Economic Indicators Roundup (May 20, 2013)
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)|
|ADS Business Conditions Index||Neutral (downgrade)|
|Bloomberg Financial Conditions Index||Positive|
|Daily Consumer Leading Indicators||Negative|
|Citigroup Economic Surprise Index||Neutral|
|Employment Trends Index||Neutral|
|Chicago Fed National Activity Index||Neutral|
|Easynomics Real Estate Price Stability Index||Neutral|
|Easy Trends Dashboard||+2.00 = Clearly in good direction with a few off-trend or unconfirmed readings|
NOTE: You may be reading an outdated analysis. Please visit my latest economic indicators roundup.
Quick ‘n Easy
A combination of several key indicators of business conditions suggests, with high confidence, that at the end of February 2013 (most recent date for which there is data for all components of the index), conditions were a little better than average (+0.178). As of about a week and a half ago, it suggested, with low confidence, that current conditions were well below average (-0.471), historically speaking. The index suggests that economic activity surged to well-above average levels in the 4th quarter of 2012, at which point conditions declined down to well-below-average levels (preliminary data only) – but this is probably an artifact of the way companies distributed dividends at the end of the year. The preliminary data also suggest that growth returned to slightly-above-average levels before dropping back down again to where it stands now.
Easy Description: Combines several indicators together to describe current business conditions. A value above zero means that conditions are better than average, but below zero means worse than average.
May 11, 2013: Negative (-) 0.471 (includes weekly unemployment figures and maybe one other indicator)
One week prior: Negative (-) 0.482
One month prior: Negative (-) 0.378
One quarter prior: Negative (-) 0.045
The most recent date for which there is data for all components of the index is end of February 2013, when conditions were a little better than average (+0.178).
Implications: It looks like a wild roller coaster ride from late November 2012 (peak) to mid-January 2013 (valley), which was most likely a side-effect of the personal income being affected artificially by companies pulling their dividends ahead to give people beneficial tax treatment. In other words, a bunch of income that normally would have been earned in January was actually distributed in December, which just made each month look much better/worse than it should have – but the average was still the same.
After mostly below-average conditions in the 3rd quarter of 2012, we saw a surge in conditions in the 4th quarter to unusually high levels. But that quickly faded, and preliminary data suggest that conditions may have deteriorated down to well-below-average levels since then. But as more data begin to come in, the assessment may change. That’s why it’s important not to put too much stock into data to the right of the first vertical line, and even less importance on data to the right of the second line.
Additional Info: This index provides confident readings about the past when all of the indicators have been collected (everything to the left of the left-most vertical line). The readings in between the two vertical lines are somewhat less confident because they include some, but not all, of the indicators. And the latest reading always falls to the right of the right-most vertical line and includes only a couple of indicators.
Easynomics Rating Methodology: For this index, I will use the very latest reading and rate anything between zero and minus (-) 1.00 as “neutral” – anything above or below that will be rated “positive” or “negative” respectively.