My headline sounds like sour grapes from a Romney supporter - NOT.
What every person in the USA should understand is that the economy is as bad as it was a week ago - and the political machine responsible for changing it is the same as one week ago. I am not a dogma driven citizen - and I do not buy the political platforms of the left or right. What I wanted was economic solutions.
Most do not understand that every economy in the world is geared differently. That is why a strong centrally controlled economy can prosper equally as well as a laissez faire economy. Taxes, regulations and government support are balanced for each situation.
The government portion of the USA economy is not in balance for the type of economy that exists. Both political parties have a vision, but not the votes to make the economy function better (ok, both have a plan but neither is good). The country has demonstrated it is divided - and has voted to prevent the necessary change.
Whether the fall in the markets this past week were due to this realization - or because of a variety of other big issues - surely a game plan for redesigning American's fiscal policy is at least 2 years (1 more election cycle) away.
The Econintersect economic forecast for November 2012 showed barely moderate growth, but the underlying data used to forecast was very mixed. To use a technical term - the data was wacky, and as an analyst leaves me with an uncomfortable feeling. However, the good data was stronger than the bad data, and our alternate forecasting tools validated our forecast.
ECRI is still insisting a recession is here (a 07Sep2012 post on their website). ECRI first stated in September 2011 a recession was coming . The size and depth is unknown. The ECRI WLI growth index value is enjoying its eleventh 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 fell slightly - from 363,000 (reported last week) to 355,000 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 367,250 (reported last week) to 370,500. 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)
Bankruptcies this Week: Homer City Funding, Privately-held American Suzuki Motor, Monitor Company Group Limited Partnership
Data released this week which contained economically intuitive components (forward looking) were:
- Rail movements (where the economic intuitive components indicate a moderately slightly expanding economy).
- ISM Services business activities subindex weakened but remains in expansion territory. There is no clear trend.
- The imports portion of the trade balance was very bad (YoY decline). This is not a good indicator.
All other data released this week either 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:
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.