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Weekly Economic Summary: Good Data Except One Datapoint

In a week of generally good data, the wholesale sales data was troubling. Overall, sales collapsed. This data series continues to wobble, and my concern is data gathering or methodology being the problem - and not sales directly. Only time will tell, but it is strange that only one sector (which is sandwiched between manufacturing and retail) had a terrible month.

The Econintersect economic forecast for August 2012 shows continues to show moderate growth. Overall, trend lines seem to be stable even with the fireworks in Europe, and emotionally cannot help thinking this is the calm before the storm. There are no recession flags showing in any of the indicators Econintersect follows which have been shown to be economically intuitive. There is no whiff of recession in the hard data - even though certain surveys are at recession levels.

ECRI stated in September 2011 a recession was coming, and now says a recession is already underway. The size and depth is unknown. A positive result is this pronouncement has caused much debate in economic cyberspace.

The ECRI WLI growth index value remains in negative territory - but this week is unchanged. The index is indicating the economy six month from today will be slightly worse than it is today. As shown on the graph below, this is not the first time since the end of the Great Recession that the WLI has been in negative territory, however the improvement from the troughs has been growing less good.

Current ECRI WLI Growth Index

Initial unemployment claims declined from 365,000 (reported last week) to 361,000 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 - declined from 365,500 (reported last week) to 368,250. 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 continue to be indicating a moderately expanding economy.
  • Trade Balance which shows intuitive imports down - but the decline is entirely due to a dramatic month-over-month and year-over year decline in oil imports. Overall this data looks good.

All other data released this week 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:

Export and Import Prices Continue to Deflate in July 2012
Mitt Romney vs. Deng Xiaoping
What's Wrong with Small Caps?
China Exports: Economy Continues to Soften
Drill, Baby, Drill - Government Revenue Gains In Opening Up Drilling
Foreclosure Inventory Remains at 3% of All Active Mortgages
Rail Week Ending 04August2012: Good Week Shows Expansion
Wholesale Sales Data in June 2012 Is a Disaster
04August2012 Unemployment Claims Update: 4 Week Moving Average Marginally Grows
June 2012 Trade Data: The Real Story Is a Major Decline In Oil Imports
China Approaches Deflation
High-Yield Health Care Stocks in Europe
'Just Enough' Doesn't Cut it Any More
Economists Debate: Where is the Recession?
July Heat is a Record!
Looking at the 1%: Trends in The Distribution of Household Income
Fewer CEO Changes in July 2012
Causes of European Banks Inability to Access Dollars
Productivity 2Q2012 (Preliminary): Growth of Unit Labor Costs Remain Moderate
The Tangled Web of Income and Inequality
Summary of Articles Published for the Two Weeks Ending 06 August 2012
The Financial Economy
Consumer Credit Driven by Student Loans in June 2012
Global Warming Is Here, Getting Worse – What Should We Do?
June 2012 CoreLogic Home Price Index Now Up 2.5% Over Last Year
MetLife Penalized $3.2 million by Federal Reserve
June 2012 JOLTS Indicates Continuing Job Growth
Neoliberal versus Keynesian Views of Unemployment
Egregious Indian Protectionism Against Trade in Services
Reconciling Dow 20,000 and the Coming Economic Collapse
Increased Temperatures Damage Developing Economies
Average Gasoline Price Jumps $0.134 Week Ending 06August2012
Demand for Residential Mortages Continues to Increase in July 2012
July 2012 Employment Index Says Slow Jobs Growth In Coming Months
Fed Chairman Bernanke's Economic Measurement Speech
$14 Trillion Moves Through USA Banks Daily
Best of the Best Dividend Paying Stocks
Is the Dreaded Government Spending Doing its Part?
Palm Trees in Antarctica and a Subtropical North Pole
July 2012 Rail Movements: Economic Winds Changing?
Insider Trading 03 August 2012: Bill Gates Sells Another 10 Million Shares of Microsoft
The Week Ahead: Time to Assess the Evidence?
Super Disconnect for Income
Employment: No Surpises Except for Compensation
Trefis: Highlights Week Ending 03 August 2012
LPS Reports Home Prices Increased 0.9% In May 2012
Is The Consumer Beginning to Hunker Down?
Book Review: Endgame by John Mauldin and Jonathan Tepper
Strong Jobs and Service Data: U.S. Dollar Plummets
July 2012 ISM Services Index Strong Improvement, Sug

Bankruptcies this Week: Genta, Omega Navigation Enterprises, Legends Gaming, K-V Pharmaceutical, Tri-Valley Oil, AcuNetx (dba Intellinetx, Eyedynamics, Visiontex and Orthonetx), Conversion Services, Passionate Pet, Capitol Bancorp and Financial Commerce

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