Sunday Night Economic Assessment

The US Industrial economy eased slightly last week (if pipeline scheduling is correct), while brisk consumer spending continued to ease off of its late-2009 strength.

After two consecutive all-time highs and 5 consecutive weekly gains, the Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) eased ever so slightly, to 111.9 from the prior weeks 112.1. In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week started off strong before moderating a bit late week.

The paperboard-based Consumption Index had a sharper decline in the week (third soft week in a row), as the US public had to deal with a quick contraction in their ultimate money supply measure.. the stock market. In its dailies, the consumption index seemed to mirror equities in their corrections.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its seemingly never-ending drop, remaining well-below pre-recessionary levels.

The aroma of political change (In the mind of the US voter) seemed to be drifting in the air last week, coming from the direction of Massachusetts (If the Republicans can take Senator Kennedy's old seat, every Democratic seat is vulnerable). From the perspective of both equities and the gas-flows, it seemed a slight depressant... perhaps momentarily igniting some consumers fears of a turn away from re-stimulating the US economy towards renewed political gridlock.

(We can all hope that that aroma of political change leads to more constructive endeavors... such as combining the best ideas of both parties to solve problems... rather than combining the worst ideas of both parties to recreate WrestleMania!)

Key to the US economy in the short term is of course the consumer... if consumer spending stalls, the productive side of the economy likely will follow into decline (Consumer-spending has been the leash that leads the dog of industrial production); if consumer spending continues strong, likely so will industrial production.

Of concern in the intermediate term will be the possibility of modest inflationary pressures as industrial production pushes further above the old 2007 highs (in terms of the Production Index) and the strongest sectors of the US industrial economy push towards 100% capacity utilization.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy again gained ground last week (if pipeline scheduling is correct), while brisk consumer spending continued to ease off of its late-2009 strength.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) again set an all-time high last week, rising to 112.1 from the prior weeks 110.9 (5th weekly gain in a row)

In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week also set a 7-day record. The week started off red-hot before moderating a bit late week.

Conversely, the paperboard-based Consumption Index lost a little more ground last week (second soft week following four consecutive weekly advances), remaining somewhat shy of its 2009 peak but still at levels ahead of (and supportive to) industrial production.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its seemingly never-ending drop, remaining well-below pre-recessionary levels.

The maintained strength in consumer spending, the deficit of the Production Index to the Consumption Index, the deep and continuing decline of the Inventories Measure... all remain supportive of the present fourth leg up for the economy, though the continuing lag in the Production vs Consumption Index continues to hint to a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.

(As the Production Index has now taken out the 2007 highs, it can no longer be assumed that the recession is the cause of the present unemployment problem. Industrial gas-flows suggest the recession is completely gone. Yet 10% unemployment remains.)

Key to the US economy in the short term will continue to be the consumer... if consumer spending stalls, the productive side of the economy likely will follow into decline (Consumer-spending has been the leash that leads the dog of industrial production); if consumer spending continues strong, likely so will industrial production.

Of concern in the intermediate term will be the possibility of modest inflationary pressures as industrial production pushes further above the old 2007 highs (in terms of the Production Index) and the strongest sectors of the US industrial economy push towards 100% capacity utilization.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy pushed ahead sharply last week (if pipeline scheduling is correct), while brisk consumer spending moderated just a tiny bit.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) finally took out its old 2007 highs... rising from 109.1 (last week) to this weeks all-time-high of 110.9 (the 2007 record was 110.2, the bottom was 86.7 on May 28th 2009).

In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week reflected the traditional New-Years holiday softness early, then industrial scheduling took off from mid-week on.

The Paperboard-based Consumption Index lost a little ground last week (following four consecutive weekly advances), remaining somewhat shy of its 2009 peak but still at levels way out ahead of industrial production.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its seemingly never-ending drop, remaining well-below pre-recessionary levels.

Of great encouragement... steel-sector gas-flows (which have been front and center in the recovery) continued to edge higher (seasonal expectations would be to edge lower - we are in the traditional Early-January retooling period), and some of the economies poorest performers (such as the Auto and Lumber groups) have also been doing quite well.

The maintained strength in consumer spending, the deficit of the Production Index to the Consumption Index, the deep and continuing decline of the Inventories Measure... all remain supportive of the present fourth leg up for the economy, though the continuing lag in the Production vs Consumption Index continues to hint to a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.

(As the Production Index has now taken out the 2007 highs, it can no longer be assumed that the recession is the cause of the present unemployment problem. Industrial gas-flows suggest the recession is completely gone. Yet 10% unemployment remains.)

Key to the US economy in the short term will continue to be the consumer... if consumer spending stalls, the productive side of the economy likely will follow into decline (Consumer-spending has been the leash that leads the dog of industrial production); if consumer spending continues strong, likely so will industrial production.

Of concern in the intermediate term will be the possibility of modest inflationary pressures as industrial production pushes further above the old 2007 highs (in terms of the Production Index) and the strongest sectors of the US industrial economy push towards 100% capacity utilization.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy again advanced last week (if pipeline scheduling is correct) amidst brisk consumer spending, as the US economy transitions from a traditional period of strength (Nov/Dec Christmas shopping season) to a period of traditional weakness (Early January industrial retooling downtime).

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) once again gained ground in the latest week (3rd weekly gain in a row). The measure rose to 109.1 (from last weeks 108.2) but remains just short of 2007's all-time high of 110.2 (It bottomed May 28th 2009 at 86.7).

In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week reflected the traditional Christmas & New-Years holiday softness early and late, with a couple of unusually strong days mid-week.

The Paperboard-based Consumption gained ground as well last week (4th consecutive weekly advance), though it remains somewhat shy of its 2009 peak.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its seemingly never-ending drop, remaining well-below pre-recessionary levels.

The latest spike in industrial flows (in late December) is encouraging, as it undoubtedly reflects confidence in the post-Christmas new year. Also encouraging... steel-sector gas-flows (which have been front and center in the recovery) continued to edge higher in the face of upcoming retooling, 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 remain supportive of the newly-commenced fourth leg up for the economy, though the continuing lag in the Production vs Consumption Index continues to hint to a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.

Key to the US economy in the short term will continue to be the consumer... if consumer spending stalls, the productive side of the economy likely will follow into decline (Consumer-spending has been the leash that leads the dog of industrial production); if consumer spending continues strong, likely so will industrial production.

Of concern in the intermediate term will be the possibility of modest inflationary pressures as industrial production pushes towards (and overtakes) the old 2007 highs (in terms of the Production Index) and the strongest sectors of the US industrial economy push towards 100% capacity utilization.



-Robry825