Monday, November 21, 2011

Monday Morning Economic Assessment

The US Industrial economy gained further ground last week (if pipeline scheduling is correct), as the consumption index gained as well.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) retook most of what it lost the prior week , rising to 120.1 (vs last weeks 119.9). In its raw dailies (above), the measure was very strong throughout the week.

The Consumption Index also put in a gain (for its second week in a row), advancing to to 140.6 (from last weeks 139.6). In its dailies the measure started the week firm but softened sharply Wednesday on.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline.

For the time being, the economy appears well-supported by the recent firmness in consumption, and it appears industry is still somewhat behind in catching up to the recent up-tick in consumption.

Corporate profitability looks to be solid so far for the 4th quarter, and the corporate-caution that is well-evidenced in the gas flows would suggest corporate profits are probably well-protected from economic softness that will likely (unless the Federal Reserve reverses its course) once past Christmas.

On the consumption side, the Federal Reserve still appears hawkish (allowing liquidity to drain from the US), and until that changes... the lid remains on the consumer and on the economy.

The OWS movement is right in that something out there is trying to crush the "little guy", they are just clueless as to who (or what) it is. Unfortunately, so are the vast majority of other folks as well.