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Low Economic Expectations And Hurricane Sandy

Ignoring the markets, last week's economic data was mixed. Saying that an upside surprise of 2% 3Q2012 GDP growth was good tells you how low our expectations are for the economy. But forgetting this horsecrap, the real bad news happening right now is Hurricane Sandy - which appears to about to make many peoples lives miserable.

Econintersect has published forecasts of damage to the Northeast USA coastal regions from storm surge.

The Econintersect economic forecast for October 2012 showed growth, but there was a serious degradation of the elements in the forecast. Overall, trend lines were broken to the downside. There is a diminishing whiff of recession in the hard data (plus a diminishing number of surveys are at recession levels), with container imports expanding for the first month in the last three.

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 ninth 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 388,000 (reported last week) to 369,000 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 insignificantly from 365,500 (reported last week) to 368,000. 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)

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).
  • The trend lines of the CFNAI index do have intuitive elements, but the elements are mixed even though the index improved in September.

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:

Advance Estimate 3Q2012 GDP is 2.0%
Infographic of the Day: $83.8 Billion Back-to-School Shopping Spree
Top-10 American Misconceptions about Mitt Romney
Initial Unemployment Claims Back to Trend
Trading More Than One Currency Pair
Japan: Stimulus and Radiation Problems
New Evidence: First Americans Likely Came from Europe, Not Asia
Rail Week Ending 20 October 2012: Still Good Improvement Ignoring Coal Shipments
Kansas City Fed: Manufacturing Activity Contracts in October 2012
September 2012 Pending Home Sales Continues to Predict Softening
CFNAI Super Index Improves in September 2012
20October2012 Unemployment Claims: Four Week Average Grows Slightly
Durable Goods New Orders Improves (but still soft) in September 2012
Infographic of the Day: Is Social Media Deciding this Election?
Stratfor: The Purpose of Presidential Debates
Waiting for A Document Security Windfall
James Bond, Buffett's Martian, and Europe's New Gold Standard
Trucking Tonnage Improves in September 2012
The Great Debate©: Did Fannie and Freddie Cause the Great Financial Crisis?
24 October 2012 FOMC Meeting Statement: No Changes, Holding Course
Confusing Models and Reality
Bank of America: Sued for Defrauding Government
Infographic of the Day: Driving on Winter Roads
September 2012 New Home Sales Strong Gains Continue
Cyber Wars Escalating
Nine Steps to Prosperity
Investing: Data Needs Context
China: PMI Improves Sharply but Still Below 50
The Fiscal Multiplier; A Real Shape Shifter
Richmond Fed Manufacturing Activity Contracts in October 2012
Philly Fed USA Coincident Index Gains Again in September 2012
Infographic of the Day: College Quality Can Impact Your Future
International Regulation Needed for Ag Swaps
Trading Range Resolution for EURUSD?
Conflicting Consumer Data
Prudential: Too Big to Fail?
Average Gasoline Price Falls A Big $0.13 Week Ending 22 October 2012
Insider Trading 19 October 2012: Dynavax Technologies Big Seller This Week
GE Issues Stern Warning Words to France
Vehicle Traffic Volumes Rise 1.2% in August 2012
Infographic of the Day: Obama vs Romney
An Exchange Rate Myth Puzzles the Financial Times
Irrationality and Economic Behavior
Where to Find Retirement Income
Japan Exports Plunge
Australia Economy Slowing Down, Government Raising Taxes, Cutting Spending
Four Key Lessons for The Coming Week
Sunday Economic Comedy: Economic Sex Is Not Good All the Time
Infographic of the Day: Is Silver the New Gold?
The Week Ahead: More Disappointing Outlooks?
What's This Presidential Election All About?
The Week That Was 20 October 2012
Michael Hudson Comments on the Financial Mafia
Trefis: Highlights Week Ending 19 October 2012
Is Resistance Futile? Thought Control
Swallowing Obama’s and Romney’s Magic Economic Pills
Stocks, Gold and Silver All Projected to Go Down

Bankruptcies this Week: Privately-held HMX

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