The US Industrial economy continued to backtrack last week (if pipeline scheduling is correct), while consumer spending turned and (at least for the moment) showing a few signs of remaining life.
The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) declined for its third week in a row, dropping to 122.5 (vs last weeks 123.7). In its dailies (raw, non-seasonally adjusted flows) the week was choppy, though (as last week) ended with some weekend strength.
The Consumption Index conversely headed higher (its second weekly gain in a row), rising to 145.7 (from last weeks 143.2). In its dailies the measure had a nice reversal, starting very soft but firming sharply Wednesday-on
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.
Again a little bit better last week in steel-group scheduling, which inched up its June '11 average up to .154 (though still off a bit from May (.153) and well off of the May '10 recovery high (.206). Food-group scheduling again bearishly gained and continues to hover at record heights for the measure.
The US economy retains its dead-in-the-water look, waiting for whatever change-in-momentum comes along first, whether for good or for bad.
Concern remains for the imminent end of the Federal Reserves QE2 (and lack of QE3 commitment), and for the ongoing budgeting & spending standoffs in government. Getting a budgeting compromise that reduces budget deficits without draining liquidity from consumers (and thus slowing already-stagnant consumer spending), and without draining liquidity from an already-defensive business community (further constraining capitol-formation and hiring) will be an impossible stunt. Unless they plug the import-liquidity drain in the bottom of the bathtub (or the Federal Reserve replace it), bailing water from one end of the tub to the other isn't going to achieve anything!