Honestly - I simply ignore thinking about the BLS jobs report - my analysis here. It does not meet any litmus test of logic with mind boggling discrepancies between the establishment and household portions. Please folks, just look at the ADP report and call it good.
And ECRI this week again renewed their recession call - tying it to the poor jobs report (see below in this post). They have a recession call active now for a year - and I will celebrate tonight having a good single malt.
The Econintersect economic forecast for September 2012 shows moderate growth continuing. Overall, trend lines seem to be stable even with the fireworks in Europe, and poor data from China. An emotional component of my mind cannot help thinking this is the calm before the storm. But a logical component in the same cranium sees there are no recession flags showing in any of the indicators Econintersect follows which have been shown to be economically intuitive. There is no whiff of recession in the hard data - even though certain surveys are at recession levels.
ECRI stated in September 2011 a recession was coming . The size and depth is unknown. A positive result is this pronouncement has caused much debate in economic cyberspace. I will be glad when ECRI removes this warning (and hopefully not when the economy actually crosses into darkness). Yet, ECRI is still insisting a recession is here (from a 07Sep2012 post on their website):
Recession Evidence Obscured in Real Time
In recent weeks, several key coincident indicators have surprised the consensus to the upside, bolstering the belief that the U.S. economy has dodged recession. Even though the latest releases may show increases, earlier data have almost uniformly been revised downward, a reality largely ignored by many. For example, after revisions, there is a net gain of only 55,000 jobs in today's payroll jobs report, which is itself subject to further revisions.
Amid these cross currents, ECRI has completed an in-depth study of after-the-fact revisions to coincident indicators, revealing that they themselves display distinct patterns around business cycle turning points.
With preliminary data often obscuring real-time evidence of recession, our analysis underscores the importance of having an array of robust leading indexes for real-time monitoring of the economy.
The ECRI WLI growth index value improved this week enjoying its second week in positive territory. The index is indicating the economy six month from today will be slightly better than it is today.Current ECRI WLI Growth Index
Initial unemployment claims declined from 374,000 (reported last week) to 365,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here). The real gauge - the 4 week moving average - rose slightly from 370.250 (reported last week) to 371,250. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2010 (blue line), 2011 (red line), 2012 (green line)
Data released this week which contained economically intuitive components (forward looking) were
- Rail movements (where the economic intuitive components continue to be indicating a moderately expanding economy).
- Jobs Reports - Although good jobs reports historically have little correlation to the economy, bad ones foretell bad times. In this regard, this week's reports are not foretelling bad times (or good times either).
All other data released this week does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.Weekly Economic Release Scorecard:
ECRI's Weekly Leading Indicator Growth Is More Positive for w/e 31 August2012
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.