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07June2012 Summary Of Economic Analysis: Looking For A Recession

This was a funny week - it was the market which was volatile. Economic data was generally OK (either static or remaining in a down trend of growth). I keep thinking these down trends at some point will stabilize - but generally since the beginning of 2011 general economic indicators continue to become less good.

I am neither an economic bear or a bull - but my view of the economy likely is different than most readers as I filter out the good and bad news which I know does not correlate to the future. I continue to search for what is likely to happen next.

The Econintersect economic forecast for June 2012 shows continues to show moderate growth - although marginally weaker. There was degradation both in our government pulse point,and in some of our transport related pulse points. There are no recession flags showing in any of the indicators Econintersect follows.

ECRI has called a recession. Their data looks ahead at least 6 months and the bottom line for them is that a recession is a certainty. The size and depth is unknown but the recession start has been revised to hit around mid-year 2012.

The ECRI's WLI index value has been jumping around due to backward revision - and this week has dropped below zero. The index is indicating the economy six month from today will be slightly worse than it is today.

Initial unemployment claims decreased from 383,000 (reported last week) to 377,000 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 from 374,500 (reported last week) to 377,750. 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.

Data released this week which contained economically intuitive components (forward looking) were rail movements (which is still indicating a moderate expansion if one ignores coal), ISM Services business activities sub-index (which showed higher growth), and the import portion of Trade Balance (which was essentially unchanged). Econintersect does not see any other data release this week as particularly intuitive in understanding future economic conditions.

Weekly Economic Release Scorecard:

April 2012 Trade Balance is sending mixed signals
April 2012 Wholesale Sales improved over last month but still is not great
Public-Sector Unions: from Wisconsin to America …
What About $67 Oil?
Forget Whatever You Knew About Consumer Credit Since 2006
Germany: Follow China
The Key to Monitoring a Company's Vulnerability
Book Review: Thinking, Fast and Slow
Productivity 1Q2012 (Final): Decline Downwardly Revised
Re-purpose Institutional Momentum
Summary of Week Ending June 4, 2012
May 2012 ISM Services Index Improves, Above Expectations
Treasury Bubble to Burst, 4.5% 10-year in 2013
Manufacturing Public Opinion
Manufacturing April 2012 Data Is Not Pretty
May 2012 Employment Trends: Jobs Growth Should Not Deteriorate Further
It's June 4, Again …
The Week Ahead: Bernanke's Next Move
The Big Easing
Where is the Global Wine Industry Headed?
How to Invest for a Weak U.S. Economic Forecast
The College Conspiracy
Government and Consumer Drag on GDP
Trefis: Week in Review 01 June 2012
Euro in Danger - a Revisit with the Walters Critique

Bankruptcies this Week: Franklin Credit, Delta Petroleum

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