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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
  • The Economy Does Not Seem To Keep Momemtum 0 comments
    Jun 21, 2014 8:28 AM

    All parts of the economy never seem to move at once in the same direction - this is normal. But when you have a weak economy, you are looking for signs of sustainable growth occurring. This week one of my favorite litmus tests for the economy decelerated.

    Export and Import container counts have now decelerated for two months in a row. However, the 3 month rolling average for both exports and imports are still accelerating. For the month:

    • the economically intuitive imports growth decelerated 6.6% month-over-month (last month decelerated 8.9%), is up 5.1% compared to May 2013, and up 6.3% year-to-date. There is a direct linkage between imports and USA economic activity - and growth in imports foretells real economic growth.
    • Export growth (which is an indicator of competitiveness and global economic growth) decelerated 6.1% month-over-month, is up 1.0% compared to May 2013, and is up 3.1% year-to-date.
    Unadjusted 3 Month Rolling Average for Container Counts Year-over-Year Change (comparing the 3 month average one year ago to the current 3 month average) - Ports of Los Angeles and Long Beach Combined - Imports (red line) and Exports (blue line)

    (click to enlarge)

    /images/z container4.PNG

    There is reasonable correlation between the container counts and the US Census trade data also being analyzed by Econintersect. But trade data lags several months after the more timely container counts.

    Unadjusted Year-over-Year Change in Container Counts - Ports of Los Angeles and Long Beach Combined - Imports (red line) and Exports (blue bars)

    (click to enlarge)

    /images/z container1.PNG

    Econintersect considers import and exports significant elements in determining economic health (please see caveats below). the takeaway from the graphs below is that imports still have not returned to pre-2007 recession levels, while exports did recover.

    Unadjusted Import Container Counts - Ports of Los Angeles and Long Beach Combined

    (click to enlarge)

    /images/z container2.PNG

    Unadjusted Export Container Counts - Ports of Los Angeles and Long Beach Combined

    (click to enlarge)

    /images/z container3.png

    The Ports of LA and Long Beach account for much (approximately 40%) of the container movement into and out of the United States - and these two ports report their data significantly earlier than other USA ports. Most of the manufactured goods move between countries in sea containers (except larger rolling items such as automobiles). This pulse point is an early indicator of the health of the economy.

    Transport and logistics is my thing. One month of data does not make a trend - but if next month comes in weak - the trend will be down again. Imports lead the USA economy by 3 or 4 months.

    We have an economy where one thing or another prevents traction.

    Other Economic News this Week:

    The Econintersect Economic Index for June 2014 is showing continued growth acceleration. Outside of our economic forecast - we are worried about the consumer's ability to expand its consumption as the ratio between income and expenditures are near all time highs. The GDP contraction for 1Q2014 is a paper contraction as GDP is determined by playing games with accounts. No serious element of the economy was in contraction (except government spending) which is already expanding in the 2Q2014.

    The ECRI WLI growth index value has been weakly in positive territory for many months - but now 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

    The market was expecting the weekly initial unemployment claims at 295,000 to 315,000 (consensus 313,000) vs the 312,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 315,500 (reported last week as 315,250) to 311,750.

    Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line), 2014 (orange line)

    (click to enlarge)

    Bankruptcies this Week: Privately-held Aramid Entertainment Fund Limited, Momentive Performance Materials (MPM), Revel AC, Kid Brands

    [click here to see all the economic news and analysis for this week]

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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