The US Industrial economy turned higher last week (if pipeline scheduling is correct), while consumer spending remained at very strong levels.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke its string of two down-weeks in a row (and took out its December-2010 high in the process), rising to 120.5 (from last weeks 120.1). In its dailies (See the "Part 7" posts on the Investor Village site) the index was on the soft side on seasonals (down about 1% from the prior week) though still very respectable given the passing of the Christmas holidays.
The Consumption Index broke its string of four consecutive weekly gains, slipping to 139.0 (from last weeks 141.8). In its dailies the measure was soft early (mostly on seasonals) then firmed late-week.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued to accelerate in is resumption of its long-term decline.
The Food Group (see "Part 8" posts on the Investor Village site) remains a concern, hovering near recession-highs. The Food group has a contra-relationship with consumption, and gains to the measure generally coincide with weakness in consumer spending.
Overall, the economy looks to be strongly underpinned by the resurgence of strong consumer spending, renewed and continuing strength in industrial production (and presumably hiring), declining inventories, and probably (on the investor / executive end of society) higher confidence born of the political-landscape changes of November.
Of course, the flip-side of that "political-landscape change" may be increased consumer-nervousness (hinted at by the food-group numbers). That "Consumer-nervousness" card is a trump card. If played into consumer-spending, it beats all else.
-Robry825
