Consumer Confidence Surveys – As Of December 31, 2019

The Doug Short site had a post of December 31, 2019 (“Consumer Confidence: ‘Consumer Confidence Unlikely to Gain Momentum in Early 2020‘“) that displays 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 sudden upswing in 2014, 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 notable, 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 3216.03 as this post is written

The U.S. Economy, U.S.Financial Conditions And Future Consequences

Various surveys, economic growth projections, and market risk indicators continue to indicate U.S. economic growth and financial system stability for the foreseeable future.

However, there are various indications – many of which have been discussed on this site – that this very widely-held consensus is in many ways incorrect.  There are many exceedingly problematical financial conditions that continue to exist, some of which have grown in severity.  As well, numerous economic dynamics continue to be worrisome and many economic indicators portray facets of weak growth or outright decline.

Of paramount importance is the resulting level of risk and the future economic implications.

From an “all things considered” standpoint, I continue to believe the overall level of risk is at a fantastic level, one that is far greater than that experienced at any time in the history of the United States.

Cumulatively, these highly problematical conditions will lead to future upheaval.  The extent of the resolution of these problematical conditions will determine the ongoing viability of the financial system and economy as well as the resultant quality of living.

As I have previously written in “The U.S. Economic Situation” updates:

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.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 3215.20 as this post is written

misc. note – corrections of blog posts

In the July 2, 2010 post I explained my policy with regard to changing the content of posts after the day the posts have been published on the blog.

While I change bad links and incorrect formatting without notification, I believe that changing blog posts’ content warrants disclosure.

Durable Goods New Orders – Long-Term Charts Through November 2019

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 November 2019, updated on December 23, 2019. This value is $242,625 ($ 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, with a last value of -3.7%:

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 December 23, 2019;
http://research.stlouisfed.org/fred2/series/DGORDER

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I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site 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 3227.46 as this post is written

Updates Of Economic Indicators December 2019

The following 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 December 2019 Chicago Fed National Activity Index (CFNAI) updated as of December 23, 2019:

The CFNAI, with current reading of .56:

source:  Federal Reserve Bank of Chicago, Chicago Fed National Activity Index [CFNAI], retrieved from FRED, Federal Reserve Bank of St. Louis, December 23, 2019;
https://fred.stlouisfed.org/series/CFNAI

The CFNAI-MA3, with current reading of -.25:

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, December 23, 2019;
https://fred.stlouisfed.org/series/CFNAIMA3

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The ECRI WLI (Weekly Leading Index):

As of December 20, 2019 (incorporating data through December 13, 2019) the WLI was at 147.1 and the WLI, Gr. was at 2.2%.

A chart of the WLI,Gr., from the Doug Short site’s ECRI update post of December 20, 2019:

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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 December 14, 2019:

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

As per the December 19, 2019 Conference Board press release, titled “The Conference Board Leading Economic Index (LEI) for the U.S. was Unchanged in November” the LEI was at 111.6, the CEI was at 106.8, and the LAG was 108.7 in November.

An excerpt from the release:

The US LEI was unchanged in November after three consecutive monthly declines. Strength in residential construction, financial markets, and consumers’ outlook offset weakness in manufacturing and labor markets,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “While the six-month growth rate of the LEI remains slightly negative, the Index suggests that economic growth is likely to stabilize around 2 percent in 2020.”

Here is a chart of the LEI from the Doug Short site Conference Board Leading Economic Index update of December 19, 2019:

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this site 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 3224.36 as this post is written

The U.S. Economic Situation – December 23, 2019 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 December 20, 2019, with a last value of 28455.09):

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

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 3221.22 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” report of December 13, 2019:

from page 25:

(click on charts to enlarge images)

from page 26:

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 3205.37 as this post is written

S&P500 EPS Forecasts 2019 Through 2021 And Past EPS

As many are aware, Refinitiv 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 24 of the “S&P500 Earnings Scorecard” (pdf) of December 19, 2019, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share; the Year 2015 value is $117.46; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; and the Year 2018 value is $161.93:

Year 2019 estimate:

$162.05/share

Year 2020 estimate:

$177.85/share

Year 2021 estimate:

$196.76/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 3205.37 as this post is written

Standard & Poor’s S&P500 EPS Estimates 2019 & 2020 – December 12, 2019

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 December 12, 2019:

Year 2019 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $158.37/share

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

-From a “bottom up” perspective, “as reported” earnings of $140.45/share

Year 2020 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $176.52/share

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

-From a “bottom up” perspective, “as reported” earnings of $161.87/share

_____

I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site 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 3205.37 as this post is written

Money Supply Charts Through November 2019

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 December 12, 2019 depicting data through November 2019, with a value of $16,984.6 Billion:

Here is the “MZM Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 8.8%:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed December 18, 2019;
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 December 12, 2019, depicting data through November 2019, with a value of $15,324.8 Billion:

Here is the “M2 Money Stock” chart on a “Percent Change From Year Ago” basis, with a current value of 7.4%:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed December 18, 2019;
https://research.stlouisfed.org/fred2/series/M2SL

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 3191.14 as this post is written

The December 2019 Wall Street Journal Economic Forecast Survey

The December 2019 Wall Street Journal Economic Forecast Survey was published on December 18, 2019.  The headline is “U.S. Expansion Expected to Continue Through 2020.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

Three excerpts:

The U.S. expansion, now in its 11th year, will continue through the 2020 presidential election with a healthy labor market backing it up, economists say.

also:

On average, they expect U.S. economic growth to slow slightly in 2020, to a year-over-year rate of 1.8% in the fourth quarter from an estimated 2.2% in 2019. They also see lower odds of a recession over the next year than they did in the prior two months.

also:

Just over a third of economists expect the next recession will come in 2021. One-fifth expect it in 2020, and 22.9% expect it to come in 2022.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 25.85%. The individual estimates, of those who responded, ranged from 5% to 65%.  For reference, the average response in November’s survey was 30.19%.

As stated in the article, the survey’s 57 respondents were academic, financial and business economists.  Not every economist answered every question.  The survey was conducted December 12 – December 16, 2019.

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Economic Forecasts

The current average forecasts among economists polled include the following:

GDP:

full-year 2019:  2.24%

full-year 2020:  1.78%

full-year 2021:  1.88%

full-year 2022:  1.99%

Unemployment Rate:

December 2019: 3.53%

December 2020: 3.68%

December 2021: 3.84%

December 2022: 3.98%

10-Year Treasury Yield:

December 2019: 1.84%

December 2020: 2.01%

December 2021: 2.28%

December 2022: 2.54%

CPI:

December 2019:  2.10%

December 2020:  1.96%

December 2021:  2.14%

December 2022:  2.17%

Crude Oil  ($ per bbl):

for 12/31/2019: $58.76

for 12/31/2020: $56.88

for 12/31/2021: $58.65

for 12/31/2022: $58.83

(note: I highlight this WSJ Economic Forecast survey each month; commentary on past surveys can be found under the “Economic Forecasts” label)

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily 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 3197.81 as this post is written