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Steven Hansen
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Steven Hansen is an international business and industrial consultant specializing in turning around troubled business units; consults to governments to optimize process flows; and provides economic indicator analysis based on unadjusted data and process limitations.
My company:
Econintersect LLC
My blog:
Global Economic Intersect
  • Is Economic Growth Accelerating? 3 comments
    Dec 21, 2013 9:40 PM

    Is the economy picking up steam? Every third quarter 2013 GDP releases has improved since the advance estimate. Normally, this is a sign that the growth is increasing in the later part of the quarter.

    To look at the progression, here is my table which freezes in time the growth of 3Q2013 GDP.

    (click to enlarge)

    Initially, the improvement in the second estimate was in inventory builds (this means it will be a negative force in the 4Q as inventories are depleted for the Holiday season). The third estimate revealed a strengthening consumer segment which should indicate strength going forward into 4Q.

    (click to enlarge)

    And the facts are that it does look like the consumer spending spree continued into 4Q2013. But it will not be enough to overcome the depletion of the inventories which is credit we took in 3Q for 4Q2103 sales.

    The Econintersect economic forecast for December 2013 again improved. What this forecast cannot see is the real effect of austerity and Obamacare - but it does see that business is betting the effects on the economy will be minimal.

    The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

    Current ECRI WLI Growth Index

    (click to enlarge)

    Initial unemployment claims went from 368,000 (reported last week) to 379,000 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. The real gauge - the 4 week moving average - degraded from 328.750 (reported last week) to 343,500. 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 - 2011 (red line), 2012 (green line), 2013 (blue line)

    (click to enlarge)

    Bankruptcies this Week: Privately-held Constar International Holdings

    Please click here to view all the economic and financial posts this week.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Comments (3)
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  • CautiousInvestor
    , contributor
    Comments (3090) | Send Message
    The economy may be strengthening or it may be simply a matter of noisy series coming together and giving the illusion, of stronger growth. While revisions in consumer spending are welcome, the fact remains that consumer spending contributed 1.36 points of growth of 4.1%. Over the three years, consumer spending on average has contributed 1.38 points to quarterly growth suggesting very little change. If inventory accumulation is removed, annualized growth is reduced to 2.43% which compares to annualized quarterly growth of 2.15% over the three years. With the likelihood of a stronger dollar, the trade balance may come under further strain leaving capex to determine our collective fate and drive the economy to higher ground.
    22 Dec 2013, 11:05 AM Reply Like
  • Steven Hansen
    , contributor
    Comments (2289) | Send Message
    Author’s reply » my "guess" is the kind of things we export are not particularly linked to subtle variations in the dollar.
    23 Dec 2013, 09:17 AM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13188) | Send Message
    "Initial unemployment claims went from 368,000 (reported last week) to 379,000 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."


    Yes, this is very strange given the hoopla about great employment gains being stated as a reason for the taper. AS I mentioned before, I think the taper is due to low US Treasury participation more than any real economic improvement. The Federal Reserve is losing control of the US Treasury auction and the long term trend is higher interest rates for US Treasuries extending all the way to the 5 year bond now.


    A good question is when the Federal reserve will end up ending zirp given they are currently loaning TBTF banks money at rates lower than the US government gets which means the US government is getting ripped off. They should make a bank and borrow say $7.5 trillion at no interest and save the taxpayer some money too.


    TBTF get the best deal in the house. Better than Uncle Sam who can only make it back suing them for their illegal activities which just means they need to borrow even more at zirp rates which according to the Federal Reserve is good for the economy.
    23 Dec 2013, 03:01 AM Reply Like
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