The US Industrial economy (if pipeline scheduling is correct) added a little more ground last week, as consumer spending looked to not know which way to go.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) had its fourth up-week in a row, rising to 120.3 (vs last weeks 119.7). In its raw dailies (above), the measure was mostly flat and in line with the previous weeks numbers.
The Consumption Index, conversely, had its second down-week in a row, dropping to 136.6 (from last weeks 137.5). In its raw dailies the measure started soft to the previous week but firmed late over the weekend.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continues to re-accelerate downwards.
Internally, food-group scheduling and steel-manufacturing scheduling continues a slightly-improved look in spite of the recent stall in the consumption dailies. Still, stress remains evident in the underlying numbers, and the economy reminds one of a rock balancing on top of a fence on a windy day... where you just can't tell when and on which side it is going to fall off.
The numbers remain bullish to strong corporate profits regardless, and the fourth quarter (aside from the battered steel group) looks to be solid. Given the bearishness in the investment/business end of the US economic spectrum, that profitability appears well-protected.
The Federal Reserve (as expected) announced nothing again in its stage-appearance last week, and appears "out-of-the-game" (or maybe "out-to-lunch") permanently... leaving the support of the US economy solely to governmental deficit spending.
The question is... when does the next US-Government debt downgrade come... and what will be the result? In corporate bankruptcies, there is usually an unstoppable downward spiral where downgrades increase debt-service costs, which in turn weaken a companies cash-flows... generating further downgrades... making bankruptcy unavoidable.
At some point (unless the government gets its act together quickly) that happens to the US government as well. The only question is when.
When that happens, the massive imports into the US stop (and maybe reverse), striking the US standard of living, emptying store shelves, creating shortages, price-increase spirals, inflation, and inevitably political upheaval.
There is probably some time still left, and a chance to turn things around, but that time is getting very short.
A long time ago (late 1990's) when I first started posting, I remember posting a call on the old Yahoo boards for Oil to go above and hold above $25, and was derided by others who thought it unlikely. That was an easy call, predicated on an imminent end to north-sea production increases which had previously contained oil pricing. This likewise is an easy call.
It is a shame, when, for two centuries citizens have risked their lives and reputations to defend the US from without, that it would be allowed to rot from within.
-Robry825
