The US Industrial economy has turned into recession. That is the call as the US Industrial economy weakened suddenly and dramatically last week (if pipeline scheduling is correct), as the prior-weeks surge in strong consumer spending evaporated.
This is an early call and perhaps the recession can be aborted in its early stages (if the Federal Reserve acts Very quickly and the press can drop its negativism), but the seeds of a downward spiral have been planted. Otherwise, this will be my last weekly economics post until fundamentals swing back to positive.
The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) pulled away from its streak of three-record-highs in a row, tumbling to 120.4 (vs last weeks revised 124.7). In its dailies (raw, non-seasonally adjusted flows) the week was extremely soft.
The Consumption Index reversed its recent short-term surge, slumping to 139.8 (from last weeks 144.9). In its dailies the measure was very strong early through the 31st, Then ratcheted down sharply June 1st on..
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.
Steel-manufacturing scheduling dropped precipitously to start June (averaging .116 BCF/day, down from .146 in May and well below the recovery high of .206 in May of 2010). Steel-scheduling (though I haven't had a chance to roll it into these posts) is consistent with durable-goods orders, and its rapid-weakening had been a harbinger of the last recession as well.
Food-Group scheduling, which bearishly broke above previous-recession highs in April, is also strengthening. 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 Federal Reserve needs to announce QE3 (or some other similar measures) very quickly. And we very much need a turn away from the bearishness in the press.