The US Industrial economy (if pipeline scheduling is correct) gained last week, while consumer spending was flat and the Federal Reserve entertained itself... saying it would change nothing, but seeking to reassure everyone with the promise that it would do so for the next two years.
The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) climbed for its second week in a row, rising to 120.4 (vs last weeks 119.3). In its dailies, the measure was mostly firm over the prior week.
The Consumption Index followed two weeks of gains by going flat, settling at 146.5 (from last weeks 146.5). In its dailies the measure was very soft.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued in its long-term decline.
Overall, gas-flows are mush and the economy appears to remain dead-in-the-water... neither advancing nor retreating... while consumption, steel-plant scheduling, and food-group scheduling all look ominously bearish.
Economically-speaking, I assume the economy to be barely hanging on by its fingernails, in spite of massive governmental deficit spending to prop it up.
Over the last 12 months, over $538 Billion left the US through the continuing trade deficits (see link below for data). Over the past 2 years... $995 Billion. Over the past 4 years... $2.2 Trillion. Over the past 8... $4.9 Trillion. Over the past 16... $6.4 Trillion. That is goods & services imbalances only... not including interest payment on debt, foreign aid, or all those dollars good-natured Americans send to help the needy in other countries, etc.
Check my math (please) at http://www.census.gov/foreign-trade/statistics/historical/exhibit_history.prn to see for yourself.
Those billions of dollars are gone... now in possession of foreign central banks around the world, who (viewing the US dollar as the worlds reserve currency) stockpile dollars the way they used to stockpile gold. The whole of the US monetary base (as of July 2011) was only $2.68 Billion (see http://www.federalreserve.gov/releases/h3/hist/h3hist1.txt), leaving the US deeply in debt (14.8 Trillion Gross External Debt, as of 03/31/11, as per http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/debta311.html)
With the Federal Reserve holding down the Monitary Base in the face of these monitary outflows, that cash has to be recycled back into the US economy by means of borrowing and deficit spending (by the US Government) to get that cash back into consumers hands. In the process all forms of debt accumulates... from government debt, to consumer debt, business debt, student debt, credit-card debt, etc... with Federal-Reserve-pushed ultra-low interest rates to entice people to borrow more to extend the madness.
One has to wonder at the success of the Federal Reserve at controlling inflation. Does the Federal Reserve control inflation by means of money supply... or does the Federal Reserve control inflation by means of the costs of foreign goods? To me, much of economic theory surrounding the Federal Reserve seems antiquated... Born of the 1930's "Great Depression" (and before)... before which the US was (I am told) a net exporter, computers & the internet (and derived analysis) did not exist, and public information was scarce.
At some point (sooner-or-later) Federal Reserve Thinking (and economic thinking in general) is going to change radically (or growing economic pressures fill force change by means of the markets). I very much hope that thought and reason will dominate the change, not the brutality of the markets.
In the meantime, the economy awaits the next QE3'ish announcement, and the return of sanity to Government.
-Robry825
