The US Industrial economy extended its recent slump again last week (if pipeline scheduling is correct), even as consumption continued to gain momentum.The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) retreated for its third week in a row, declining to 120.8 (vs last weeks 121.8), and is now at its lowest level since November 23rd (2011). In its raw dailies (above) the week was soft Sunday through Wednesday, firmed up (vs the prior week) Thursday & Friday, then softened slightly again on Saturday.
Conversely, the Consumption Index added to its recent surge (its fourth up-week in a row and second strait record high), climbing to 160.3 (from last weeks 157.6). In its dailies the measure started the week strong, softened Tuesday, then came back over the weekend.
The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index), continued its long-term decline. The chart (above) this week was redrawn to cut the sensitivity to changes within the inventories measure.
The rapidly growing gap between consumption and production is alarming, reflective to re-emerging bearishness within the business sector of the economy (even while consumers find their confidence). The rising gap is very conducive to a continuation and acceleration of healthy corporate profitability, although it also raises fears of renewed unemployment gains going forward, a further surge in imports, and an increased danger to acceleration in the core measures of inflation.
It may also signal that industry is starting to reassess the 2012 election returns as less likely to be bullish (White house not as likely to go Republican as thought before, therefore forget new hiring to go after new business... just in case), although investors (conservative, "Tea-Party" end of the Republican party) have not yet joined that bearishness in the realm of the equities markets.
I don't at all like the look of the industrial side stealing the initiative from the consumptive side of the economy (which it is trying to do right now). Should the investment side of the economy get spooked (and the stock market corrects), the economy looks dangerously vulnerable.
Food-group scheduling, while improving slightly with the consumptive surge, remains at strongly-bearish levels... implying little depth to the mile-wide width of that consumptive surge.
Still, I like that consumption surge (shallow as it is) and if the US government could get its act together and say the right things to that "other" half of the US economy (or if the industrial sector gets mesmerized by consumption before it collapses under its own weight) the economy could be built upon.
-Robry825
