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See The Trends Of The US Economy, Looking Towards 2020

Summary

Journalists focus on the exciting changes from month to month in the major economic statistics. That's mostly noise.

Instead watch the trends. These do not show the most recent action, but provide a more reliable basis for action.

Bottom line: the economy is slowing — and has been since early 2015.

The economy might (as it so often has) might be the major factor in the 2020 election.

A glowing crystal ball held in two hands

Job growth

Growth in nonfarm payrolls peaked in January 2015 at 2.3%. In January 2017 it was 1.4%. This is a coincident indicator.


Workers’ real wages

Growth of workers’ wages per hour — wages of production and non-supervisory workers (85% of all workers) minus the CPI — peaked in January 2015 at 2.3%. In December (the last month available) it was 0.3%. It was probably roughly the same in January (hourly wages were unchanged).

Commercial and Industrial Loans

Growth in Commercial and Industrial Loans by banks peaked in January 2015 at 13.5%. It was +1.1% in January. The largest drop was from January 11, 2018 to March 8. This is a lagging indicator.

University of Michigan Consumer Sentiment Index

Improvement in this measure of consumer sentiment peaked in January 2015 at +20%. In January it was –2%. It is a leading indicator.

Average weekly hours

Growth in average weekly hours of production and non-supervisory workers peaked in January – February 2015 at 1%. In January it was –0.5%.

Building permits

Growth in new permits for private housing units peaked in June 2015. This is a leading indicator.

The supply of money

M2 consists of M1 (cash and checking account) plus savings accounts, money market accounts, and small-denomination time deposits (less than $100,000). This is a leading indicator.

The OECD Leading Indicators look strong!

The OECD Composite Leading Indicator (CLI) for the US peaked in July – August 2014 at 101.0. It was 99.9 in November 2018. The CLI for the full OECD has followed the same path. Note: unlike the other graphs, this shows the absolute value of the CLI (not the YoY change).

Some leading indicators continue to rise

The big story: Durable goods.

Growth in new orders for durable goods are accelerating, after lagging throughout the expansion.

For More Information

Ideas! For shopping ideas, see my recommended books and films at Amazon.

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about economic growth, about secular stagnation, and especially these…

  1. Ignore the skeptics. America can still grow.
  2. Today’s mythbusting: the Fed is not suppressing interest rates.
  3. Did anyone predict the 2008 crash? Will anyone predict the next crash?
  4. WWI warns us about markets’ ability to see the future.
  5. See the mystery of US GDP, and understand ourselves better.
  6. Trump’s Tax Cuts Won’t Offset the Impending Slowdown.

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