Sunday Night Economic Assessment

The US Industrial economy took a breather last week (if pipeline scheduling is correct) as industrial production declined, while consumer spending thankfully went the other way and surged higher.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke a string of three up-weeks in a row, falling to 117.8 (from last weeks 118.7). In its dailies the week was very week throughout, and appeared as if still in an extension of the July retooling period (which in years past has exhibited an end mid-month) as automotive natgas scheduling has yet to turn up. California, interestingly, had a very strong looking week.

The paperboard-based Consumption Index conversely surged to 126.7 (from last weeks 123.4). In its dailies the measure was firm throughout and especially into the weekend.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its pattern of decelerating decline.

As noted in last Sundays economic assessment, this past week was an important week as consumption (at that time) was falling very close to production, risking a crossing which would have opened the door to a possibility of resumption of recession. We needed very badly to see a turn in the Consumption Index (and we got it).

We also got another close call on the economy (by way of the threatened curtailment of extended unemployment benefits) which was narrowly avoided Thursday when a bill finally cleared a congressional log-jam and was signed into law by the President. The move to cut unemployment threatened to push consumer spending below production, setting off a chain reaction of reduced spending... leading to production cuts... leading to layoffs... leading to reduced income... leading to reduced spending... and on and on and on.

On balance, the US economy looks to be more firmly underpinned than last week as its cushion (the ongoing excess of consumption over industrial production) got pumped by this weeks surge in (gas-flow) implied consumer spending.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy inched ahead last week (if pipeline scheduling is correct) as industrial production advanced slightly, while consumer spending meandered higher.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) gained for its third week in a row, advancing slightly to 118.7 (from last weeks 118.5). In its dailies the week was soft throughout, though not out of line with seasonal expectations (we are at the end of the traditional July retooling period).

The paperboard-based Consumption Index broke a string of three down-weeks in a row and decided to turn higher, gaining to 123.4 (from last weeks 122.8). In its dailies the measure started week but firmed late into the weekend.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued its pattern of decelerating decline.

On balance, the economic advance (from the perspective of gas flows) looks to be meekly continuing, though its cushion (the ongoing excess of consumption over industrial production) remains thin and well off of the healthy look it had in previous months.

Next week is an important one for watching, as we should be getting a spurt Monday-on from the exit of the Seasonal retooling period. We really need for this to hit, and especially to hit consumer spending (to pump up the cushion between consumption and industrial production).



-Robry825

Sunday Night Economic Assessment

The US Industrial economy advanced again last week (if pipeline scheduling is correct) as industrial production pushed higher, while consumer spending shook off its Pre-July-4th spurt and continued to soften.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) rose for the second week in a row, climbing to 118.5 (from last weeks 117.7). In its dailies the week started strong (especially given the July 4th holiday) but weakened as the week progressed into the seasonal July retooling period.

The paperboard-based Consumption Index slipped for its third week in a row, dropping to 122.8 (from last weeks 123.9). In its dailies the measure started very strong but quickly weakened as the week unfolded.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again declined, though the momentum within its decline continues to slow.

There are mixed signals behind July's strength... The weakness in implied consumer spending casts worry, yet the Food Sector (see "Part 8" post on the Investor Village CWEI Board) is bullishly continuing its decent from its April 2010 peak (The Food-Sector sampling has been a good contra-indicator throughout the recession... and is suggestive of continued improvements in consumer self-confidence).

On balance, the economic advance (from the perspective of gas flows) looks to be meekly continuing though its cushion (the ongoing excess of consumption over industrial production) is being eaten away.




-Robry825

Sunday Night Economic Assessment

Finally an up week for the US Industrial economy (if pipeline scheduling is correct), as industrial production turned and worked higher, while consumer spending (though declining for the week) showed signs of a rebound late.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke its string of four down weeks and advanced to 117.7 (from last weeks 117.4). In its dailies the week started modestly then strengthened as the week progressed.

The paperboard-based Consumption Index dipped for its second week in a row, dropping to 123.9 (from last weeks 124.1). In its dailies the measure started soft but firmed throughout the week, and looked very strong in this weekends preliminary scheduling (should that scheduling hold).

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) once again declined, though the momentum within its decline has definately slowed.

Last week was a very important week and was to be watched closely as it marked both the beginning of a new month and the beginning of a new quarter. Big changes within the gas flows tend to like to happen at such transitory points between months or quarters, as factories & retailers adjust to changing trends in orders and inventories in their scheduling of production and purchases for the upcoming new month or quarter.

Last week did not disappoint, as good things seemed to occur within the dailies of both the Consumption Index and Production Index. We will hope it is not some aberration related to the July 4th holiday weekend as the support underpinning the recovery (the indicated excess of consumption over production) has deteriorated sharply in recent weeks... threatening recovery.

With high levels of stress within the business & investing sector of US society (implied by the ongoing lag of production to consumption and the decline of the inventories measure) the burden of recovery continues to be laid fully (as always) on the consumer.



-Robry825