The US Industrial economy again gained ground last week (if pipeline scheduling is correct), while the ongoing recent surge in consumer-spending inched even further ahead.
The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) advanced for its third week-in-a-row, rising to 116.5 (from last weeks 115.7). In its dailies (See the "Part 7" posts on the InvestorVillage site) the index started the week softened early (following a strong end to the prior week) but sharply firmed as the week progressed.
The paperboard-based Consumption Index reversed its prior-week dip, rising to 140.1 (from last weeks 139.9). In its dailies the measure vacillated but overall was firm through Friday.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) is continuing its pattern steep decline.
For the time being, the US industrial economy looks to remain strongly supported by an excess of consumption over production, a recent surge in consumption, and the ever-declining Inventories measure. And the recovery looks to remain a jobless recovery (given the large comparative weakness of the production index to the consumption index, and the implied inventory declines... and the negative sentiment all of that implies within the business and investment communities).
With Midterm US Elections now 15 days away, one has to be thinking now of voter fallout after the elections pass. Polls and press seem to be suggesting the possibility of strong Republican gains come November, and allude to I think favor a slim Republican recapture of the House of Representatives with strong Republican gains and a chance of Senate control as well. Consumer spending appears robust the past few weeks, and equities are surging.
Now I can understand the equities rally (Republicans tend to champion the business & investment side of US society) but the strong consumption part is a mystery. As Democrats tend to champion consumers, and the press is so dismal for Democrats, are consumers somewhat unaware (with a big dip in consumption coming in late November/December once the surprise is out)?
Or... are consumers aware... and discouraged with their overall champions? These two possibilities both would have big implications.
If consumers are unaware, an economic reversal (and a big equities reversal within presently-rising stock markets) may be coming. If consumers are aware and discouraged... a Republican election rout throughout government... and whatever emotional shock waves follow that.
But beyond all that... what of the 2008 elections? Consumption fell off big time in the weeks proceeding the Democratic sweep of November 2008.
Consumption way down before the 2008 Democratic sweep... Consumption way up before a prospective 2010 Republican sweep. Are consumers Republicans? Am I misjudging something here? Or is the ever-emotional consumer voting out of emotion rather than conviction (or worse, out of emotion rather than knowledge)? Or... is the dog simply following it's tail!
-Robry825
