America's Current & Future Economic Situation - By Ted Kavadas
Thursday, September 12, 2019
Charts Indicating Economic Weakness – September 2019
U.S. Economic Indicators
Throughout this site there are many discussions of economic indicators. At this time, the readings of various indicators are especially notable. This post is the latest in a series of posts indicating U.S. economic weakness or a notably low growth rate.
While many U.S. economic indicators – including GDP – are indicating economic growth, others depict (or imply) various degrees of weak growth or economic contraction. As seen in the August 2019 Wall Street Journal Economic Forecast Survey the consensus (average estimate) among various economists is for 2.2% GDP growth in 2019 and 1.8% GDP growth in 2020. However, there are other broad-based economic indicators that seem to imply a weaker growth rate.
As well, it should be remembered that GDP figures can be (substantially) revised.
Charts Indicating U.S. Economic Weakness
Below are a small sampling of charts that depict weak growth or contraction, and a brief comment for each:
Total Federal Receipts
“Total Federal Receipts” growth continues to be intermittent in nature since 2015. As well, the level of growth does not seem congruent to the (recent) levels of economic growth as seen in aggregate measures such as Real GDP.
“Total Federal Receipts” through August had a last monthly value of $227,965 Million. Shown below is the measure displayed on a “Percent Change From Year Ago” basis with value 4.0%, last updated September 12, 2019:
source: Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed September 11, 2019: https://fred.stlouisfed.org/series/CFNAI
The CFNAI-MA3 (CFNAI three-month moving average) with current reading of -.14:
source: Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis; September 11, 2019: https://fred.stlouisfed.org/series/CFNAIMA3
The Aruoba-Diebold-Scotti Business Conditions Index (ADS Index)
Another broad-based economic indicator that seems to imply a weaker recent growth rate is the ADS Index.
Among the broad-based economic indicators that seem to imply subdued growth or decline is that of the Aruoba-Diebold-Scotti Business Conditions Index (ADS Index.) Below is a chart of the index from December 31, 2007 through September 7, 2019, with a value of -.1223, as of the September 12 update:
While I continue to have the stated reservations regarding the “Yield Curve” as an indicator, I do believe that it should be monitored.
Various portions of the U.S. Yield Curve have been showing intermittent or prolonged inversions. Below is the spread between 10-Year Treasury Constant Maturity and the 3-Month Treasury Constant Maturity from 1982 through the September 11, 2019 value, showing a value of -.21: (10-Year Treasury Yield (FRED DGS10) of 1.75% , 3-Month Treasury Yield (FRED DGS3MO) of 1.96%):
source: Federal Reserve Bank of St. Louis, 10-Year Treasury Constant Maturity Minus 3-Month Treasury Constant Maturity [T10Y3M], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed September 12, 2019: https://fred.stlouisfed.org/series/T10Y3M
Alternate Growth Trend Measures
Another facet of economic activity is seen in the ratio of the Conference Board’s Coincident Composite Index to the Lagging Composite Index. I interpret the trends seen in this measure to be disconcerting, as the ratio has generally been sinking for years: