Am playing around with another indicator, adding it into the mix with tonights report. This came about from a PM from one of our wiser board members, that thought that a measure of business inventories could be seen in the difference between the Production Index and the Consumption Index.
The theory here is that the difference between production and consumption is "banked" in inventories, and that a measure of business inventories can be gleaned by adding up successive weeks of production and consumption, much the way that a measure of ones bank account might be gleaned (with no knowledge of its beginning balance) by adding up successive weeks of deposits and withdrawals over time.
This should (in theory) have a shot at working fairly well because the "Production" and "Consumption" are both equally weighted (to eachother), and both seasonally adjusted... meaning the new business "Inventories" estimate should reflect the accuracy of the matching of the other two models, and should also naturally inherit the seasonal-adjusted nature of the Production and Consumption models as well.
The paperboard-based Consumption Index (in the latest week) continues to say the recession (in terms of consumers) is over, as it continues to extended its recovery above year-ago levels, as stock markets continued to recover. The Consumption Index is now approaching its national-election-convention highs, when America's Republicans and Democrats both put on their respective rose-colored glasses to view their futures under their respective parties candidates (and spent accordingly). Too bad the conventions couldn't have gone on for an extra year or two... it would have been prosperity for everyone!
The Production Index, as it has done for the previous three weeks, balked at the trend and slid to a new recession low.
The new business "Inventories" modeling gives a possible explanation for the discrepancy between increasing consumption and decreasing consumption... bloated business inventories. Following the close of last summers national political conventions, consumption collapsed at a faster rate than production, suggesting an accumulation of "unconsumed production" in business inventories. This excess of inventories would match well the stories that have been told both on the CWEI board and in the press, and may have to be worked off before the Production Index can come back to life.
Next week should also prove interesting... we are in the lull of Easter week, when some industrial facilities are down. Will be interesting to see if the Industrial gas flows on the CWEI board start to snap back as the new week progresses.
Need to keep those spenders spending...