The estimates for wholesale sales and inventory complete the devastation of January’s economic landscape. Overall sales fell by the largest amount, nearly 4%, since the bottom of the Great Recession. Inventories, however, continue to build despite the slowing sales, leaving the inventory-to-sales ratio far above either the most recent “cycle” peak or even the last one. The greatest part of [...]
Part of the rewriting of GDP in the middle of last year involved adding more components that are not directly observable, leaving them susceptible to more imputations and adjustment processes than GDP normally counts. Changing “fixed investment” to include less well-defined concepts like R&D, “intellectual property” and “entertainment” makes sense intuitively until you actually try to piece together how they [...]
There isn’t a whole lot to say about the payroll report this month, as there hasn’t been much that is different. The Establishment Survey continues to dazzle, while the Household Survey lags (factoring the monthly volatility) and the labor force itself undercounts with the exception of what looks suspiciously like a discontinuity for January (when the labor force jumped by [...]
The continued release of increasingly bad data serves to further isolate the payroll report as something residing only of its own accord. There are far more relevant pieces of evidence that are clearly free of overly-dependent assumptions about factors that are less and less relevant to the actual economy as it exists post-crisis – and really post-2012. While the Establishment [...]
It is often very easy to fixate on the S&P 500 as if it were the only current proxy of the broad universe of stocks. Like the Dow Jones Industrial Average before it, the 500 has attained synonymy with stocks as it is the most widely publicized and recognized value. But just like the DJIA, the index has its own [...]
The Great Recession was seven years ago so it might seem appropriate that our memories of the specific nature and order of events is lost to time. However, given that it will be a seminal event in history (hopefully not surpassed) there is less leeway to having such a short grasp on the important pieces. Part of that relates to [...]
The last time I commented on the Chicago Business Barometer (formerly the Chicago PMI) it was over a one-month drop that was quickly erased. That violated a personal rule whereby I make every effort to ignore sentiment surveys as they both do not mean what they are taken for and are usually of dubious value. The reason I commented then [...]
France was the latest Eurozone country to announce officially an entrance into negative “inflation.” The French were very cautious, overly it might be said, to assure that such an outcome was not at risk of pushing that economy into “deflation.” Apparently, rigidity in wages from socialism is a factor as an economic buffer, though left unanswered is where such an [...]
I think the ongoing destruction in the Japanese Household sector demonstrates very well a specific shortcoming about economic statistics like GDP. The basic calculation of the particular measure that forms the headlines of almost all commentary is a comparison of the current quarter to the previous one. That right away opens the door to incongruities as there remain very definite [...]
Say what you want about the CPI as it relates to inflation, the actual calculation is set up to measure essentially what GDP measures. That is why economists take their calculations of “inflation” as almost literal substitutes for actual economic activity. There is little denying the close correlation between economic activity especially in recession and the dramatic slides in CPI [...]
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