Sunday Night Economic Assessment

The US Industrial economy continued to forge ahead last week (if pipeline scheduling is correct) while consumer spending eased slightly in the wake of last Sundays landmark health-care congressional agreement.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) extended its recent push for the sixth week in a row, rising to 114.4 (from the prior weeks 113.7), and achieved its third record high in as many weeks. In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week started firm over the weekend, softened ever so slightly on the congressional deal for a couple days, then restrengthened dramatically late-week (in line with pre-Easter seasonals).

For the fourth week in a row the paperboard-based Consumption Index again bucked the trend and dropped to 126.2 (from the previous weeks 128.4), In its dailies the seek started soft over the weekend, firmed modestly for a couple days on the congressional deal, then softened at the close of the week.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued to fall, although at a slower pace than in recent weeks.

It seemed there was very little impact within the gas-flows to last Sundays announced health-care deal, with the overriding multi-week trends of rising production continuing to close the gap to slowly declining consumption. Perhaps Sundays announcement was expected. Perhaps it was not believed. Or perhaps it was ignored.

My own long-term view of the health-care bill is that it will (if it survives procedural and legal challenges) eventually prove to be a cash-flow transfer away from the consumer (health-insurance payer) to the investor/producer (doctors, lawyers, drug companies, etc) that will have to be accommodated somehow by either the Federal Reserve or further government stimulus... to prevent consumer-dollars from being diverted into health care (to cover 31+- million new US citizens) from elsewhere in the economy.

Chief of concerns continues to be the ongoing slow drop-off in the consumption index dailies, should it not reverse soon (Though the consumption index is a very volatile index... mirroring the emotional volatility of the consumer). Also of concern is the continuing lag in the Production vs Consumption Index (which continues to imply a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation).



-Robry825

Sunday Night Economic Assessment

The US Industrial economy advanced again last week (if pipeline scheduling is correct) and consumer spending eased ahead of congressional passage Sunday of a landmark (and highly controversial) Democratic health-care bill.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) forged ahead for the fifth week in a row, rising to 113.7 from the prior weeks 113.0, and scored its second record high in as many weeks. In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week was stronger throughout vs the prior week.

For the third week in a row, the paperboard-based Consumption Index went the other way and dropped to 128.4 from the previous weeks 134.8. In its dailies the week was extremely soft, continuing to 24 days the pronounced midweek easing of four weeks ago.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued to fall for the gazillianth week in a row.

Interesting enough, the dailies of the Consumption Index approached the dailies of the Production Index last week, suggesting at a neutralized economy that (at least for the time being) is at risk of stalling. The recent drop-off in the consumption index dailies is a big concern, should it not reverse soon (Though the consumption index is a very volatile index... mirroring the emotional volatility of the consumer). Also of concern is the continuing lag in the Production vs Consumption Index, which continues to imply a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.

As of tonight, we appear to have a health-care bill that will be making the news and echoing back and forth in the minds of both consumers and producers Monday. That bill is portrayed as pro-consumer by Democrats and anti-consumer by Republicans.

My own long-term view of the health-care bill is that it will (if it survives procedural challenges in congress and legal challenges in the courts) eventually prove to be a cash-flow transfer away from the consumer (health-insurance payer) to the investor/producer (doctors, lawyers, drug companies, etc) that will have to be accommodated somehow by either the Federal Reserve or further government stimulus... to prevent consumer-dollars from being diverted into health care (to cover 31+- million new US citizens) from elsewhere in the economy.

In the short-term however, the emotional-aspects of the health-care bill should outweigh its practical aspects (given this emotion-driven economy and emotional-driven markets). If consumers see it the Democrats way (pro-consumer) it might just give a quick boost to consumer confidence (and consumer spending). Of course if consumers see it the Republican way than the economy will be at risk, given the very recent softening implied by the gas-flows in consumer spending.

It will be real interesting to watch the gas-flows this week to see which way it actually goes.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy again gained ground last week (if pipeline scheduling is correct), while already-robust consumer spending continued to slowly ease.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) pushed ahead for the fourth week in a row, rising to 113.0 (from the prior weeks 112.4), taking out its Feb-1st high (112.5). In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week was softer throughout from the prior week.

The paperboard-based Consumption Index went the other way, dropping to 134.8 from the previous weeks 137.9 (second down-week in a row). In its dailies the week was very soft, continuing to 17 days the pronounced midweek easing of three weeks ago.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued its never-ending chant of down-down-down.

Overall, the deficit of the Production Index to the Consumption Index, and the deep and continuing decline of the Inventories Measure continue to underpin the economy. The sudden drop-off in the consumption index dailies is a big concern, should it not reverse soon (Though the consumption index is a very volatile index... mirroring the emotional volatility of the consumer). Also of concern is the continuing lag in the Production vs Consumption Index, which continues to imply a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.



-Robry825

Sunday Night Economic Assessment

The US Industrial economy advanced last week (if pipeline scheduling is correct), while robust consumer spending eased.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) gained for the third week in a row, rising to 112.4 from the prior weeks 111.7, and nearing its Feb-1st high (112.5). In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week was firm throughout.

Conversely, the paperboard-based Consumption Index broke its string of four gains in a row, dropping to 137.9 from the previous weeks 140.7. In its dailies the week was very soft, continuing to 10 days the pronounced midweek easing of two weeks ago.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again declined.

Overall, the deficit of the Production Index to the Consumption Index, and the deep and continuing decline of the Inventories Measure continue to underpin the economy. The sudden drop-off in the consumption index dailies is a big concern, should it not reverse soon (Though the consumption index is a very volatile index... mirroring the emotional volatility of the consumer). Also of concern is the continuing lag in the Production vs Consumption Index, which continues to imply a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.





-Robry825

Sunday Night Economic Assessment

The US Industrial economy pushed ahead last week (if pipeline scheduling is correct), while already-robust consumer spending inched higher.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) gained for the second week in a row, rising to 111.7 from the prior weeks 111.3. In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week started somewhat firm and strengthened through Friday.

The paperboard-based Consumption Index also gained (for its fourth week-in-a-row), rising to 140.7 from the previous weeks 140.4. In its dailies the week was volatile, starting strong but falling off sharply midweek.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued it's decline.

Overall, maintained firmness in consumer spending, the deficit of the Production Index to the Consumption Index, and the deep and continuing decline of the Inventories Measure... all continue to underpin the economy, though flows still exhibit a stagnant-look which is worrisome. The continuing lag in the Production vs Consumption Index continues to hint to a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.




-Robry825

Sunday Night Economic Assessment

The US Industrial economy strengthened last week (if pipeline scheduling is correct), consumer spending surged higher, and gas-flows surprised late-week and exhibited a very pronounced positive reaction to the Federal Reserves announced discount rate hike.

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) broke a string of two down weeks in a row, rising to 111.3 from the prior weeks 110.8. In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week started somewhat firm, softened mid week, then firmed on Friday.

The paperboard-based Consumption Index also rose (for its third week-in-a-row), rising to 140.4 from the previous weeks 132.5. In its dailies the week started soft early, firmed somewhat midweek, then took off on Friday.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) again continued it's never-ending story of down, down, down.

Overall, maintained firmness in consumer spending, the deficit of the Production Index to the Consumption Index, and the deep and continuing decline of the Inventories Measure... all continue to underpin the economy, though flows still exhibit a stagnant-look which is worrisome. The continuing lag in the Production vs Consumption Index continues to hint to a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.

A big surprise was the Federal Reserves Thursday-night discount rate hike. With unemployment hovering near 10% my own initial reaction was they had to be crazy, but in looking at the gas-flows I was wrong. It appeared as if the rate-hike challenged some of the economic bearishness, perhaps catching some off-guard on the notion that the Fed was doing a reversal and they were leaning the wrong way.

Now the gas-flows have long hinted (at least ever since I started studying their economic side) that recessions and recoveries are highly emotional beasts- rising and falling on heard-like behaviors of consumers, growing and receding on risk-appetites of industrial producers.

Question is (with unemployment near 10%) was the Fed's move a gambit on just that... a calculated, risky end-run around emotion? Or was the Fed simply being the Fed... starting the tightening process early on the perceived risks of over-expansion of money supply?

Another angle to the Fed's move is the gap between consumption and industrial production, and the void in the political leadership that seeks to represent and balance them. A lot of folks see the political climate in the US as outright hostile toward business and investment, and the gas flows strongly suggest that sector of society to be deeply entrenched and dug in against a liquidity-sapping onslaught... avoiding risk-taking activities such as new-hiring, expansion, etc. Could the Fed be looking at starting to counter imbalance by raising rates to redirect stimulus away from interest-payers (consumers) to interest-receivers (investors)?

Government would do well to address that void of political leadership. One good place to start would be the Presidents upcoming "Summit" on the dying health-care reform moves in congress (I know I keep harping on the health-care bill, but it has become the poster-child of political ineptness lately, and seeing friends and church-members in this wretched state of mine (Michigan) who are in miserable circumstances because `neither they nor their employers can afford $15,000 a year health insurance... it is high on my list).

I would love to see our President, in the midst of that health-care summit, take copies of those two house/senate bills, and rip them up in the presence of the congressional leadership! Tell them to start over, leave the power-brokers, lobbyists, and handlers out of negotiations... turn their backs on their mega-contributors, PAC's and special interests... turn their loyalties back to their voters... and produce a plan that is actually intelligent- containing the best ideas of both parties, and devoid of the self-seeking interests that have more-and-more come to dominate both parties.

Wouldn't it be nice to see a president who actually presides, for a change?




-Robry825

Sunday Night Economic Assessment

The US Industrial economy dipped again last week (if pipeline scheduling is correct), while brisk consumer spending perked up a bit in the midst of a storm-tossed week (weather-wise).

The Production Index (In terms of its 28-day moving average of gas-flow scheduling into US industrial facilities) edged lower vs the previous week (second down week-in-a-row), falling to 110.8 from the prior weeks 111.8. In its dailies (as per the "Part 7" industrial daily posts on the IV-CWEI site) the week was somewhat soft throughout.

On a sector-by-sector basis... Paperboard, LNG, Auto, and Metals (including the Copper & Steel subgroups) all started January strong... while refining, Minerals & Mining, and Lumber started a bit weak to December

The paperboard-based Consumption Index conversely rose for its second week-in-a-row, rising to 132.5 from the previous weeks 131.0. In its dailies the week was somewhat soft, though the index itself (in terms of its 28-day moving average) benefited slightly as a softer week dropped off the other end.

The Inventories measure (the cumulative weekly difference between the Production Index and the Consumption Index) continued it's seemingly never-ending decline, remaining well-below pre-recessionary levels.

The weather added to the general malaise of the week, as blizzard-conditions appeared to hamper some markets in the industrial northeast.

Overall, maintained firmness in consumer spending, the deficit of the Production Index to the Consumption Index, and the deep and continuing decline of the Inventories Measure... all continue to underpin the economy, though flows still exhibit a stagnant-look which is worrisome. The continuing lag in the Production vs Consumption Index continues to hint to a shallowness in the productive end of the US economy... which is a continuing drag on employment and job-creation.



-Robry825