The November 2016 Wall Street Journal Economic Forecast Survey

The November 2016 Wall Street Journal Economic Forecast Survey was published on November 13, 2016.  The headline is “GDP, Inflation And Interest Rates Forecast to Rise Under Trump Presidency.”

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.

An excerpt:

On average, economists marked up their growth forecasts. The economy could expand 2.2% in 2017 and 2.3% in 2018, as a fiscal stimulus kicks into gear, up from about 1.5% over the past 12 months. Inflation is seen at 2.2% next year and 2.4% in 2018. If correct, it would be the first stretch of sustained inflation above 2% since before the recession of 2007 to 2009.

The forecasts were collected from 57 academic, business and financial economists from Nov. 9 to Nov. 11. Their average forecasts for growth, inflation and interest rates in both 2017 and 2018 all rose, at least slightly, from a survey conducted before the election in October.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 18.54%. The individual estimates, of those who responded, ranged from 0% to 60%.  For reference, the average response in October’s survey was 20.24%.

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The current average forecasts among economists polled include the following:

GDP:

full-year 2016:  1.8%

full-year 2017:  2.2%

full-year 2018:  2.3%

Unemployment Rate:

December 2016: 4.9%

December 2017: 4.6%

December 2018: 4.6%

10-Year Treasury Yield:

December 2016: 2.05%

December 2017: 2.49%

December 2018: 3.00%

CPI:

December 2016:  1.8%

December 2017:  2.2%

December 2018:  2.4%

Crude Oil  ($ per bbl):

for 12/31/2016: $47.44

for 12/31/2017: $53.00

for 12/31/2018: $56.53

(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 blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2165.53 as post is written

Philadelphia Fed – 4th Quarter 2016 Survey Of Professional Forecasters

The Philadelphia Fed 4th Quarter 2016 Survey of Professional Forecasters was released on November 14, 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:  1.5%

full-year 2017:  2.2%

full-year 2018:  2.1%

full-year 2019:  2.1%

Unemployment Rate: (annual average level)

for 2016: 4.9%

for 2017: 4.7%

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 9.9%, 14.0%, 15.0%, 16.5% and 18.9% for each of the quarters from Q4 2016 through Q4 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 1.4% 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 2162.96 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – November 11, 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 ECRI update post of November 11, 2016 titled “ECRI Weekly Leading Index: WLI Inches Up.”  These charts are on a weekly basis through the November 11, 2016 release, indicating data through November 4, 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 2164.45 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 November 3, 2016 update (reflecting data through October 28) is -1.193.

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 November 9, 2016 incorporating data from January 5,1973 through November 4, 2016, on a weekly basis.  The November 4, 2016 value is -.66:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 9, 2016:

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

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The ANFCI chart below was last updated on November 9, 2016 incorporating data from January 5,1973 through November 4, 2016, on a weekly basis.  The November 4 value is .11:

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis; accessed November 9, 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 2136.82 as this post is written

Building Financial Danger – November 9, 2016 Update

My overall analysis indicates a continuing elevated and growing level of financial danger which contains many worldwide and U.S.-specific “stresses” of a very complex nature. I have written numerous posts in this site concerning both ongoing and recent “negative developments.”  These developments, as well as other exceedingly problematic conditions, have presented a highly perilous economic environment that endangers the overall financial system.

Also of ongoing immense importance is the existence of various immensely large asset bubbles, a subject of which I have extensively written.  While all of these asset bubbles are wildly pernicious and will have profound adverse future implications, hazards presented by the bond market bubble are especially notable.

Predicting the specific timing and extent of a stock market crash is always difficult, and the immense complexity of today’s economic situation makes such a prediction even more challenging. With that being said, my analyses continue to indicate that a near-term exceedingly large (from an ultra-long term perspective) stock market crash – that would also involve (as seen in 2008) various other markets as well – will occur.

(note: the “next crash” and its aftermath has great significance and implications, as discussed in the post of January 6, 2012 titled “The Next Crash And Its Significance“ and various subsequent posts in the “Economic Depression” category)

As reference, below is a daily chart since 2008 of the S&P500 (through November 8, 2016 with a last price of 2139.56), depicted on a LOG scale, indicating both the 50dma and 200dma as well as price labels:

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

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2139.56 as this post is written

Monthly Changes In Total Nonfarm Payrolls – November 7, 2016 Update

For reference purposes, below are five charts that display growth in payroll employment, as depicted by the Total Nonfarm Payrolls measures (FRED data series PAYEMS).

PAYEMS, which is seasonally adjusted, is defined in Financial Reserve Economic Data [FRED] as:

All Employees: Total Nonfarm, commonly known as Total Nonfarm Payroll, is a measure of the number of U.S. workers in the economy that excludes proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed. This measure accounts for approximately 80 percent of the workers who contribute to Gross Domestic Product (GDP).

This measure provides useful insights into the current economic situation because it can represent the number of jobs added or lost in an economy. Increases in employment might indicate that businesses are hiring which might also suggest that businesses are growing. Additionally, those who are newly employed have increased their personal incomes, which means (all else constant) their disposable incomes have also increased, thus fostering further economic expansion.

Generally, the U.S. labor force and levels of employment and unemployment are subject to fluctuations due to seasonal changes in weather, major holidays, and the opening and closing of schools. The Bureau of Labor Statistics (BLS) adjusts the data to offset the seasonal effects to show non-seasonal changes: for example, women’s participation in the labor force; or a general decline in the number of employees, a possible indication of a downturn in the economy. To closely examine seasonal and non-seasonal changes, the BLS releases two monthly statistical measures: the seasonally adjusted All Employees: Total Nonfarm (PAYEMS) and All Employees: Total Nonfarm (PAYNSA), which is not seasonally adjusted.

The series comes from the ‘Current Employment Statistics (Establishment Survey).’

The source code is: CES0000000001

The first chart shows the monthly change in total nonfarm payrolls from the year 2000 through the current report of October 2016:

(click on charts to enlarge images)

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: All Employees: Total nonfarm [PAYEMS] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed November 7, 2016;

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

The second chart shows a long-term chart of the same month-over-month change in total nonfarm payrolls (reports of January 1940 through the present report of October 2016):

The third chart shows the aggregate number of total nonfarm payrolls, from January 1939 – October 2016 (October 2016 value of 144.952 million):

The fourth chart shows this same aggregate number of total nonfarm payrolls measure as seen above but presented on a LOG scale:

Lastly, the fifth chart shows the total nonfarm payrolls number on a “percent change from year ago” basis from January 1940 – October 2016:

_________

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 2120.02 as this post is written

S&P500 And VIX Chart – Through November 4, 2016

Through Friday's (November 4, 2016) closing price, the S&P500 had declined for nine days in a row, which is the longest such streak since 1980.

For reference purposes, below is a 1-year chart of the S&P500 and VIX through Friday’s (November 4, 2016) close.  The closing price for the S&P500 was 2085.18 and the VIX had a closing value of 22.51.  Price labels as well as moving averages are also shown:

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

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2085.18 as this post is written

Average Hourly Earnings Trends

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

Along these lines, one of the measures showing disconcerting trends is that of hourly earnings.

While the concept of hourly earnings can be defined and measured in a variety of ways, below are a few charts that I believe broadly illustrate problematic trends.

The first chart depicts Average Hourly Earnings Of All Employees: Total Private (FRED series CES0500000003)(current value = $25.92):

(click on chart to enlarge image)(chart last updated 11-4-16)

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of All Employees:  Total Private [CES0500000003] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed November 4, 2016:

http://research.stlouisfed.org/fred2/series/CES0500000003

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This next chart depicts this same measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 11-4-16)

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There are slightly different measures available from a longer-term perspective. Pictured below is another measure, the Average Hourly Earnings of Production and Nonsupervisory Employees – Total Private (FRED series AHETPI)(current value = $21.72):

(click on chart to enlarge image)(chart last updated 11-4-16)

Data Source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average Hourly Earnings of Production and Nonsupervisory Employees:  Total Private [AHETPI] ; U.S. Department of Labor: Bureau of Labor Statistics;  accessed November 4, 2016:

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

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Pictured below is this AHETPI measure on a “Percentage Change From A Year Ago” basis.   While not totally surprising, I find the decline from 2009 and subsequent trend to be disconcerting:

(click on chart to enlarge image)(chart last updated 11-4-16)

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I will continue to actively monitor these trends, especially given the post-2009 dynamics.

_________

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 2086.34 this post is written