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Weekly Economic Update: No Dynamics Other Than Muddle Along

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:
ECRI's Weekly Leading Index Growth Index Improves Marginally w/e 04 January 2013
November 2012 Trade Data Shows Economy Still Expanding
Export Price Deflation Continues in December 2012
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Bill Black: "Jack Lew Lacks Integrity."
Fed's Balance Sheet 09 January 2013: Balance Sheet Up $9.3 billion
China: Food Drives Inflation Higher
Equities "Aura" is Powerful And Dangerous
Japan Launches Stimulus Program
Rail Week Ending 05 January 2013: Terrible Start to 2013
Infographic of the Day: Mobile Wallets and Payments
US Double-Dip Death Watch Continues
What We Read Today 10 January 2013
November 2012 JOLTS Suggests Slowing Jobs Growth
November 2012 Wholesale Sales & Inventories Show Sluggish Economy
05 January 2013 Unemployment Claims Slightly Elevated
Nonfinancial Leverage NFCI Again Deteriorated Slightly w/e 04 January 2013
Infographic of the Day: Android Takes the Lead over iPhone
America: Republic vs. Democracy
The Holy Grail of Investing: Combining Value and Momentum
Money Supply Exploded After Fed Purchases Began To Settle
China: Strong Trade Growth for December and 2012
The Terrifying Danger of the Trillion Dollar Coin
What We Read Today 09 January 2013
Have the Democrats Just Been Br'er Rabbited?
Value vs. Tech (Part 2)
Taxing U.S. Multinational Corporations
Infographic of the Day: PhDs on Food Stamps
Have You Heard The One About Banks Not Lending?
Some Talk: The Biased Base of Basel
The Great DebateĀ©: 'Safe' Nuclear Power from Thorium?
Liars: Dark Money Groups in Politics
Indiana is Top State for Parent Power in Public Education
November 2012 Consumer Credit Growing At Pre-Recession Rates
Rothbard and Money
The Social Dialog is Far from Friendly
What We Read Today 08 January 2013
Value vs. Tech (Part I)
Infographic of the Day: Going Green over Time
December 2012 Small Business Optimism Improves, Remains Near Historic Lows
Stratfor: Crisis of the Middle Class and American Power
The Insanity of the Debt Ceiling Platinum Coin Debate
The Economic Significance of Avoiding the "Cliff"
Average Gasoline Price Rise $0.004 in Week Ending 07 January 2013
Economist Ridicules Congressman's Platinum Coin Bill
1.8 Million Jobs Gained in 2012
Monster Employment Index is No More
EURUSD 2013 Outlook: Key Bullish, Bearish Factors
Q4 2012 Global Risk Analysis from BBVA
What We Read Today 07 January 2013
December 2012 Employment Index: Significant Increase
Infographic of the Day: Doing the Right Thing with Nuts
Is it Time to Buy Gold Again?
Nine Lessons From The Greatest Trader Who Ever Lived
The Fiscal Cliff and Debt Ceiling Duo: What Will Happen to U S Jobs
Ending the Era of Ponzi Finance
Labor Unions, Thugs, And Storm Troopers
A Picture of 341,817,095 People
Insider Trading 04 January 2013: Insiders Sold 14 Times as Much Stock as they Purchased
Non Farm Payrolls Does Not Change the Economic Picture
What We Read Today 06 January 2013
Virtually All 2013 Outlooks Summarized
Infographic of the Day: Top 10 Fastest Production Cars
Sunday Economic Comedy: Coping With the Economy
The Week Ahead: Can Earnings Reach Expectations?
Platinum Coin Legality Discussions Abound
Short Sales Tax Exemption Renewed Through 2013
Central Banks Can Phase in Nominal GDP Targets without Losing the Inflation Anchor
Rail Traffic in December 2012 Projects a Slowly Growing Economy
What We Read Today 05 January 2013
Saturday Economic Comedy: The Fiscal Cliff
Infographic of the Day: Losing Your Tablet, Smartphone, Computer at the Airport
The Real Cliff of Concern - Loss of the Middle Class
The New Era of Oil Renaissance
Platinum Coin Seigniorage Goes Mainstream
Gold Scenarios
What We Read Today 04 January 2013
ECRI's Weekly Leading Index Growth Index Slips Marginally w/e 28 December 2012
Infographic of the Day: Natural Cold Remedy Effectiveness
Selected Recent Articles About Gold
Fed's Balance Sheet 03 January 2013: Balance Sheet Down $8.9 billion

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