Friday, October 15, 2021

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – October 15, 2021 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 Advisor Perspectives’ ECRI update post of October 15, 2021 titled “ECRI Weekly Leading Index Update.”  These charts are on a weekly basis as of the October 15, 2021 release, reflecting data through October 8, 2021.

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

ECRI WLI,Gr. 154.7

This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:

ECRI WLI YoY of the Four-Week Moving Average

This last chart depicts, on a long-term basis, the WLI, Gr.:

ECRI WLI,Gr. 3.3 Percent

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I post various economic 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 4463.29 as this post is written

Disturbing Charts (Update 43)

The following is the latest update of 10 charts that depict various aspects of the U.S. economic and financial situation.

I find these charts portray disturbing long-term trends. These trends have been in effect for years.

These charts raise a lot of questions.  As well, they highlight the “atypical” nature of our economic situation from a long-term historical perspective.

All of these charts are from the Federal Reserve, and represent the most recently updated data.

(click on charts to enlarge images)

Housing starts (last updated September 21, 2021):

Housing Starts

U.S. Bureau of the Census, Housing Starts: Total: New Privately Owned Housing Units Started [HOUST], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/HOUST/, October 14, 2021.

The Federal Deficit (last updated June 29, 2021):

Federal Deficit

U.S. Office of Management and Budget, Federal Surplus or Deficit [-] [FYFSD], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYFSD/, October 14, 2021.

Federal Net Outlays (last updated June 29, 2021):

FYONET

U.S. Office of Management and Budget, Federal Net Outlays [FYONET], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/FYONET/, October 14, 2021.

State & Local Personal Income Tax Receipts (% Change from Year Ago)(last updated July 29, 2021):

ASLPITAX Percent Change From Year Ago

U.S. Bureau of Economic Analysis, State and local government current tax receipts: Personal current taxes: Income taxes [ASLPITAX], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/ASLPITAX/, October 14, 2021.

Total Loans and Leases of Commercial Banks (% Change from Year Ago)(last updated October 8, 2021):

TOTLL Percent Change From Year Ago

Board of Governors of the Federal Reserve System (US), Loans and Leases in Bank Credit, All Commercial Banks [TOTLL], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTLL/, October 14, 2021.

Bank Credit – All Commercial Banks (% Change from Year Ago)(last updated October 8, 2021):

TOTBKCR Percent Change From Year Ago

Board of Governors of the Federal Reserve System (US), Bank Credit of All Commercial Banks [TOTBKCR], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/TOTBKCR/, October 14, 2021.

M1 Money Multiplier Proxy:

M1 Money Multiplier Proxy

Federal Reserve Bank of St. Louis, M1 Money Multiplier [MULT], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/MULT/, October 14, 2021.

Median Duration of Unemployment (last updated October 8, 2021):

Median Weeks Unemployed

U.S. Bureau of Labor Statistics, Median Duration of Unemployment [UEMPMED], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/UEMPMED/, October 14, 2021.

Labor Force Participation Rate (last updated October 8, 2021):

Labor Force Participation Rate

U.S. Bureau of Labor Statistics, Civilian Labor Force Participation Rate [CIVPART], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CIVPART/, October 14, 2021.

The Chicago Fed National Activity Index (CFNAI) Three Month Moving Average (CFNAI-MA3)(last updated September 23, 2021):

CFNAIMA3

Federal Reserve Bank of Chicago, Chicago Fed National Activity Index: Three Month Moving Average [CFNAIMA3], retrieved from FRED, Federal Reserve Bank of St. Louis https://research.stlouisfed.org/fred2/series/CFNAIMA3/, October 14, 2021.

I will continue to update these charts on an intermittent basis as they deserve close monitoring…

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 4438.26 as this post is written

Thursday, October 14, 2021

The CFO Survey Third Quarter 2021 – Notable Excerpts

On October 14, 2021 the latest CFO Survey (formerly called the “Duke/CFO Global Business Outlook”) was released.  It contains a variety of statistics regarding how CFOs view business and economic conditions.

In this CFO Survey press release, I found the following to be the most notable excerpts – although I don’t necessarily agree with them:

Three-fourths of U.S. CFOs express difficulty hiring, leading them to increase wages, according to The CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta. Most CFOs also indicate in the third-quarter survey that their firms are experiencing supply chain disruptions that are expected to last well into 2022.

When asked whether they are currently experiencing disruptions in their supply chains, three-quarters of firms report disruptions, including production delays, shipping delays, reduced availability of materials, and increased materials prices. Large firms are more likely than small firms to take action to adjust their supply chains, such as holding more inventory, diversifying or reconfiguring supply chains, moving production closer to the U.S., or changing shipping logistics. Small firms note less “room to maneuver” and are more likely to report waiting for supply chain issues to resolve themselves.

For the panel as a whole, only about 10 percent of respondents anticipate these supply chain difficulties will resolve by the end of this year. Most respondents anticipate these issues will not resolve until the second half of 2022 or later.

This CFO Survey contains an Optimism Index chart, with the blue line showing U.S. Optimism (with regard to the economy) at 59.9, as seen below:

The CFO Survey - Optimism Indexes

[Note: The dashed vertical line denotes a moderate change in the question wording and presentation. Please see The CFO Survey Methodology for further information.]

It should be interesting to see how well the CFOs predict business and economic conditions going forward.   I discussed past various aspects of this, and the importance of these predictions, in the July 9, 2010 post titled “The Business Environment”.

(past posts on CEO and CFO surveys can be found under the “CFO and CEO Confidence” tag)

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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 4433.73 as this post is written 

Chicago Fed National Financial Conditions Index (NFCI)

The St. Louis Fed’s Financial Stress Index (STLFSI2) is one index that is supposed to measure stress in the financial system. Its reading as of the October 14, 2021 update (reflecting data through October 8, 2021) is -.8827:

STLFSI2

source: Federal Reserve Bank of St. Louis, St. Louis Fed Financial Stress Index [STLFSI2], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 14, 2021: https://fred.stlouisfed.org/series/STLFSI2

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 October 14, 2021 incorporating data from January 8, 1971 through October 8, 2021, on a weekly basis.  The October 8 value is -.68013:

NFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 14, 2021:  
http://research.stlouisfed.org/fred2/series/NFCI

The ANFCI chart below was last updated on October 14, 2021 incorporating data from January 8, 1971 through October 8, 2021, on a weekly basis.  The October 8, 2021 value is -.68242:

ANFCI

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed October 14, 2021:  
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 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 4429.05 as this post is written

Wednesday, October 13, 2021

CEO Confidence Surveys 3Q 2021 – Notable Excerpts

On October 7, 2021, The Conference Board released the Q3 2021 Measure Of CEO Confidence.   The overall measure of CEO Confidence was at 67, down from 82. [note:  a reading of more than 50 points reflects more positive than negative responses]

Notable excerpts from this October 7, 2021 Press Release include:

Current Conditions

CEOs’ assessment of general economic conditions declined in Q3:

  • 70% of CEOs reported economic conditions were better compared to six months ago, down from 94% in Q2.
  • Only 11% said conditions were worse, up from 2%.

CEOs were similarly less optimistic about conditions in their own industries in Q3:

  • 64% of CEOs reported that conditions in their industries were better compared to six months ago, down from 89%.
  • Only 10% said conditions in their own industries were worse, up from 4%.  

Future Conditions

Expectations about the short-term economic outlook retreated in Q3:

  • 60% percent of CEOs said they expect economic conditions to improve over the next six months, down from 88% in Q2.
  • Only 9% expect conditions to worsen, up from 1%.

CEOs’ expectations regarding short-term prospects in their own industries also moderated in Q3:

  • 65% of CEOs expect conditions in their own industry to improve over the next six months, down from 81%.
  • Only 6% expected conditions to worsen, up from 4%.

On September 28, 2021, the Business Roundtable released its most recent CEO Economic Outlook Survey for the 3rd Quarter of 2021.   Notable excerpts from this September 28, 2021 release, titled “Business Roundtable: U.S. Economy Remains Strong, But CEO Economic Outlook Dips in Q3“:

Business Roundtable today released its Q3 2021 CEO Economic Outlook Survey, a composite index of CEO plans for capital spending and employment and expectations for sales over the next six months. This quarter, the overall index dipped slightly, driven by a decline in expectations for sales. The headline index and three subindices remain well above their historical averages. In addition, answers to a special question revealed CEOs are cautious of current public health and economic conditions and federal policy changes that could put U.S. competitiveness at risk, including the corporate tax increases proposed in current reconciliation legislation.

The overall CEO Economic Outlook Index decreased in the third quarter to a value of 114, down 2 points from Q2 2021…

also:

In their fourth estimate of 2021 U.S. GDP growth, CEOs project 4.8 percent growth for the year, a 0.2 percentage point decrease from their estimate last quarter.

Additional details can be seen in the sources mentioned above.

_____

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 4350.65 as this post is written

Tuesday, October 12, 2021

Charts Indicating Economic Weakness – October 2021

 

U.S. Economic Indicators

Throughout this site there are many discussions of economic indicators.  This post is the latest in a series of posts indicating facets of U.S. economic weakness or a notably low growth rate.

The level and trend of economic growth is especially notable at this time. As seen in various measures and near-term projections, the U.S. economy had undergone an outsized level of economic contraction in 2020. However, most people believe (and virtually all prominent economic forecasts indicate) that this historic level of contraction will prove ephemeral in nature; i.e. an economic expansion will continue. 

As seen in the July 2021 Wall Street Journal Economic Forecast Survey the consensus (average estimate) among various economists is for 6.89% GDP growth in 2021, 3.24% GDP growth in 2022, and 2.30% GDP growth in 2023. 

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:

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Commercial And Industrial Loans, All Commercial Banks (BUSLOANS)

“Commercial And Industrial Loans, All Commercial Banks” (BUSLOANS) has recently been declining. Shown below is this measure with last value of $2,441.6606 Billion through August, last updated October 8, 2021:

BUSLOANS

Below is this measure displayed on a “Percent Change From Year Ago” basis with value -13.5%:

BUSLOANS Percent Change From Year Ago

source: Board of Governors of the Federal Reserve System (US), Commercial and Industrial Loans, All Commercial Banks [BUSLOANS], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 12, 2021: https://fred.stlouisfed.org/series/BUSLOANS

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Truck Tonnage (TRUCKD11)

“Truck Tonnage” (TRUCKD11) has recently been exhibiting weakness. Shown below is this measure with last value of 110.6 through July, last updated September 28, 2021:

Truck Tonnage

Below is this measure displayed on a “Percent Change From Year Ago” basis with value -2.7%:

source: U.S. Bureau of Transportation Statistics, Truck Tonnage [TRUCKD11], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 12, 2021: https://fred.stlouisfed.org/series/TRUCKD11

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Freight Transportation Services Index (TSIFRGHT)

“Freight Transportation Services Index” (TSIFRGHT) also has recently been exhibiting weakness. Shown below is this measure with last value of 134.5 through July, last updated September 23, 2021:

Freight Transportation Services Index

Below is this measure displayed on a “Percent Change From Year Ago” basis with value .5%:

Freight Transportation Services Index Percent Change From Year Ago

source: U.S. Bureau of Transportation Statistics, Freight Transportation Services Index [TSIFRGHT], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 12, 2021: https://fred.stlouisfed.org/series/TSIFRGHT

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Motor Vehicle Retail Sales: Heavy Weight Trucks (HTRUCKSSA)

Sales of “Heavy Weight Trucks” (HTRUCKSSA) has recently been declining. Shown below is this measure with last value of 34.774 Thousand through September 2021, last updated October 8, 2021:

Heavy Weight Trucks sales

Below is this measure displayed on a “Percent Change From Year Ago” basis with value -1.5%:

Heavy Weight Truck Sales Percent Change From Year Ago

source: U.S. Bureau of Economic Analysis, Motor Vehicle Retail Sales: Heavy Weight Trucks [HTRUCKSSA], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed October 12, 2021: https://fred.stlouisfed.org/series/HTRUCKSSA

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Other Indicators

As mentioned previously, many other indicators discussed on this site indicate economic weakness or economic contraction, if not outright (gravely) problematical economic conditions.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 4350.65 as this post is written