The trade situation is my reality check for economic conditions - especially imports. Imports are what will be on the shelves in the coming months, and are a good window to look at the road ahead.
Friday, the trade report was released (analysis here) and the economy's growth appears to be slow but steady:
The bottom line is that both exports and imports (inflation adjusted) now have a roughly flat rate of growth trend (rate of growth unchanging).
I like to look at inflation adjusted data - and as you can see in the graph below, there is just a slow and steady growth.Inflation Adjusted Year-over-Year Change Exports (blue line), Imports less Oil (black line), and Imports with Oil (red line)
The Econintersect economic forecast for January 2012 shows weak growth. The underlying dynamics have a whiff of improvement - as underlying trends seemed to have stabilized with some marginally improving. Most of the recession markers have evaporated, and one of our alternate methods to validate our forecast remains recessionary (but now only slightly so). All in all, still not a great forecast - but at least there is hope that conditions will be improving in the months to come.
ECRI believes the recession began in July 2012. ECRI first stated in September 2011 a recession was coming . The size and depth is unknown. The ECRI WLI growth index value has been weakly in positive territory for over three months. 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 from 372,000 (reported last week) to 371,000 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 - continued to fall from 360.000 (reported last week) to 365,750. 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)
Bankruptcies this Week: K-V Pharmaceutical
Data released this week which contained economically intuitive components (forward looking) were:
- Rail movements (where the economic intuitive components indicate a moderately expanding economy).
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:
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.