Is This What An Overheating Economy Looks Like?

by: TickerSense

There has been a lot of talk in the last few days that the unexpected strength in the economy will prompt the need for additional interest rate hikes by the FRB. Hearing comments like these cause us to wonder what information some people are looking at.

The accompanying chart is what we term an economic indicator A/D line, where we tally up all the reports that are stronger than expected and subtract the weaker than expected reports. For example, if on a given day two reports come out stronger than expected and one comes out weaker than expected, the net for the day is "+1".

Since the start of the year, this indicator has been rolling over to the downside causing us to wonder how one can conclude that the economy is surprising to the upside: