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Hurricane Sandy Hit In The Middle Of A Period Of Soft Data

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

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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)

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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:
NY Fed Historical Post: 1947 Banking Basics, Step by Step
Forexpros Weekly Wrap-Up 16 November 2012
Book Review: The Cartoon Introduction to Economics
What We Read Today 16 November 2012
ECRI's Weekly Leading Index Growth Index Slides Slightly in w/e 09 November 2012
6.9 Million Job Gains from Opening and Expanding Private Sector Establishments in 1Q2012
Industrial Production Bad in October 2012 - Blame It on Hurricane Sandy
Infographic of the Day: The Burden of Being Overweight
Diagnosis II for America: Cancer!
Breakouts: Are They Working For You?
Initial Claims' Storm Surge
Risks of Extraordinary Accommodation and Nontraditional Policies
Fed's Balance Sheet: 14 November 2012: Increases, But Still Trending Smaller
Rail Week Ending 10 November 2012: Improving After Hurricane Sandy
IMF's Curious Conclusion about Debt/GDP and Bond Yields
What We Read Today 15 November 2012
Average Hourly Earnings Fell 0.2% in October 2012
Disrupting Thanksgiving: Retailers Open Their Doors
November 2012 Philly Fed Survey Drops Deep Into Contraction
15 November 2012 Nonfinancial Leverage NFCI Shows No Recession Looming
10 November 2012 Unemployment Claims: Hurricane Sandy Hits
October 2012 CPI Rises to 2.2% Inflation Year-over-Year
November 2012 Empire State Survey Still Shows Sector Contracting
Infographic of the Day: How Business Does Employment Planning
Europe is in Recession
Consensus Stock Picks in Top Small-Cap Mutual Funds
Germany, France GDPs Positive in Q3 2912, Barely
Everything You Need to Know About Greek Austerity in One Graph
How Bank of America Execs Hid Losses, In Their Own Words
China's New Government is Conservative
How the Budget Control Act Is Effecting Military Pay
Accounting for the Slow Growth of the Economy After the Great Recession
The Declining Significance of Wine Tastings
October 2012 FOMC Meeting Minutes - The Story of Nothing
What Can We Learn About Ourselves from the Career of General Petreaus?
What We Read Today 14 November 2012
Business Inventories and Sales in September 2012 Have Recessionary Whiff
October 2012 Producer Price Index Inflation Remains Moderate
Retail Sales Look Good in October 2012
CoreLogic Sees a Stronger Home Rental Market in November 2012
Infographic of the Day: Wasting Your Day at Work
If the Deficit Disappeared, Where Would the Deficit Hawks Find Work?
Defined Maturity ETFs Instead of Bond Ladders
Where Now for China's Gold Market?
November Fed Actions Will Be the Largest Since Early 2011
Madoff Affair: Winding Down
Carbon Tax Will Effect the Poor More Than the Wealthy
Average Gasoline Price Falls $0.045 Week Ending 12 November 2012
What We Read Today 13 November 2012
Sustainable Living
October 2012 Small Business: Still Recessionary Optimism
Infographic of the Day: Some Universities Graduate More Entrepreneurs
Stratfor: Regrouping American Foreign Policy
Tesla Model S is Motor Trend Car of the Year
Three Ways to Invest in Silver Before Prices Take Off
US Dollar Index - Technical Analysis Update
The Long View
Guardian: Libor-like Manipulation of UK Gas Prices
Monster: UK Has Third Month of Online Recruiting Growth
Is South-South Economic Interaction Any Better for Poor Countries?
The Storm Before the Calm
China: Continuing Grip on Property Markets
What We Read Today 12 November 2012
Holiday Video: The Irish Financial Crisis Explained by Robots
Infographic of the Day: Did the Non-Voters Decide the Presidential Election?
Will U.S. Leaders Become Cliff Divers?
Jobless Recoveries and the Disappearance of Routine Occupations
Greece Struggles Against Default
Here's What President Obama's Win Means For Your Money
Japan: GDP Contraction
India's Inflation Crisis: What This Means for Monetary Policy
New, Old News Align: Risk Off Holds Sway
Insider Trading 09 November 2012: Kohl's Corp. Directors Biggest Seller this Week
Rail Data in October 2012 Shows Economy Is Softening
What Impacts Will Obamacare Have On Employment?
Hope, Change and Gold
Preliminary November 2012 Michigan Consumer Sentiment at Post Recession High
September 2012 Wholesale Sales & Inventories Shows Recessionary Signs
Slight Export and Import Price Inflation in October 2012

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