The US Industrial economy forged ahead again last week (if pipeline scheduling is correct), while consumer spending vacillated .The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for the sixth time in the last seven weeks, to 123.4 (vs last weeks 122.6), breaking its previous February high of 123.0. In its dailies (raw, non-seasonally adjusted flows) the week started strongly but softened slightly vs the prior weeks strong ending.
The Consumption Index also gained a lot of ground last week (second up-week in a row), climbing to 148.5 (from last weeks revised 142.3). In its dailies the measure was strong through midweek, then trended down sharply into the weekend.
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) echoed the late-week softness in the consumption index... bearishly restrengthening throughout the week. The Food group has a contra-relationship with consumption, and gains to the measure historically have tended to coincide with weakness in consumer spending.
In looking at the economic-implied turns of the past couple weeks, it is starting to look like the sharp upward turn may prove to be something more on the brief, temporary side. The Food-Group continues to scream pessimism... pushing upwards again to levels not seen since the bottom of the recession, while the volatility the past couple of weeks in the consumption index dailies is suggestive of uncertainty and uneasiness on the part of consumers.
I have not checked the time line, but I wonder if all this coincides with the US's takeout of Osama Bin Laden. An emotional reaction to current events.
Concern remains on the upcoming end of the Fed's 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), as well as the continuing threat of government saber-rattling leading to ineptitude within the present split government.
-Robry825
