Sunday Night Economic Assessment

The US Industrial economy pushed further ahead last week (if pipeline scheduling is correct), consumer spending continues to advance, and an apparently very strong 2009 Christmas-shopping season drew to a close.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) again gained ground in the latest week (2nd weekly gain in a row). The measure (now at 108.2) managed to take out September 2008's pre-plunge peak (108.1) though remains short of 2007's high of 110.2 (It bottomed May 28th 2009 at 86.7).

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was very strong early before fading slightly into the seasonal Christmas holidays.

The Paperboard-based Consumption also gained ground last week (third consecutive weekly advance following a string of six consecutive declines).

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop and remains well-below pre-recessionary levels.

The latest spike in industrial flows (with just days left until Christmas) is encouraging, as some of this will (if not shortly) be intended for post-Christmas delivery. Also encouraging... steel-sector gas-flows (which have been front and center in the recovery) looked very perky, and some of the economies poorest performers (such as the Auto and Lumber groups) have been doing quite well lately.

The present uptrend in consumer spending, the deficit of the Production Index to the Consumption Index, the deep and continuing decline of the Inventories Measure... all are supportive of the newly-commenced fourth leg up for the economy.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy advanced last week (if pipeline scheduling is correct), already-brisk consumer spending accelerated further, and signs in the gas flows continue to point to a very strong 2009 Christmas-shopping season.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) after two consecutive soft weeks gained ground in the latest week. The measure (at 106.8) remains just shy of 2008's September pre-plunge peak (108.1) and 2007's high of 110.2 (It bottomed May 28th at 86.7).

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was red-hot, starting firm early then ramping to fresh 2009 highs on Wednesday, then again on Thursday, then yet again for Saturdays preliminary scheduling (if Saturdays preliminaries hold up).

The Paperboard-based Consumption again advanced last week (second weekly advance in a row following of six consecutive declines. Over the past several weeks, the Consumption index has fallen short of the ramp implied by seasonal factors, presumably because it attained that ramp prematurely weeks earlier when the Christmas shopping rush looks to have begun prematurely.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop and remains well-below pre-recessionary levels.

The latest spike in industrial flows (with just days left until Christmas) is encouraging, as some of this will (if not shortly) be intended for post-Christmas delivery. Also encouraging... steel-sector gas-flows (which have been front and center in the recovery) looked very perky, and some of the economies poorest performers (such as the Auto and Lumber groups) have been doing quite well lately.

The present uptrend in consumer spending, the deficit of the Production Index to the Consumption Index, the deep and continuing decline of the Inventories Measure... all argue for a fourth leg up for the economy (if not many more). That fourth leg up may have just begun last week.


-Robry825

Sunday Night Economic Assessment

The US Industrial economy eased last week (if pipeline scheduling is correct), consumer spending strengthened, and signs remain of a very strong 2009 Christmas-shopping season.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) was declined from the prior weeks peak. The measure (at 106.3) remains just shy of 2008's September pre-plunge peak (108.1) and 2007's high of 110.2 (It bottomed May 28th at 86.7).

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week actually appeared quite firm throughout, and was the 3rd strongest week of 2009. The overall Production index was down only because the strongest week of the year rolled off the back of its 28-day moving average. The 2nd strongest week of the year rolls off with next weeks report.

The Paperboard-based Consumption Index advanced slightly last week, breaking a string of six consecutive declines. Over the past several weeks, the Consumption index has fallen short of the ramp implied by seasonal factors, presumably because it attained that ramp prematurely weeks earlier when the Christmas shopping rush looks to have begun early.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop and remains well-below pre-recessionary levels.

With the 2009 Christmas shopping season about to draw to a close, all eyes have to be on consumer spending. With the production index lagging the consumption index for such a protracted period of time; With unemployment trends bucking the turn in the economy; With the inventories measure in such free-fall... signs abound in the gas flows of nervousness in the US business community.

At present, the recovery is locked in by enthused consumption. But what of the Christmas season? Is the 2009 Christmas rush going to carry into 2010? Or are consumers about to become tapped out after one big Christmas shopping party, with consumer spending ready to dive in January (with a nervous business community following in lock step)?

Continued quantitative easing, unemployment-benefit extensions, the slight up-tick in last weeks Consumption Index, and the December strength in automotive gas flows (which are not tied into the Christmas shopping rush) would seem to argue for a continuation of consumer spending strength.

Yet I am nervous... one has to worry of the foot-dragging on the business side. To get the economy really humming, you need enthusiasm on the part of both consumers and business. Otherwise, you have a one-armed man in a row-boat.

I can remember a time (when I first started investing in the late 70's) when we had 10% unemployment, 10% inflation, and 10% interest rates all at the same time. One-sided economies can be very cruel. I sincerely hope to see the likes of it never again!


-Robry825

Sunday Night Economic Assessment

The US Industrial economy held steady last week (if pipeline scheduling is correct), while consumer spending remained firm amidst a strong 2009 Christmas-shopping season.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) was unchanged from the prior weeks peak, standing higher than at any time since September 29th, 2008. The measure (at 107.5) is just shy of 2008's September pre-plunge peak (108.1) and 2007's high of 110.2 (It bottomed May 28th at 86.7).

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week reflected the normal Thanksgiving-weekend softness early on, then firmed up a bit.

The Paperboard-based Consumption Index eased as well, though still at very high levels. Within its dailies, the index reflected the slight softening throughout and came in below seasonals. Over the past several weeks, the Consumption index has fallen short of the ramp implied by seasonal factors, presumably because it attained that ramp prematurely weeks earlier when the Christmas shopping rush looks to have begun early.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop and remains well-below pre-recessionary levels.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy again advanced last week (if pipeline scheduling is correct), and consumer spending remains robust amidst a strong 2009 Christmas-shopping season

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) tallied its 24nd advance in 26 weeks, and now stands higher than at any time since September 29th, 2008. The measure (at 107.5) is just shy of 2008's September pre-plunge peak (108.1) and 2007's high of 110.2 (It bottomed May 28th at 86.7).

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was the again somewhat softer in its actuals, though in line given the normal seasonal declines of a Thanksgiving-week.

On a sector-by-sector basis (as per the "Part 8" posts) the steel delivery natgas scheduling remains very firm (steel has been front-and-center in the recovery) and we are having a good strong month (vs the previous month) in the paper, chemical, fertilizer, refining, auto, mining, building materials and Agriculture & Livestock groups.

Especially noteworthy in the part-8 posts is the Food sector, which has now plunged nearly 35% from its January-2009 peak. Gas-flows into food-manufacturing plants have been remarkably proportionate to the recession, prompting me more-and-more towards thinking it has captured consumer-confidence well throughout the recession by measuring Americas ultimate stress-coping mechanism... the fridge.

The Paperboard-based Consumption Index softened a bit more in its latest week. Within its dailies, the index was soft early in the week and strengthened abruptly Wednesday-on, in line with Thanksgiving seasonals. Over the past several weeks, the Consumption index has fallen short of the ramp implied by seasonal factors, presumably because it attained that ramp prematurely weeks earlier when the Christmas shopping rush looks to have begun early.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop and remains well-below pre-recessionary levels. Once inventory-rebuilding kicks in (assuming nothing tries to derail the economy), another meaningful surge in the industrial economy (and natgas demand) is unavoidable.

Of greatest concern to the US now has to be unemployment. I had hoped to see unemployment numbers starting to come down by now with numbers like these. They so far have not. Either the unemployment numbers are wrong... or something else is very wrong.

For investors, it probably means barn-burning fourth-quarter earnings reports from increased margins as companies make more from the odd-combination of rising revenues and steady-to-falling employment/wage expenses. But for the country as a whole, it is not good to have 10% unemployment lock in.

Perhaps businesses are afraid to hire, preferring to raise cash to meet perceived tax increases or health-reform-mandated payroll increases. Perhaps businesses are hindered by debt-repayment / liquidity concerns. Or perhaps there is a concern for a return to recession, or other emerging factors hostile to business health.

But whatever the reason, the business side of the economic equation is now the sticking point. Consumer confidence appears to be now flying (judging from the gas flows) while business confidence lags. As a vigorous economy requires vigorous participation by both consumers and industrial producers, trouble lays closely ahead if the confidence-imbalance remains... in the form of inflation... and rapid erosion of standard-of-living and economic potential.

We now find ourselves at a point where government must change gears, away from consumption-only stimulus to a more balanced, more-holistic across-the-board approach.

Can 60% govern on behalf of 100% to grow the economy?

Or will 60% diminish to 35% as the economy hits a wall?

Time will tell.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy continued to push ahead (if pipeline scheduling is correct), consumer spending remains strong, and signs of a very early Christmas shopping rush are abundant.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) added its 23nd advance in 25 weeks, and now stands higher than at any time since October 2nd, 2008 (It bottomed May 28th).

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) it was firm though off just a tad from the previous weeks blistering pace.

On a sector-by-sector basis (as per the "Part 8" posts) the steel delivery natgas scheduling remains very firm (steel has been front-and-center in the recovery) and we are having a good strong month (vs the previous month) in the paper, chemical, fertilizer, refining, auto, mining, building materials and Agriculture & Livestock groups.

The Paperboard-based Consumption Index again softened in its latest week, though in its dailies it gained ground and remains well above the Production Index, supporting the recent momentum of industrial recovery.

Within its dailies, the consumption index (though it advanced) did not attain the ramp implied by seasonal factors, presumably because it attained that ramp prematurely weeks ago when the Christmas shopping rush looks to have begun early.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop and remains well-below pre-recessionary levels. Once inventory-rebuilding kicks in (assuming nothing tries to derail the economy), another meaningful surge in the industrial economy (and natgas demand) is unavoidable.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy greatly intensified the prior weeks surge (if pipeline scheduling is correct), consumer spending retained its strength, and signs continue to abound of a very early Christmas shopping rush.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) added its 22nd advance in 24 weeks, and now stands higher than at any time since October 8th, 2008 (It bottomed May 28th). The index commenced its third-leg up in the recovery at an extremely steep rate, which (if it continues) would suggest the US as a whole emerges entirely from recession within days.

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) it was wild... with scheduled gas flows to industry increasing 8% from the prior week. For the natgas markets, it implies 13 BCF per week added to demand. The gap between the consumption index and production index has been arguing for such a sharp increase in manufacturing, as has the low level of the inventories measure.

On a sector-by-sector basis (as per the "Part 8" posts) the steel delivery natgas scheduling remains very firm (steel has been front-and-center in the recovery) and a good start for the month (vs the previous month) in the paper, chemical, fertilizer, refining, auto, building materials and livestock groups.

The Paperboard-based Consumption Index again softened in its latest week, though in its dailies it gained ground and remains well above the Production Index, supporting the recent momentum of industrial recovery.

Within its dailies, the consumption index (though it advanced) did not attain the ramp implied by seasonal factors, presumably because it attained that ramp prematurely weeks ago when the Christmas shopping rush looks to have begun early.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop fast and remains well-below pre-recessionary levels. Once inventory-rebuilding kicks in (assuming nothing tries to derail the economy), another meaningful surge in the industrial economy (and natgas demand) is unavoidable.

Question now becomes... are we now about to exit the recession with a 10% unemployment rate?

Six months ago, we had a demoralized consumer segment. The tables have turned. We now have a demoralized industrial segment, being dragged along to higher output seemingly grudgingly... by low inventory levels and robust consumption. This is actually a good argument for higher margins and a whale of a good fourth quarter... as events of the open market drive up margins to meet perceived risk. But it is also a good argument for inflationary pressures in 2010, unless that perceived risk abates.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy surged ahead in the latest week (if pipeline scheduling is correct), consumer spending remained strong, and signs abound of a very early Christmas shopping rush.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) added its 21st advance in 23 weeks, and now stands higher than at any time since October 21st, 2008 (It bottomed May 28th). The index appears to have now began its third-leg up in the recovery at an extremely steep rate, which (if it continues) would suggest the US as a whole emerges entirely from recession within 3 or 4 weeks!

In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was strong throughout and set a high for 2009 on Wednesday.

On a sector-by-sector basis (as per the "Part 8" posts) the steel delivery natgas scheduling remains very firm (steel has been front-and-center in the recovery) and a good start for the month (vs the previous month) in the paper, chemical, fertilizer, refining, auto, building materials and livestock groups.

The Paperboard-based Consumption Index again softened just a tad in the week, though in its dailies it remained firm and well above the Production Index, supporting the recent momentum of industrial recovery.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continues to drop fast and remains well-below pre-recessionary levels. (So fast it had to be redrawn on the chart above at a 50% lower sensitivity last week). Once inventory-rebuilding kicks in (assuming nothing tries to derail the economy), another meaningful surge in the industrial economy (and natgas demand) is unavoidable.

Lots of signs of an early and vigorous Christmas-shopping rush in the flows (paperboard, paper, refining, etc). With the Inventories measure so week, the retail, distribution and warehousing side may have been caught short on inventory, and consumers figured it out. I would not wait for Thanksgiving to start shopping this year... or you might not be able to find the kids just what they want!



-Robry825

Sunday Night Economic Assessment

The US Industrial economy pushed further ahead in the latest week (if pipeline scheduling is correct), while consumer spending remained strong.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) added its 20th advance in 22 weeks, and now stands higher than at any time since November 29th, 2008 (It bottomed May 28th). The index is has been holding at levels suggesting it has made up better than two-thirds of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was strong throughout and set a high for 2009 on Tuesday.

The basis for the Production Index (The "Part 8" Industrial Sampling) was slightly revised this week, due to re-weighting of its position within the broader scope of the EIA's monthly data.

On a sector-by-sector basis (as per the "Part 8" posts) the steel delivery natgas scheduling remains very firm (steel has been front-and-center in the recovery) and the Automotive group thankfully (For Robry's home state of Michigan) holds on to its mid-month increase.

The Paperboard-based Consumption Index again softened just a tad in the week, though in its dailies it remained very firm (seasonals are pushing the index a tad lower). The Consumption Index remains nearly 40% above the Production Index, supporting the recent momentum of industrial recovery. A hint of an early, exceptionally strong Christmas shopping season is in the gas flows.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recessionary levels and is dropping fast. (The inventory measure had to be redrawn on the chart above at a 50% lower sensitivity starting this week). Once inventory-rebuilding kicks in (assuming nothing tries to derail the economy), another meaningful surge in the industrial economy (and natgas demand) is unavoidable.

Next hurdle continues (in my judgment) to be the health-care debate in congress. A whole lot of folks are watching this thing unfold, and I fear the reaction if congress blunders.

I am a "reinvent the wheel" type of person, and studying the economics side of the gas flows has changed my thinking dramatically the past couple of years. One thing I have learned recently, and come more and more convinced of, is the emotional aspects of people en mass. One current event, or one news report, can appear to change gas-flow patterns instantly. People pay attention to current events. People react. And in a state of heard-mentality people can rush forward in excitement... or in panic retreat.

If congress is seen to gamble away health-care reform on political posturing and ambitions, consumers may react harshly, and the economy stumble. If congress is seen to enact health-care reform that is harmful to business, then investors (and the whole of the productive side of society) may react harshly, and the economy stumble.

Again, the best thing the Dem's and Rep's could do... go into a closed room (with the camera's, lobbyists, and power-brokers left behind), give the Democrats 60% of what they want, the Republicans 40% of what they want (as per the 60/40 split in representation) and come out of the room to reassure both the productive class and consumptive class with a bill that would be supported by 70% of each party.

Right now, more than ever, we need wisdom, carefulness, and prudence from our leadership.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy bounced back up in the latest week (if pipeline scheduling is correct), consumer spending continues to be robust, and inventories continued their recent trends of sharp contraction.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) added its 19th advance in 21 weeks, holding near levels suggesting it has made up better than two-thirds of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week started soft, then took off... setting a new high for 2009 on the last day (Friday) in the raw numbers.

On a sector-by-sector basis (as per the "Part 8" posts) the steel delivery natgas scheduling remains very firm (steel has been front-and-center in the recovery) and the Automotive group holds on to its mid-month increase... challenging its monthly "climb-early-then-die" habit.

The Paperboard-based Consumption Index softened just a tad in the week, though in its dailies it remained firm (seasonals pushed the index a tad lower). The Consumption Index remains solidly above the Production Index... supporting the recent momentum of recovery.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recessionary levels and is dropping fast. Once inventory-rebuilding kicks in (assuming nothing tries to derail the economy), another meaningful surge in the industrial economy (and natgas demand) is unavoidable.

Equities have been rallying on the bullishness. A rising Production Index is bullish to stocks (more products being manufactured); consumption outrunning production is bullish (more products to be sold tomorrow than today); downward-trending Inventories are bullish (positive cash flow from inventory liquidation, debt-repayment, etc); and surging consumption combined with stagnating unemployment is bullish (rising profit margins).



Never thought I'd say this... If you see a really lousy unemployment report... Buy! (We are now in the speculative, political, and sometimes tongue-in-cheek part of this post.)

(Which brings us also back to last weeks rant on the recent congressional health-care debate.)

At the start of 2009, the recession was being fueled by a dejected consumer... Consumption collapsed as the US consumer segment panicked, lost all confidence, and slowed spending dramatically. Industry, caught off-guard, responded by cutting off production, closing plants, laying off workers, and in some cases went bankrupt... Further depressing consumption in a catch-22-style, downward spiral.

Today... 180 degree turn. The consumer segment (according to the gas flows) is robust, with the productive segment somewhat lagging but also gaining momentum fast in an attempt to catch up with consumers. Confidence looks strong in the consumption sector, improving in the productive sector.


In order to get real, honest-to-goodness growth (in national standard of living and wealth), you need high confidence in both the consumptive and productive sectors of society. It doesn't work if you get high confidence in just one alone... you have to get both.

If the productive segment of society gets pumped (manufacturing more goods), but consumers don't buy, you get only bloated inventories, falling margins, rising debt, read ink... and eventually a recession as the imbalance gets corrected.

Conversely, if the consumptive segment gets pumped (buying more goods), but the productive segment doesn't produce more products, you get only dwindling inventories, shortages, higher prices, higher inflation, higher interest rates... and eventually a recession as the imbalance gets corrected.

In order to get real, honest, sustainable growth, you have got to pump BOTH the productive and consumptive segments of society AT THE SAME TIME.

Double industrial production, double consumption, and you will double the US standard of living, double corporate earnings (or more), double equities, double the nations wealth, double governmental tax receipts (with no rise in taxes), and halve the proportional size of the national debt.

But if you ignore either the consumptive or the productive segments of society... you get nothing... Absolutely nothing.

Right now, in congress, there is an approx 60/40 split between the consumptive segment (which looks mostly to the Democrats for representation), and the productive segment (Which looks mostly to the Republicans). I believe the health-care debate to be the most important issue of the year, probably the next several years. I believe both segments of the US are watching closely, expecting the best ideas of both parties of representation to get worked into the ultimate result of health care reform.

Get it right, and a lot of people watching will see it, react, and society as a whole will be advanced. Get it wrong, and a whole lot of people will see that too... and react.

If representatives can compromise and write a good bill, a lot of good could happen, if they dig in their heals and insist on 100% "Their way or no way", a lot of bad could happen.

Worst thing would be for a bill to run into a Republican filibuster and fail, dejecting that 60% consumptive segment whom the Democrats represent, ruining consumer confidence and optimism, and rapidly tanking the recovery.

Next worse thing would be for a bill to overrun a Republican filibuster and succeed, dejecting that 40% productive segment whom the Republicans represent, prompting them to restrain on new ventures, new hiring, and new investments... but instead to pay-off debts, cut costs, and to other-wise "hunker-down", ... just in case.

Consider the Clinton Administration... The Democrats had the White House, the Senate, and the House. They tried an aggressive health-care reform plan too... and failed. Two years later dejected voters gave Congress to the Republicans, and President Clinton had to play defense for the remainder of his terms. People are watching today just as they watched then.

Consider the CWEI board. More on politics today than energy. They are watching too.

Again, the best thing the Dem's and Rep's could do... go into a closed room (with the camera's, lobbyists, and power-brokers left behind), give the Democrats 60% of what they want, the Republicans 40% of what they want (as per the 60/40 split in representation) and come out of the room to reassure both the productive class and consumptive class with a bill that would be supported by 70% of each party.

Let us all pray that the wiser heads will prevail over the foolish, that we get a bill that will be seen as constructive by all, and that we, as a nation, may move forward rather than back.


-Robry825

Sunday Night Economic Assessment

The US Industrial economy took a break in the latest week (if pipeline scheduling is correct), consumer spending maintained its recent surge, and inventories bullishly continued their recent trends of sharp contraction.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) eased for the first time in 5 weeks, but remains at levels suggesting it has made up better than two-thirds of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was soft throughout.

Apart from the 28-day moving average of the Production Index, last week was the fourth down week in a row in the raw numbers, with seasonal adjustments within those weeks muting the decline. Seasonal factors now include last years fall plunge within their calculations.

On a sector-by-sector basis (as per the "Part 8" posts) the softness was centered mostly in the chemical/fertilizer and refining sectors, missing the core areas of the recent economic recovery. Steel delivery natgas scheduling remains very firm (steel has been front-and-center in the recovery) and the Automotive group is trying for a mid-month increase... challenging its monthly "climb-early-then-die" habit.

The Paperboard-based Consumption Index maintained its recent surge, again setting another all-time high within the week. The Consumption Index remains solidly above the Production Index... supporting the recent momentum of recovery.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recessionary levels and is dropping fast. Inventory-rebuilding (once it kicks in) will be another major support-mechanism for the economy.

Next challenge (for the economy) looks to be the health-care debate in congress. Will the Democrats steamroll the republicans by breaking a filibuster to win a purely democratic health-care bill (scaring the pants off of America's productive class)? Will the Republicans scuttle health-care reform by a successful filibuster (depressing the pants off of America's consumptive class)? A lot of folks want to see genuine, non-gimmicky reform. What those folks are given to see could be an economy maker... or an economy breaker.

Best thing the Dem's and Rep's could do... go into a closed room (with the camera's, lobbyists, and power-brokers left behind), give the Democrats 60% of what they want, the Republicans 40% of what they want (as per the 60/40 split in representation) and come out of the room to reassure both the productive class and consumptive class with a bill that would be supported by 70% of each party.

Please... Please... Please... Forget about the filibuster gambit!



-Robry825

Sunday Night Economic Assessment

The US Industrial economy inched further ahead in the latest week (if pipeline scheduling is correct), amidst surging consumer spending.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) added its 18th advance in 19 weeks, and now stands higher than at any time since October 24th, 2008 (It bottomed May 28th), and at levels suggesting it has made up better than two-thirds of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week softened sharply through midweek before regaining ground late.

Apart from the 28-day moving average of the Production Index, last week was the third down week in a row in the raw numbers, with seasonal adjustments for the last 2 weeks keeping the "official" 4-week measure trending higher.

The Paperboard-based Consumption Index (as last week) surged all week, closing out the week at an all-time high. The Consumption Index remains solidly above the Production Index... supporting the recent momentum of recovery.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recessionary levels, adding inventory-rebuilding as another support-mechanism near-term to the economy.

Michigan (Robry's Home State) continues to be the bottom-of-the-barrel state, as Auto scheduling looks to be repeating its monthly strengthen-early-then-fall-apart cycle. There is now vigorous debate in Michigan as to whether to cut state spending (less money to citizens & state workers = less spending = kill the economy further) or to raise taxes (less money kept by taxpayers = less spending by them = kill the economy further). The ultimate Michigan Loose-Loose scenario.

Not to worry though. A group of Michigan's finest in Lansing has the ultimate legislative idea to stimulate the economy. They are going to pass a law to allow all the bars to stay open to 4am rather than 2am! True story! It is the perfect stimulus plan! Stimulative for Tavern Workers and waitstaff, stimulative for security personnel, stimulative for police enforcement and firefighters and tow-truck operators, stimulative for health-care and rehabilitation professionals, stimulative for the legal community, and stimulative for road workers and maintenance personnel.

Michigan will be back in the drivers seat in no time!



-Robry825

Sunday Night Economic Assessment

The US Industrial economy continues to push ahead (if pipeline scheduling is correct), as consumer spending surges.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) racked up its 17th advance in 18 weeks, and now stands higher than at any time since October 27th, 2008 (It bottomed May 28th), and at levels suggesting it has made up better than two-thirds of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week moderated just a tad from the previous week.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has more than tripled (up 265%) since its worst month ever (June).

September closed out to be a very strong month (over August), with broad-based strength including the paper, chemical, refining, mining, and metals sectors.

The Paperboard-based Consumption Index (as last week) surged all week, closing out the week at an all-time high. The Consumption Index remains solidly above the Production Index... supporting the recent momentum of recovery.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recession levels, adding inventory-rebuilding as another support-mechanism near-term to the economy.

I am leery (based upon ongoing weakness in Automotive gas-flow scheduling) that the Consumption index has somewhat overestimated the gains in consumption. One big handicap of the Consumption Index is (because it is derived from gas-flows into cardboard-box manufacturing) is it doesn't touch merchandise that isn't packed in cardboard boxes (like Automobiles). So with gas-flows suggesting softness in the Auto-Sector (Which the model does not represent) and strength in non-auto (Which the model does represent) the non-auto strength gets imputed into the whole of US consumption by the model.

I also struggle with the low sample size of the paperboard sector model, and wish that there were better representation of the paperboard industry in the FERC-mandated pipeline informational postings. (If it wasn't for the FERC pushing for greater transparency, we would not have the info that we have, and most of my posts & blogs would have never existed.)

My hope is that these posts of mine may serve as a demonstration of the great worth of this data, and perhaps one day, government and industry will wake up to what they could have, more avenues of information will open (intrastates and LDC's), and more help can one day preemptively be done to stave off recession or blunt impact on individual sectors of the economy by either the governments or the markets.

How much better these posts would be with the NICOR's and the MICHCON's of the US represented!





-Robry825

Sunday Night Economic Assessment

The US Industrial economy continues to advance (if pipeline scheduling is correct), amidst surging consumer spending.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) collected its 16th advance in 17 weeks, and now stands higher than at any time since December 1st, 2008 (It bottomed May 28th), and at levels suggesting it has made up better than 65% of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week started strong, then moderated just a bit mid & late week.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has tripled (up 255%) since its worst month ever (June).

The September strength continues to be very broad based, including the paper, chemical, refining, mining, and metals sectors. The auto sector, which also started the month strong, is again back-peddling (an early-month-strength-late-month-weakness pattern that has repeated itself in recent months). Michigan (Robry's state) remains a mess.

The Paperboard-based Consumption Index surged all week, closing out the week at an all-time high. The Consumption Index remains well above the Production Index... supporting the recent momentum of recovery.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recession levels, adding inventory-rebuilding as another support-mechanism near-term to the economy.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, production lagging consumption by a wide margin, and inventory-estimates sharply down going into a stimulative Christmas season, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass, and the economy will continue to sharply accelerate until overheating forces the feds to kill it off (to limit inflation).

That is not to say that the economy (in the mean time) is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic and stop spending, leading to a "double-dip" type recession. Momentum, however, remains overwhelmingly on the side of recovery, and until something immense breaks that momentum...I expect the recovery to continue.




-Robry825

Sunday Night Economic Assessment

Another very strong week for the US Industrial economy (if pipeline scheduling is correct), amidst restrengthening consumer spending.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) racked up its 15th advance in 16 weeks, and now stands higher than at any time since December 8th, 2008 (It bottomed May 28th), and at levels suggesting it has made up better than 65% of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was again red-hot all the way through.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has tripled (up 255%) since its worst month ever (June).

The September strength continues to be very broad based, including the paper, chemical, refining, mining, and metals sectors. The auto sector, which also started the month strong, is again back-peddling (an early-month-strength-late-month-weakness pattern that has repeated itself in recent months).

The Paperboard-based Consumption Index also restrengthened. Though slightly below year-ago levels (which benefited from a bit of political-convention euphoria), the Consumption Index remains well above the Production Index... supporting the recent momentum of recovery.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recession levels, adding inventory-rebuilding as another support-mechanism near-term to the economy.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, production lagging consumption by a wide margin, and inventory-estimates sharply down going into a stimulative Christmas season, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass, and the economy will continue to sharply accelerate until overheating forces the feds to kill it off (to limit inflation).

That is not to say that the economy (in the mean time) is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic and stop spending, leading to a "double-dip" type recession. Momentum, however, remains overwhelmingly on the side of recovery, and until something immense breaks that momentum...I expect the recovery to continue.




-Robry825

Sunday Night Economic Assessment

The US Industrial economy continued to push ahead last week (if pipeline scheduling is correct), consumer spending softened, and the US Administration made a major tactical blunder in the area of international trade.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) collected its 14th advance in 15 weeks, and now stands higher than at any time since January 5th (It bottomed May 28th), and at levels suggesting it has made up better than 50% of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week looked strong all the way through and closed out above the prior week... which was remarkable as the most recent week had one less work-day due to the Labor-Day holiday.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has tripled (up 255%) since its worst month ever (June).

The early-September strength continues to be very broad based, including the paper, chemical, refining, mining, and metals sectors. The auto sector, which also started the month strong, is again back-peddling (an early-month-strength-late-month-weakness pattern that has repeated itself in recent months).

The Paperboard-based Consumption Index conversely gave up a little more ground last week. Though slightly below year-ago levels (which benefited from a bit of political-convention euphoria), the Consumption Index remains well above the Production Index... supporting the recent momentum of recovery at least for the time being... though they are getting close on the dailies.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) remains well-below pre-recession levels, adding inventory-rebuilding as another support-mechanism near-term to the economy.

Of great concern, however, is a major blunder of the US Administration in bypassing the World Trade Organization in its recent decision to pursue tariffs against China against imported tires. This was an unbelievable lapse of judgment, and China immediately retaliated (another error on their part) against US autos and poultry... spooking the international markets even as I type this up (Sunday Night).

With China's massive trade surplus with the US, with China's massive US dollar holdings, and China's historic dollar-pegging, a large monetary & trade bubble is in place, and if this bubble pops suddenly (as opposed to relieved slowly) shock waves could circle the globe.

Should the US dollar suddenly dive against China, it could cause severe recession in China by way of sudden loss of export-related trade, a burst of inflation expectations in the US, an intrinsic loss of perhaps a trillion dollars (or more) in Chinese currency holdings, renewed recession in the US by way of consumer pessimism crimping off consumer spending (reigniting recession and perhaps depression)... all through global market turmoil.

Both the US and China would do well to step back from all of this (QUICKLY... LIKE MONDAY MORNING BEFORE US MARKETS OPEN) and defer all this properly to the WTO. Otherwise we will have to hope the markets choose to look the other way.

It will be an interesting day... Monday...



-Robry825

Sunday Night Economic Assessment

Another big week last week... The US industrial economy continued its advance (If pipeline scheduling is correct)... racking up its 13th advance in the last 14-weeks as the US continues to fight its way out of recession.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) now stands higher than at any time since January 10th (It bottomed May 28th), and at levels suggesting it has made up better than 50% of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was again red-hot, starting off strong and gaining further strength as the week progressed.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has tripled (up 255%) since its worst month ever (June).

The early-September strength was very broad based, including the paper, chemical, refining, mining, metals, and even (finally) the auto sector.

The Paperboard-based Consumption conversely gave up a little ground, and remains below year-ago levels (which benefited from a bit of political-convention euphoria... right before the bottom fell out of everything).

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

A big week last week... The US industrial economy resumed its advance following its one-week pause the previous week (If pipeline scheduling is correct)... racking up its 12th advance in the last 13-weeks as the US continues to fight its way out of recession.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) now stands higher than at any time since January 14th (It bottomed May 28th), and at levels suggesting it has made up better than 50% of it's recessionary deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week was red-hot, starting off strong and gaining further strength as the week progressed.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has nearly tripled (up nearly 175%) since its worst month ever (June). The auto sector again continued to back-peddle (in spite of the much talked of "Cash for clunkers" activity).

Gas flows suggest that California has totally emerged from recession with its surge the last few weeks (at last years levels) while Michigan (Robrys home state) remains a terrible mess. There is a joke locally that the feds will be building a major new freeway linking Michigan with Texas... with 2 lanes going north... and 4 lanes going south!

The Paperboard-based Consumption Index also advanced nicely for the week (though still off from its all-time high of six weeks ago). The Consumption Index is now below year-ago levels (which benefited from a bit of political-convention euphoria... right before the bottom fell out of everything). In its dailies, it appeared strong all week.

Was last week the beginning of the final push up out of recession for the economy? Do we now quickly ramp production to restock for the Christmas-that-makes-up-for-last-Christmas (Christmas '08 was nothing but hum-bug in the gas flows)? Or are we going to repeat the "Great Fake-Out of 2008" (Gas flows looked great in early September, then collapsed into near-depression). Time will tell.

But overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

Following 11 straight weeks of advance, the US Industrial economy appeared to have stalled (at least temporarily) in its advance last week (If pipeline scheduling is correct), continuing a softening pattern (in recent weeks) in its previous-rapid ascent out of recession.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) eased for the first time in 12 weeks (since its May 28th bottom), though still at levels suggesting a better than 50% of it's recession-suggested deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) the week started off soft, but gained strength as the week progressed and closed out the week slightly stronger than the previous week, but below the first week of the featured 28-day average.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has more than doubled since its worst month ever (June). The auto sector (which also showed a nice pop for the 1st day of August) continued to back-peddle, in spite of the much talked of "Cash for clunkers" activity. Michigan (Robrys home state) remains out of the recession-recovery game.

My thoughts on "Cash for clunkers" is it will be found (when history is written) to have been a blunder. Week gas flows to the auto sector suggest opportunistic use of the program by folks that would probably have purchased new cars anyway, with their trade-ins being removed from the "fleet" of cars on the road to be scrapped.

Net effect of "Cash for clunkers" will probably be less cars on the road (less older "clunkers"), much less after-market demand for parts ("clunkers" require far more new parts per 1000 miles driven than newer cars), layoffs in the auto after-market industry (which is significant), higher prices on used cars (Less "clunker" supply = higher pricing), and more people in the lower-income strata that won't be able to afford to replace their "clunker" when it dies because of the higher pricing (Always the little guy that takes it on the chin... Always!).

Next "blunder hurdle" for the economy will be the expiration of extended unemployment benefits in key states. In a locked-up economy (as we now have) the only way to get idle production is to get spenders to spend, then keep them spending. Unemployment compensation can help to keep them spending. Allowing it to expire in mass will send us back into recession if not depression... and fast.

Third "blunder hurdle" will be health-care reform. If consumers get a whiff of any kind of a big tax increase (or insurance-premium increase) to pay for health-care reform... they will likely cut their spending to accommodate it... again sending the economy down hard. We need smart cost-cutting reform for now, not wild-eyed reform in the midst of a wild-eyed recession.

The Paperboard-based Consumption Index also pulled off just a bit more from its all-time high of five weeks ago, though still well above year-ago levels. In its dailies, it actually appeared strong for the week, though seasonal factors pulled it down just a tad.

I remain leery (based upon Automotive gas-flow scheduling) that the Consumption index is somewhat overestimating the gains in consumption. One handicap of the Consumption Index is (because it is derived from gas-flows into cardboard-box manufacturing) is it doesn't touch merchandise that isn't packed in cardboard boxes (like Automobiles). So with gas-flows suggesting softness in the Auto-Sector (Which the model does not represent) and strength in non-auto (Which the model does represent) the non-auto strength gets imputed into the whole of US consumption by the model.

Now this is not to say that the US economy isn't advancing (the gas-flows evidence numerous signs of a rapid ramp in the economy). It is, however, to say that the Consumption Index (and the Inventory Index that makes use of it) look too fast on the consumption ramp-up. (It is also to say that Robry's models need improvement!)

The Inventory Index (given the Consumption & Production Indexes) has now given up all of its overhang, and is extending its deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession, and the ineptitude of the government/feds to address it.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy continued its advance out of recession last week (If pipeline scheduling is correct), though again at a somewhat slower pace than recent weeks.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its 11th week in a row (since its May 28th bottom), and has now recovered better than 50% of it's recession-suggested deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) it was actually a second softer week, as opposed to the first two red-hot weeks of the featured 28-day average. Within this weekend's scheduling, early strength also gave way to softening mid and late week.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) continues to lead on the upside and has more than doubled since its worst month ever (June). The auto sector (which also showed a nice pop for the 1st day of August) continued to back-peddle, in spite of the much talked of "Cash for clunkers" activity. Michigan (Robrys home state) remains out of the recession-recovery game.

The Paperboard-based Consumption Index also pulled off just a bit more from its all-time high four weeks ago, though still well above year-ago levels. In its dailies, the softening trend reversed sharply as the week ended.

California continues to strengthen big-time, perhaps due to the recent fall in the US dollar taking out imports. PG&E alone reported just today industrial natgas deliveries hit an estimated 1 BCF for the latest day, the first time that has happened since early October '08. A bit more of a pull-back in the dollar might accomplish the same for the interior states, igniting local industrial production at the expense of imports.

Theoretically, there has to be some point of equilibrium, where lowered exchange rates make imports less economical... to the point that trade balances out as higher-cost shuttered US industry gains advantage over importers and displaces them... pushing up inflation in the process. One could make a point that a strong dollar masks real inflation, and that the re-emergence of inflation is the cost of economic recovery. One could also ask the question, does the Federal Reserve hike interest rates to control inflation, or to hide it.

Eventually (if not now) the world is not going to permit such huge US trade deficits/imbalances. If that time is now, it might be a terrible time to be invested in transportation (Trucks & Rails). Those huge California imports keep a lot of folks busy moving freight thousands of miles to distribution hubs across the US. If local higher-cost industrial production ignites (shutting off import transport), it could be rough for transportation investments.

I remain leery (based upon Automotive gas-flow scheduling) that the Consumption index is somewhat overestimating the gains in consumption. One handicap of the Consumption Index is (because it is derived from gas-flows into cardboard-box manufacturing) is it doesn't touch merchandise that isn't packed in cardboard boxes (like Automobiles). So with gas-flows suggesting softness in the Auto-Sector (Which the model does not represent) and strength in non-auto (Which the model does represent) the non-auto strength gets imputed into the whole of US consumption by the model.

Now this is not to say that the US economy isn't advancing (the gas-flows evidence numerous signs of a rapid ramp in the economy). It is, however, to say that the Consumption Index (and the Inventory Index that makes use of it) look too fast on the consumption ramp-up. (It is also to say that Robry's models need improvement!)

The Inventory Index (given the Consumption & Production Indexes) has now given up all of its overhang, and is extending its deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession, and the ineptitude of the government/feds to address it.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy once again extended its advance out of recession last week (If pipeline scheduling is correct), albeit at a somewhat slower pace than recent weeks.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its 10th week in a row (since its May 28th bottom), and has now recovered better than 50% of it's recession-suggested deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) it was somewhat softer, edging off from two previous red-hot weeks of increases to scheduling. Within this weekend's scheduling, early (incomplete) data again looked strong.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) is now leading on the upside and has more than doubled since its worst month ever (June). The auto sector (which also showed a nice pop for the 1st day of August) again started to back-peddle and Michigan (Robrys home state) remains a mess.

Interestingly, California has turned big time in the gas flows, perhaps due to the recent fall in the US dollar.

The Paperboard-based Consumption Index also pulled off just a bit more from its all-time high three weeks ago, though still well above year-ago levels.

I remain leary (based upon Automotive gas-flow scheduling) that the Consumption index is somewhat overestimating the gains in consumption. One handicap of the Consumption Index is (because it is derived from gas-flows into cardboard-box manufacturing) is it doesn't touch merchandise that isn't packed in cardboard boxes (like Automobiles). So with gas-flows suggesting softness in the Auto-Sector (Which the model does not represent) and strength in non-auto (Which the model does represent) the non-auto strength gets imputed into the whole of US consumption by the model.

Now this is not to say that the US economy isn't advancing (the gas-flows evidence numerous signs of a rapid ramp in the economy). It is, however, to say that the Consumption Index (and the Inventory Index that makes use of it) look too fast on the consumption ramp-up. (It is also to say that Robry's models need improvement!)

The Inventory Index (given the Consumption & Production Indexes) has now given up all of its overhang, and is extending its deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession, and the ineptitude of the government/feds to address it.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy extended its rapid rise out of recession last week (If pipeline scheduling is correct), as gas-flow delivery scheduling on US pipelines continued to ramp.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its 9th week in a row (since its May 28th bottom), and has now recovered better than 50% of it's recession-suggested deficit. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) it was a second red-hot week-in-a-row..

The recent pattern of ongoing upward-revisions to previous estimates also bullishly continued (as facilities have to adjust to the quick ramp-up in implied productive demand).

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) is now leading on the upside and has more than doubled since its worst month ever (June). The auto sector (which also looked good good earlier this month), remained in the dog-house early in the week, though it too closed out the month (July) above the previous (June), and showed a nice pop for the 1st day of August, which we in Michigan (Robry's home state) desperately hope to continue.

The Paperboard-based Consumption Index pulled off a bit more from its all-time high two weeks ago, though still well above year-ago levels.

I remain leery (based upon Automotive gas-flow scheduling) that the Consumption index is somewhat overestimating the gains in consumption. One handicap of the Consumption Index is (because it is derived from gas-flows into cardboard-box manufacturing) is it doesn't touch merchandise that isn't packed in cardboard boxes (like Automobiles). So with gas-flows suggesting softness in the Auto-Sector (Which the model does not represent) and strength in non-auto (Which the model does represent) the non-auto strength gets imputed into the whole of US consumption by the model.

Now this is not to say that the US economy isn't advancing (the gas-flows evidence numerous signs of a rapid ramp in the economy). It is, however, to say that the Consumption Index (and the Inventory Index that makes use of it) look too fast on the consumption ramp-up. (It is also to say that Robry's models need improvement!)

The Inventory Index (given the Consumption & Production Indexes) has now given up all of its overhang, and is extending its deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession, and the ineptitude of the government/feds to address it.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up very quickly to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy continued its rapid rise out of recession last week (If pipeline scheduling is correct), as gas-flow delivery scheduling on US pipelines continued to ramp.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its 8th week in a row, and is now at its highest point since March 21st. In its dailies (as evidenced by the "Part 7" industrial daily posts on the IV-CWEI site) it was red-hot all week.

The recent pattern of ongoing upward-revisions to previous estimates also bullishly continued (as facilities have to adjust to the quick ramp-up in implied productive demand).

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) is now leading on the upside and has more than doubled since its worst month ever (May). The auto sector (which also looked good good earlier this month), however remains in the dog-house, and Michigan (Robry's home state) remains in the out-house.

Michigan's unemployment rate topped 15% in June (worst in the nation) with 20% (one-in-five unemployed) in some regions. Michigan is not yet following the gas-flow ramp of the US, and unless it does soon Michigan will be decimated when/if these folks unemployment runs out (and they cut back personal spending further... tightening Michigan's contraction).

The Paperboard-based Consumption Index pulled off just a bit from last weeks all-time high, though still well above year-ago levels.

I remain leery (based upon Automotive gas-flow scheduling) that the Consumption index is somewhat overestimating the gains in consumption. One handicap of the Consumption Index is (because it is derived from gas-flows into cardboard-box manufacturing) is it doesn't touch merchandise that isn't packed in cardboard boxes (like Automobiles). So with gas-flows suggesting softness in the Auto-Sector (Which the model does not represent) and strength in non-auto (Which the model does represent) the non-auto strength gets imputed into the whole of US consumption by the model.

Now this is not to say that the US economy isn't advancing (the gas-flows evidence numerous signs of a rapid ramp in the economy). It is, however, to say that the Consumption Index (and the Inventory Index that makes use of it) look too fast on the consumption ramp-up. (It is also to say that Robry's models need improvement!)

The Inventory Index (given the Consumption & Production Indexes) has now given up all of its overhang, and is extending its deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession, and the ineptitude of the government/feds to address it.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up very quickly to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

Gas flows suggest a continuing strong rebound within the US industrial economy last week (If pipeline scheduling is correct), with upward revisions to previous estimates now becoming a daily pattern (as facilities have to adjust to the quick ramp-up in implied productive demand) and what's left of the US' original "Big Three" was supposed to emerge from their "retooling" cycle.

In the dailies, scheduling of natural gas deliveries into industrial facilities started soft, then strengthened through the week on the heels of a strong rebound of the consumers ultimate money supply measure... the stock market.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) the steel sector (which led the other groups to the downside with a 75% drop in scheduling) is now leading on the upside and has nearly doubled since its worst month ever (June). The auto sector (which also looked good good earlier this month), however absolutely rolled over and died in its dailies last week... and for the last few days has been its lowest ever. I am hoping that that has something to do with the retooling week being extended.

The Paperboard-based Consumption Index took off and set an all-time high last week... pushing well above its Mid-September-2008 pre-election peak... which occurred just before everything fell apart in late September.

I am increasingly suspecting (based upon Automotive gas-flow scheduling) that the Consumption index is somewhat overestimating the gains in consumption. The big handicap of the Consumption Index is (because it is derived from gas-flows into cardboard-box manufacturing) is it doesn't touch merchandise that isn't packed in cardboard boxes (like Automobiles). So with gas-flows suggesting softness in the Auto-Sector (Which the model does not represent) and strength in non-auto (Which the model does represent) the non-auto strength gets imputed into the whole of US consumption by the model.

Now this is not to say that the US economy isn't advancing (the gas-flows evidence numerous signs of a rapid ramp in the economy). It is, however, to say that the Consumption Index (and the Inventory Index that makes use of it) look too fast on the consumption ramp-up. (It is also to say that Robry's models need improvement!)

The Inventory Index (given the Consumption & Production Indexes) has now given up all of its overhang, and is extending its deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession, and the ineptitude of the government/feds to address it.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up very quickly to meet it.

That is not to say that the economy is free of risk. There is always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

The recent rebound of the US industrial economy continued for its 6th week in a row last week (If natural-gas pipeline scheduling is correct), albeit at a slower pace than the last few weeks, as the Production Index (in terms of its 28-day moving average) pushed a little further above its May-28th bottom. In its dailies, scheduling of natural gas deliveries into industrial facilities were soft through the week.

Seasonally, we are in a "retooling" period (First 2 weeks of July) where what's left of the US Auto Industry (and supporting steel industry) slows down. The Production Index (above) should see past the aberration (as it is seasonally weighted to filter out such noise), however the raw daily data (posted on the IV CWEI site) will be skewed.

On a sector-by-sector basis (see part "8" posts on the IV-CWEI site) both the steel and automotive groups were among the strongest last week, continuing their rebound off of their worst month ever (June)... taken by me as a good sign as these have been at the core of the recessionary softness.

The Consumption Index remained well above year-ago levels (and just below its 2009-high set the previous week). Consumption is suggested by the gas-flows to be near but just below its Mid-September-2008 Pre-election peak... which occurred just before everything fell apart in late September.

The Inventory Index (If the other indexes are correct) has now given up all of its overhang, and has begun to carve out a deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession, and the ineptitude of the government/feds to address it.

There are times that political parties have to decide whom to represent... their voters... or their funders. The interests of those two groups can at times be diametrically opposed, and it seems those interests are becoming more and more opposed every year. On both sides of last falls elections, the choices over whom to serve (voter or funder) were abysmal. The Republicans disintegrated last year. The Democrats are disintegrating now. Unless we get some change that can really be believed in, the economy will eventually likewise dissintigrate, though for now ineptitude is making more friends than enemies... and the economy advanced again last week.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up very quickly to meet it.

That is not to say that the economy is free of risk. Equities have been soft, and the recent steep ramp-up in the Production Index slowed this week, seemingly in tandem with weakness in equities markets (Though the Consumption Index continues to hold its ground), and if equities softness continues it could very well cause consumers to cut back spending by means of a drop in their ultimate money measure... the stock market.

There is also always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825

Sunday Night Economic Assessment

The US industrial economy rebound continued (If natural-gas pipeline scheduling is correct) for its 5th week (in spite of weakness in equities) as the Production Index (in terms of its 28-day moving average) pushed further above its May-28th bottom. In its dailies, scheduling of natural gas deliveries into industrial facilities again hit a multi-month high on Tuesday before tailing off late week in preparation for the July-4th holiday weekend.

Seasonally, we also entered a "retooling" period (First 2 weeks of July) where what's left of the US Auto Industry (and supporting steel industry) slows down. The Production Index (above) should see past the aberration (as it is seasonally weighted to filter out such noise), however the raw daily data (posted on the IV CWEI site) will be skewed.

The Consumption Index remained well above year-ago levels and set a new 2009-high early in the week, before trailing off late week. Consumption is suggested by the gas-flows to be near but just below its Mid-September-2008 Pre-election peak... which occurred just before everything fell apart in late September.

The Inventory Index (If the other indexes are correct) has now given up all of its overhang, and will likely begin to carve out a large deficit to year-ago levels... reflecting perhaps the long-term damage done to some industries (especially auto) by the length and severity of the recession.

Overall, I continue to believe the industrial-recession ended at the May-28th Production-Index bottom, and anticipate a turning in the employment numbers in the month(s) ahead. With the implied inventory overhang now gone, and production lagging consumption by a wide margin, I believe the recovery has (to borrow a term from nuclear physics) reached its point of critical mass. As long as consumption holds at current levels, production should ramp up very quickly to meet it.

That is not to say that the economy is free of risk. Equities have been soft, and the recent steep ramp-up in the Production Index slowed this week, seemingly in tandem with weakness in equities markets (Though the Consumption Index continues to hold its ground), and if equities softness continues it could very well cause consumers to cut back spending by means of a drop in their ultimate money measure... the stock market.

There is also always the risk of news events (acts of war/terrorism, natural catastrophes, political events/blunders, etc) that could cause consumers to panic, leading to a "double-dip" type recession. Momentum, however, appears (at least for the time being) on the side of recovery, and until that momentum gets broken, I see the recovery continuing.



-Robry825