Economic Indicators Roundup (September 8, 2014)
Economic indicators are everywhere, so this is kind of like a dashboard that I like to follow. For each indicator, 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. For the economic indicators, I will denote in each one’s section how I decide which rating to give it. At the end, I assign an overall rating, but this is just to guide me in my takeaway of where things stand. It’s not scientifically rigorous or anything.
- Positive - indicative of a healthy, growing economy.
- Neutral - indicative of a slow or no growth economy but not a contracting (recession) economy.
- Negative - indicative of a shrinking economy or recession.
(NOTE: For a “Quick ‘n Easy” read, just review the labeled white boxes, then skip to my “Easy Take” summary at the end. You can review any charts/graphs afterward. I want to make sure no one is intimidated by the length of my posts, even though I’m trying to making them easy …)
|Indicator (Click for details – only works if full article is open)||Current Rating (change from previous roundup)|
|GDPNow (GDP Forecast from Atlanta Fed)||Positive (Upgrade)|
|ADS Business Conditions Index||Neutral (Downgrade)|
|Bloomberg Financial Conditions Index||Positive|
|Daily Consumer Leading Indicators||Negative|
|Citigroup Economic Surprise Index||Positive|
|Employment Trends Index||Positive|
|Chicago Fed National Activity Index||Positive|
|Easynomics Real Estate Price Stability Index||Neutral|
|Easy Trends Dashboard (min/max -3 to +3)||+2.56 = Definitely moving in a positive direction, with hardly any unconfirmed trends or off-trend readings|
NOTE: You may be reading an outdated analysis. Please visit my latest economic indicators roundup.
Economic Indicator: GDPNow | POSITIVE (Upgrade)
Easy Intro: None yet | Link to Source | Latest Date This Info Represents: 3rd Quarter 2014 (i.e., end of September 2014)
Quick ‘n Easy
The current forecast for real GDP growth in the 3rd quarter of 2014 is 3.6 percent – healthy growth by historical standards. The Federal Reserve Board of Atlanta combines a whole bunch of public data to mimic what the government does when reporting Gross Domestic Product (GDP), which is the broadest and most comprehensive measure of the economy that is widely accepted. It basically measures the value of all goods and services produced in the country, regardless of industry. In a sense, that’s what economics is all about, the value of things. The rate at which GDP is growing tells us whether our economy is strong or not. Historically, the average has been about 3.3 percent per year. It would be great to see at least that rate of growth.
Easy Description: GDPNow is a frequently updated estimate of the growth rate of the economy (GDP growth) as opposed to having to wait for quarterly estimates from the Bureau of Economic Analysis for “official” figures.
3rd Quarter of 2014: On Sep 4, GDPNow is positive (+) 3.6 percent annualized growth rate (versus a reading of +3.2 percent on Sep 2)
NOTE: “Annualized growth rate” is how much growth we would see over a full year if economic growth continued at the same pace as it did in the latest quarter being forecast
Implications: The 1st quarter of 2014 saw a contraction (i.e., negative GDP growth) followed by a nice bounce back in the 2nd quarter, but not enough to put us on track for an overall solid 2014. The current forecast for 3rd quarter growth is a robust 3.6 percent, which suggests that the final two-thirds of 2014 may show robust growth.
Additional Info: This is a new indicator, so my use of it here may evolve over time. I like it because it provides a very comprehensive and more timely update for overall economic growth.
Easynomics Rating Methodology: For this index, I will use data on the most recent quarter available. If the latest GDPNow estimate refers to a quarter for which there is already an official BEA reading, then I will go with the BEA reading. I will rate anything between zero and (+) 3.3 as “neutral” – anything above or below that will be rated “positive” or “negative” respectively.