My best wishes to all for this Thanksgiving Holiday weekend.
The economy still seems to be stumbling along, sometimes appearing to dance at recessions edge - and other times seems to be picking up steam. Even though this was a short week - and being late in the month - it did have three data points showing crappy to moderate economic expansion:
- rail (less coal and grains) continues to show the real economy is running in the 3% growth range;
- the Leading Economic Indicator from the Conference board continues to modestly expanding economic activity in the near term; and,
- the National Financial Conditions Index (ANFCI) rose (rising is not good) this week but remains well in economic expansion territory.
I do not know of any other data points released this week which are intuitive of the economy going forward - and historically do not give false warnings of economic downturns. Does this mean things are good going forward? - hell no! Going back to 1Q2008, the economic indicators were jumping around in real time - and it was not until mid 2008 that it was clear there was a recession.
All the above data points released this week historically have backward revision (except rail). It is rail that I keep my eyes on, but depending on the cause of a recession, rail can be one of the later indicators to tank. So nothing is certain.
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 (but at a nine week low this week). 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 and 18 month record high 439,000 (reported last week but revised up this week to 451,000) to 410,000 this week. Hurricane Sandy continues to be the villain. 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 383,750 (reported last week) to 396,250. 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. This is the highest 4 week average in over one year, and is up 1.0% year-over-year.Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2010 (blue line), 2011 (red line), 2012 (green line)
Bankruptcies this Week: Pipeline Data,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.