Sunday Night Economic Assessment

The US Industrial economy advanced slightly last week (if pipeline scheduling is correct), while consumer spending continued to fade.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) moved higher in the latest week (third gain in four weeks) at 121.8 (vs last weeks revised 121.4). In its dailies (raw, non-seasonally adjusted flows) the week started soft, firmed midweek, then ended somewhat flat.

The Consumption Index eased again (5th down-week in a row), slipping to 134.5 (from last weeks 135.4). In its dailies the week was choppy but overall soft.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.

Food Group scheduling (see "Part 8" posts on the Investor Village site) is of great concern... the measure has been ominously strengthening as of late, rising to near levels not seen since the January/February 2009 recessionary-bottom. Such activity is strongly indicative of deep consumer mistrust in the economy (probably the reason for that 5-week decline in the consumption index). The Food group has a contra-relationship with consumption, and gains to the measure historically have tended to coincide with weakness in consumer spending.

The state of the recovery for the moment is very uncertain... almost akin to a gas leak in the basement that has yet to ignite (where you hope you can get the gas shut off and basement aired out before something produces a spark). Hopefully one of those sparks won't be the saber-rattling between Democrats and Republicans regarding budgeting and threatened government default, or the forthcoming end of QE2 (second round of quantitative easing).

(My preference would be to see to see at least a meek "QE-3"... perhaps 1/2 of QE-2 (though it will continue to pressure the dollar)... and to see the White House take default off the table by executive order.)

But for the moment... the recovery continues to appear supported by the lead in the Consumption Index over the Production Index, and continuing declines in the Inventories measure... assuming no sparks! Once past the Easter holiday we are really going to need to see consumer spending reaffirm itself to keep fundamentals in place.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy held steady last week (if pipeline scheduling is correct), while consumer spending continued to whittle away at it self.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) was unchanged in the latest week (breaking its string of two up-weeks in a row) at 121.4 (vs last weeks revised 121.4). In its dailies (raw, non-seasonally adjusted flows) the week was soft though in line with seasonals.

The Consumption Index again backtracked (fourth down-week in a row), dipping to 135.4 (from last weeks 141.9). In its dailies the week started somewhat soft-to-flat, then weakened midweek on.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.

For the moment, the recovery appears supported by the lead in the Consumption Index over the Production Index, and continuing declines in the Inventories measure.

However, the declines in the Consumption Index are worrisome, and once past the Easter holiday we will need to see consumer spending reaffirm itself to keep fundamentals in place.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy gained a little more ground last week (if pipeline scheduling is correct), while consumer spending continued to give back gains.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) gained for it's second week in a row, advancing 121.3 (vs last weeks revised 120.9). In its dailies (raw, non-seasonally adjusted flows) the week started off strongly, but softened as the week progressed..

The Consumption Index continued lower (third down-week in a row), dipping to 141.9 (from last weeks 145.5). In its dailies the week started somewhat firm, strengthened through Wednesday, then declined through to the weekend.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.

Overall, the recovery continues to appear strongly supported by elevated consumer-spending, an uncharacteristically-large lead in the Consumption Index over the Production Index, and continuing declines in the Inventories measure.

First-quarter results (due out starting in another weeks) look to be exceptionally strong, as large gaps (in the past) of consumption over production have generally been consistent (in the modeling) with large jumps in profitability. And that gap widened at the end of the quarter... probably to add to optimism as CEO's prepare their comments toward the 2nd quarter.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy turned and advanced last week (if pipeline scheduling is correct), consumer spending continued to ease, and the calender-page turned to start the second quarter.

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 in a row, gaining to slipped for it's fourth week in a row, easing to 120.9 (vs last weeks revised 120.4). In its dailies (raw, non-seasonally adjusted flows) the week started flat and finished strong. Seasonally-adjusted, there was a pronounced change precisely at quarters-end, with the first two days of April exceptionally strong.

The Consumption Index edged lower (second down-week in a row), dipping to 145.5 (from last weeks 148.1). In its dailies the week started soft but finished very strongly, paralleling the Production Index's quarters-end flip to positive..

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.

Overall, the recovery continues to appear strongly supported by elevated consumer-spending, an uncharacteristically-large lead in the Consumption Index over the Production Index, and continuing declines in the Inventories measure.

First-quarter results (due out starting in about 3 weeks) look to be exceptionally strong, as large gaps (in the past) of consumption over production have generally been consistent (in the modeling) with large jumps in profitability. And that gap widened at the end of the quarter... probably to add to optimism as CEO's prepare their comments toward the 2nd quarter.

(One has to wonder at that softening in the Production Index the last four weeks of the quarter... that looks to have ended in the gas-flows precisely at quarters-end. Makes one think industry is sandbagging... seeing a strong quarter coming and cutting production runs & inventory abnormally to cut expenses... to "juice" an anticipated strong quarter into a barn-burner.)



-Robry825