If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Thursday, October 11, 2012

Misc. recession like data

Even though some data has clearly looked like we are in a recession, there has been other data that does not.  I think many economists are somewhat going crazy trying to understand what is happening.  They are trying to compare the current situation to other time periods post WW2.  I think the FED policy of 0 interest rates means it is truly different this time.  There is no other time period post WW2 like this.  People are digging into things not normally talked about much trying to understand what is happening.  Here is a look at a couple of things I have never seen before.

The first is the Aruoba-Diebold-Scotti business conditions index (ADS)Here is the description.

The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high frequency. Its underlying (seasonally adjusted) economic indicators (weekly initial jobless claims; monthly payroll employment, industrial production, personal income less transfer payments, manufacturing and trade sales; and quarterly real GDP) blend high- and low-frequency information and stock and flow data. Both the ADS index and this web page are updated as data on the index's underlying components are released. 

The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times. A value of -3.0, for example, would indicate business conditions significantly worse than at any time in either the 1990-91 or the 2001 recession, during which the ADS index never dropped below -2.0.

Their web site is here.  http://www.philadelphiafed.org/research-and-data/real-time-center/business-conditions-index/

Here is an interesting long term look at this index.  The article is interesting if you want more details.

One thing interesting in this chart is the lack of strength in the 2000-2007 time period compared to other recession recoveries.  I have seen other economic data show that recovery was weaker then in past ones, but not to this extreme.  Is there a connection between the weakness in this index to how bad the great recession was?  If that was the case, we are in a similar situation now.  We spent this long below the zero line back in the 80s without going into recession so it is possible we could be doing that again.  It is also possible the economy is getting ready to crash again.  I guess we will have to wait and see which case it is.  

I wish there was more data for this next chart, but I have never seen a chart of this before.


I don't know if this signals a recession or not, but it clearly shows many more companies are getting worried about their ability to pay their dividends then there has been the last two years.  There must be something bothering them about the future.

Here is the latest Job Openings and Labor Turnover Survey (JOLTS)


I can't really say this is recession like.  It does show that we have stopped making new highs for quite a few months now.  It could still go either way from here, but a roll over is possible.

I think there are more charts that suggest we have started a recession then suggest we have not.  One thing I think is very clear.  Any economic shock will send us into a recession because the economy is so weak.  A sell off in the stock market could even do the trick.  We are on the hairy edge if not already there. 


No comments:


The information in this blog is provided for educational purposes only and is not to be construed as investment advice.