The US Industrial economy gained again last week (if pipeline scheduling is correct), consumer spending strongly reversed course and turned up, and the consumption index re-crossed the production index (on extremely strong dailies) into positive territory.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) climbed for its third week in a row, lifting to 119.8 (from last weeks 119.0). In its dailies (See the "Part 7" posts on the Investor Village site) the index waffled... softening early and staying soft through most of the week before firming up late.
The Consumption Index broke its string of six down-weeks in a row, gaining to 123.3 (from last weeks 116.9). In its dailies the measure had a very dramatic reversal... started the week strongly and maintaining its firmness through to the weeks close.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) was unchanged for its second week in a row (at 18.4). In its dailies it crossed into inventory declines again on Thursday, along with the Production/Consumption index crossing.
Last week was a very dramatic week (according to the gas-flows), as natural-gas-flows into paperboard facilities ignited... suggesting consumer-caution abated abruptly about a week ago. The gas-flow dailies suggest what could best be described as a very deep micro-recession... an approximately one-month plunge in consumer-spending... beginning November 3rd (in the dailies) slowly, climaxing November 28th, then ending by December 1st.
The consumption-pause coincided very nicely with the November elections (started the day after and built progressively downward thereafter), and seemed (from my viewpoint) very consistent with positive press about a likely Democratic/Republican "Deal" of a continuation of extended unemployment benefits and avoidance of planned/scheduled tax increases at the end of 2010.
My assumption is that consumers foresaw a drop to their incomes forthcoming with the turn of the elections and compensated... cutting and over-cutting spending "just in case".
I am very glad for the governmental compromise... I believe we likely averted something bad last week.
-Robry825
