It appears that Hurricane Sandy negatively impacted Initial Unemployment Claims, Industrial Production, and both the Philly Fed and Empire Surveys negatively. I use the word "appears" as the data was friggen soft leading into this reporting period anyway - and in my opinion, as close to a recession as we have been since the end of the Great Recession.
So admittedly, it is difficult to understand the underlying economy at this point. But wholesale trade data released in the previous week, sent shivers down my spine - and the only reason I am not screaming recession is that this series is inconsistent and unreliable. One month of bad data does not a recession make.
But here we now have Industrial Production now several months past a peak, initial unemployment claims trending up - even without the effect of Hurricane Sandy. Sandy pretty much made a sokey crystal ball opaque.
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 twelfth 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 jumped massively from 355,000 (reported last week) to 439,000 this week. Analysts have attributed the jump to Hurricane Sandy. 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 significantly from 370,500 (reported last week) to 383,750. 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: Vyteris, Privately-held Metex Mfg. Corporation (fka Kentile Floors), AMF Bowling Worldwide, Latitude Solutions, Overseas Shipholding Group (NYSE:OSG), Helicos BioSciences
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).
- Industrial Production
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.