one can see, post-recession real median household income (seen in the blue line since 2009) is especially worrisome.

(click on chart to enlarge image)

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As Doug mentions in his aforementioned post:

As the excellent data from Sentier Research makes clear, the mainstream U.S. household was struggling before the Great Recession. At this point, real household incomes are about where they were during the middle of the Great Recession.

Among other items seen in his blog post is a chart depicting each of the two (nominal and real household incomes) data series’ percent change over time since 2000.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1952.88 as this post is written

Consumer Confidence Surveys – As Of February 26, 2016

Doug Short had a blog post of February 26, 2016 (“Michigan Consumer Sentiment:  February Final Slightly Better Than Forecast“) 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)

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There are a few aspects of the above charts that I find highly noteworthy.  Of course, until the recent sudden upswing, the continued subdued absolute levels of these two surveys was 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 site.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1948.05 as 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 February 26, 2016, titled “The Philly Fed ADS Index Business Conditions Index” 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)

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The ADS Index, 91-Day MA:

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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 1948.05 as this post is written

Durable Goods New Orders – Long-Term Charts Through January 2016

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 January, updated on February 25, 2016. This value is $237,465 ($ Millions):

(click on charts to enlarge images)

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

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 25, 2016;

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 1933.48 as this post is written

House Prices Reference Chart

As a reference for long-term house price index trends, below is a chart, updated with the most current data (through December) from the CalculatedRisk blog post of February 23, 2016 titled “Real Prices and Price-to-Rent Ratio in December”:

(click on chart to enlarge image)

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1929.80 as this post is written

The U.S. Economic Situation – February 24, 2016 Update

Perhaps the main reason that I write of our economic situation is that I continue to believe, based upon various analyses, that our economic situation is in many ways misunderstood.  While no one likes to contemplate a future rife with economic adversity, current and future economic problems must be properly recognized and rectified if high-quality, sustainable long-term economic vitality is to be realized.

There are an array of indications and other “warning signs” – many readily apparent – that current economic activity and financial market performance is accompanied by exceedingly perilous dynamics.

I have written extensively about this peril, including in the following:

“Building Financial Danger” (ongoing updates)

“A Special Note On Our Economic Situation”

“Forewarning Pronounced Economic Weakness”

“Thoughts Concerning The Next Financial Crisis”

“Was A Depression Successfully Avoided?”

“Has the Financial System Strengthened Since the Financial Crisis?”

“The Next Crash And Its Significance”

My analyses continues to indicate that the growing level of financial danger will lead to the next stock market crash that will also involve (as seen in 2008) various other markets as well.  Key attributes of this next crash is its outsized magnitude (when viewed from an ultra-long term historical perspective) and the resulting economic impact.  This next financial crash is of tremendous concern, as my analyses indicate it will lead to a Super Depression – i.e. an economy characterized by deeply embedded, highly complex, and difficult-to-solve problems.

For long-term reference purposes, here is a chart of the Dow Jones Industrial Average since 1900, depicted on a monthly basis using a LOG scale (updated through February 19, 2016, with a last value of 16391.99):

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1921.27 as this post is written

Money Supply Charts Through January 2016

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 February 19, 2016 depicting data through January 2016, with a value of $13,754.3 Billion:

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 23, 2016:

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 February 18, 2016, depicting data through January 2016, with a value of $12,421.5 Billion:

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 23, 2016:

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

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1945.50 as this post is written

Updates Of Economic Indicators February 2016

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 2016 Chicago Fed National Activity Index (CFNAI) updated as of February 22, 2016: (current reading of +.28; current reading of CFNAI-MA3 is -.15):

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The ECRI WLI (Weekly Leading Index):

As of February 19, 2016 (incorporating data through February 12, 2016) the WLI was at 128.6 and the WLI, Gr. was at -3.1%.

A chart of the WLI,Gr., from Doug Short’s post of February 19, 2016, titled “ECRI Weekly Leading Index: Down from Last Week“:

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

Here is the latest chart, depicting the ADS Index from December 31, 2007 through February 13, 2016:

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

As per the February 18, 2016 press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. Declined Slightly,” (pdf) the LEI was at 123.2, the CEI was at 113.2, and the LAG was 120.0 in January.

An excerpt from the February 18 release:

“The U.S. LEI fell slightly in January, driven primarily by large declines in stock prices and further weakness in initial claims for unemployment insurance,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Despite back-to-back monthly declines, the index doesn’t signal a significant increase in the risk of recession, and its six-month growth rate remains consistent with a modest economic expansion through early 2016.”

Here is a chart of the LEI from Doug Short’s blog post of February 18 titled “Conference Board Leading Economic Index: Decrease in January for Second Consecutive Month“:

_________

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 1943.12 as this post is written

Trends Of S&P500 Earnings Forecasts

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of February 12, 2016:

from page 23:

(click on charts to enlarge images)

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from page 24:

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1911.35 as this post is written

S&P500 2015, 2016 & 2017 EPS Estimates

As many are aware, Thomson Reuters publishes earnings estimates for the S&P500.  (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings label)

The following estimates are from Exhibit 12 of “The Director’s Report” (pdf) of February 18, 2016, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share:

Year 2015 estimate:

$117.34/share

Year 2016 estimate:

$121.91/share

Year 2017 estimate:

$138.08/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1906.67 as this post is written

Standard & Poor’s S&P500 Earnings Estimates For 2015, 2016 & 2017 – As Of February 16, 2016

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  (My posts concerning their estimates can be found under the S&P500 Earnings label)

For reference purposes, the most current estimates are reflected below, and are as of February 16, 2016:

Year 2015 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $103.58/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $90.57

Year 2016 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $120.04/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $113.93/share

Year 2017 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $138.22/share

-From a “top down” perspective, operating earnings of N/A

-From a “bottom up” perspective, “as reported” earnings of $127.81/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1917.83 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 11, 2016 update (reflecting data through February 5) is -.472.

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 February 18, 2016 incorporating data from January 5,1973 to February 12, 2016, on a weekly basis.  The February 12, 2016 value is -.50:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 18, 2016:

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

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The ANFCI chart below was last updated on February 18, 2016 incorporating data from January 5,1973 to February 12, 2016, on a weekly basis.  The February 12 value is -.06:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed February 18, 2016:

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 1924.09 as this post is written

Walmart’s Q4 2016 Results – Comments

I found various notable items in Walmart’s Q4 2016 management call transcript (pdf) dated February 18, 2016.  (as well, there is Walmart’s press release of the Q4 results(pdf))

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 management call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Doug McMillon, President and CEO, page 4:

Overall, this past year has been a year of investment, operational improvement and change, even while we delivered solid growth. We do see an underlying strength in our Walmart U.S. business that wasn’t there a year ago.

comments from Greg Foran, president and CEO of Walmart U.S., page 9:

Secondly, in January, we announced the closing of 150 U.S. stores, including all 102 of our Express format locations. Closing stores is never an easy decision, but it’s necessary to ensure we are positioned to deliver our long-term plan. Strengthening the Supercenter and Neighborhood Market formats, while simultaneously delivering a seamless experience with e-commerce, will require our full attention. In fact, we expect to open more than 135 stores in fiscal 2017 alone. While we know that closing stores affected a number of our associates, I’m proud to say that more than half of these associates have already received offers or have been placed in open roles in nearby stores, and we're moving aggressively to identify other open positions for the remaining associates who are interested in transferring to new locations.

comments from Greg Foran, president and CEO of Walmart U.S., page 13:

We opened 69 supercenters this year, including relocations and conversions, and 146 traditional-format Neighborhood Markets. In FY17, we expect to open 50 to 60 supercenters, including relocations and conversions. We’ll also open 85 to 95 Neighborhood Markets. Additionally, we plan to further expand our online grocery program to more markets this year. As we have discussed in the past, we are committed to growth, but we’ll do it sensibly, with the customer in mind as we select the right locations, products, and service offerings for each store.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1926.82 as this post is written

The S&P500 Vs. The Shanghai Stock Exchange Composite Index – February 18, 2016

For reference purposes, the chart below shows the S&P500 vs. the Shanghai Stock Exchange Composite Index on a daily basis, since 2006, with price labels:

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

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1926.82 as this post is written

Zillow Q1 2016 Home Price Expectations Survey – Summary & Comments

On February 17, 2016, the Zillow Q1 2016 Home Price Expectations Survey results were released.  This survey is done on a quarterly basis.

Excerpts from the Press Release:

Prices of newly constructed homes are at historic highs -- the median price of new homes sold in December 2015 was almost 7 percent above the pre-recession peak of $267,000 in March 2007.

Overall home price expectations are up from a quarter ago, with survey respondents expecting 3.7 percent home value appreciation in 2016. Respondents expected 3.4 percent appreciation last quarter.

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Various Q1 2016 Zillow Home Price Expectations Survey charts are available, including that seen below:

As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the U.S. Zillow Home Value Index, will continually climb.

The detail of the Q1 2016 Home Price Expectations Survey (pdf) is interesting.  Of the 100+ survey respondents, only one (of the displayed responses) forecasts a cumulative price decrease through 2020.  That forecast is from Mark Hanson, who foresees a 16.65% cumulative price decrease through 2020.

The Median Cumulative Home Price Appreciation for years 2016-2020 is seen as 3.72%, 7.12%, 10.55%, 13.89%, and 17.62%, respectively.

For a variety of reasons, I continue to believe that even the most “bearish” of these forecasts (as seen in Mark Hanson’s above-referenced forecast) will prove too optimistic in hindsight.  From a longer-term historical perspective, such a decline is very mild in light of the wild excesses that occurred over the “bubble” years.

I have written extensively about the residential real estate situation.  For a variety of reasons, it is exceedingly complex.  While many people continue to have an optimistic view regarding future residential real estate prices, in my opinion such a view is unsupported on an “all things considered” basis.  Furthermore, from these price levels there exists outsized potential for a price decline of severe magnitude, unfortunately.  I discussed this downside, based upon historical price activity, in the October 24, 2010 post titled “What’s Ahead For The Housing Market – A Look At The Charts.”

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1926.82 as this post is written

Gold, Silver And The Gold:Silver Ratio

As a reference, below is a monthly chart of Gold, Silver, the Gold:Silver ratio, and the S&P500, from January 1, 1980 through February 12, 2016 with price labels:

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

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1883.59 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – February 12, 2016 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.

Below are three long-term charts, from Doug Short’s blog post of February 12, 2016 titled “ECRI Weekly Leading Index:  Up Fractionally from the Previous Week.”  These charts are on a weekly basis through the February 12, 2016 release, indicating data through February 5, 2016.

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

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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:

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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 1862.71 as this post is written

Philadelphia Fed – 1st Quarter 2016 Survey Of Professional Forecasters

The Philadelphia Fed 1st Quarter 2016 Survey of Professional Forecasters was released on February 12, 2016.  This survey is somewhat unique in various regards, such as it incorporates a longer time frame for various measures.

The survey shows, among many measures, the following median expectations:

Real GDP: (annual average level)

full-year 2016:  2.1%

full-year 2017:  2.4%

full-year 2018:  2.7%

full-year 2019:  2.3%

Unemployment Rate: (annual average level)

for 2016: 4.8%

for 2017: 4.6%

for 2018: 4.6%

for 2019: 4.7%

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Regarding the risk of a negative quarter in real GDP in any of the next few quarters, mean estimates are 14.4%, 14.7%, 15.8%, 17.0% and 18.8% for each of the quarters from Q1 2016 through Q1 2017, respectively.

As well, there are also a variety of time frames shown (present quarter through the year 2025) with the median expected inflation (annualized) of each.  Inflation is measured in Headline and Core CPI and Headline and Core PCE.  Over all time frames expectations are shown to be in the .4% to 2.3% range.

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1858.75 as this post is written