The US Industrial economy moved forward again last week (if pipeline scheduling is correct), while consumer spending was flat with the Easter holiday week.
The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) rose for the fourth time in the last five weeks, to 122.1 (vs last weeks revised 121.8, and within a point of its all-time high of 123.0). In its dailies (raw, non-seasonally adjusted flows) the week was boringly flat throughout, though it benefitted in the 28-day model on seasonals.
The Consumption Index held steady in the latest week (breaking its string of 5 down-weeks in a row), at 134.5 (same as last weeks 134.5). In its dailies the week was very soft, though in line with the Easter-Holiday seasonals.
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 and made further gains last week. 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.