Loading ...I am slowly building my dashboard of economic indicators that I most regularly follow. For each, I will try to give you a brief description, the latest reading and what I understand to be its implications. For simplicity, I will assign each a rating of positive, neutral or negative. Generally, a “positive” rating is consistent with economic growth that is close to or better than average, enough to sustain good job growth. Neutral would imply slow or no economic growth but not a recession or worse. Negative would be indicative of a slowdown or recession.
ADS Business Conditions Index (link here)
From the actual description:
The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high frequency. Its underlying (seasonally adjusted) economic indicators (weekly initial jobless claims; monthly payroll employment, industrial production, personal income less transfer payments, manufacturing and trade sales; and quarterly real GDP) blend high- and low-frequency information and stock and flow data. The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times.
This index combines information from several indicators (noted above). If the value is zero, then conditions are average. Higher is better. The tricky part is reading the graph. There are two vertical lines. Everything to the left of the vertical line represents values that incorporate all of the underlying indicators mentioned. In between the two vertical marks, the index only incorporates data from weekly jobless claims and at least two monthly indicators. To the right of the last vertical line, it represents only weekly jobless claims and maybe one monthly indicator. The bottom line here is that our confidence in the value of the index decreases as we move to the right past those vertical lines.
Latest Reading: -0.06 on Jan 1, 2011. But this value is not one we can be too confident in given that it is based on only jobless claims and maybe one other indicator. The somewhat more confidence-inspiring data between the two vertical bars shows a clear upward trend, implying improving business conditions. As more data comes in, we can be more confident. Overall, this index points to improving conditions but slightly below average conditions at this time.
Economic Indicator Roundup (January 6, 2011)
NOTE: You may be reading an outdated analysis. Please visit my latest economic indicators roundup.
| Indicator: USA Today / IHS Global Insight Economic Outlook IndexLink: Click hereDescription: Forecast of the 6-month annualized Real GDP growth rate for the next several months. Based on an index of 11 leading indicators, each of which generally predicts future changes in economic growth.Latest Reading: Gradual increase from low in August 2010 of 2.5% to December’s 3.1% forecast rate of growth. Expected to stay slightly above 3% through May 2011.
Implications: Perhaps a bit below the average growth rate, but it is enough to begin lowering the jobless rate and provide hope to sustained recovery. POSITIVE Above Info as of : Aug 2010 |
Indicator: Bloomberg Financial Conditions IndexLink: Click hereDescription: Monitors the level of stress in the U.S. financial markets. Zero is normal, above zero is good and below zero is bad.Latest Reading: +0.32
Implications: Conditions look pretty good now and support continued economic growth. Businesses and consumers are likely able to get a fair amount of credit and money to take care of business. POSITIVE Above Info as of : January 4, 2011 |
Indicator: Daily Consumer Leading IndicatorsLink: Click hereDescription: Level of consumer interest in purchasing discretionary (non-essential) items, as a percent compared to same day last year, also as a 91-day average (and other lengths of days averages).Latest Reading: 94.11 on 1/1/11. Ranging between 94 and 96 over the last week or so. 91-day growth rate is -4.56%, in the bottom 3 percentile of all such intervals since spring 1947.
Implications: Compared to last year, the consumer is not as interested in discretionary items, which would imply sluggish economic growth, if any. NEGATIVE Above Info as of : January 5, 2011 |
| Indicator: ADS Business Conditions IndexLink: Click HereDescription: Combines several indicators together to describe current business conditions.Latest Reading: -0.06
Implications: Overall business conditions are improving, but because they started from a pretty low place, we are still at slightly-below-average conditions most likely. NEUTRAL Above Info as of : Jan 1, 2011 |
Indicator: TBDLink:Description:Latest Reading:
Implications: Above Info as of : |
Indicator: TBDLink:Description:Latest Reading:
Implications: Above Info as of : |
Related posts:
