Monday, October 10, 2011

Monday Morning Economic Assessment

The US Industrial economy (if pipeline scheduling is correct) backed off one more notch last week, while consumer spending again pressed upward.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) had its seventh down-week in a row, backing off a notch to 116.4 (vs last weeks 116.5), and at its lowest point since October 16th, 2010. The measure put in a low of 116.2 on Thursday, before turning up Friday and Saturday. In its raw dailies (above), the measure was soft early before flattening late.

The Consumption Index gained for its third week-in-a-row, rising to 134.5 (from last weeks revised 129.1). In its raw dailies the measure started soft (to the previous week) but benefited from weaker numbers falling off the back of its 28-day moving average.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), is now re-accelerating to the downside as the spread between consumption to production has increased.

The quarters-beginning (spoken of in last weeks comments) failed to see a response in the Production Index to the recent rally in consumption, reaffirming the strange nature of the present "Micro-recession", as the Production Index thus far continues to resist (rather than follow) the consumer. We very much need to see both Fridays upturn in the Production Index (and the three-week-old rally in the Consumption Index) continue... to re-establish normalcy back into the economy.

Absent that, we will have what is best described as a "negative-polarity" recession (to borrow a phrase from electronics), or a "negative recession"... which would (if it continues to follow its patterns of the last few months) be a monster quite different from the beasts of the last recessions (and I assume the great depression), with theoretical surges in unemployment, corporate profitability, and inflation all at the same time... leading initially to massive transfers of wealth out of the lower & middle class and into the hands of the upper-class, then ultimately out of the upper-class and out of the country by way of panic-driven taxation (upper-class to consumers to foreign interests) where ownership of US industry follows the ownership of US money-supply out of the country (via export drains) and the US goes third-world.

Unfortunately, all this remains to look like a "Federal-Reserve-Problem" and not a "Government-Problem", and any attempt by government to "fix" the problem (aside from either reforming or replacing Federal Reserve policies) probably will serve only to "enable" Federal-Reserve oversight of the continual drain of wealth out of the US.