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Wednesday, August 29, 2012

Recent economic data

After some better then expected data earlier in the month the more recent data is not so hot.  Check out the durable goods chart.

In all the panic last fall and recession call by the ECRI, we can see that durable goods did not actually look all that bad.  However, we have a different situation this year.  Only one time as the 3 month MA gone negative in the last 20 years and we did not go into recession.  That was 1998 when there was panic in the air.  You might recall the Asian contagion, Russian default, and the Long Term Capital Management fiasco were all combining to cause a lot of fear.  Past history has had lots of panics and stock market crashes that affected the economic data.  Sometimes enough to cause a recession and sometimes not.  Since we don't have fear and panic at the moment, is it possible this is a more serious slow down then we have seen since 2009?

Here is a chart with some of the latest confidence data.

There has been quite a down turn in both these surveys in the last few months.  I suspect both presidential campaigns are aware of this data.  One side is cheering and the other side is scared to death.  The consumer confidence at the time of the election could impact the outcome. Here is an interesting article on consumer confidence and QE.  http://www.streettalklive.com/daily-x-change/1158-qe3-mechanism-is-broken.html

It is interesting that people grab on to the the retail sales and the employment data and are saying the economy is picking up steam.  I have seen several economists question the seasonal adjustments on both of those pieces of data and their arguments seem to be reasonable.  There appears to be a lot more data pointing to future weakness then strength at the moment.  I guess we will see what happens.


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