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Wednesday, January 23, 2013

Richmond FED and rail traffic charts

The Richmond FED manufacturing survey came in very negative and another big manufacturing miss to start the year.  Here is the latest charts of the index and the new orders.

Both the main index and the new orders took a big plunge.  This is three for three on the regional surveys coming in negative and missing expectations by a wide margin.  The charts look a lot different then they did during the bull market of the mid 2000s.  The last few years it has had some wild swings up and down.  I have no idea what caused the volatility or if it has any important meaning.  It just strikes me as odd. 

This table shows the weakness all across the report.

The number of employees and average workweek also declined.  I don't see anything good in this report.  We continue to see the year starting off poorly in the economic data.

This next chart is for rail traffic.


Rail traffic obviously drops off at the end of every year as the inventory build for the late year shopping season winds down.  However, this year's plunge is of a much bigger magnitude then usual.   We are back into 2009 levels.  For the last few years it bounced right back in the early part of the year and continued to new highs.  Will that pattern continue this year?  This is the first drop since 2009 that did not make a higher low.  Is that significant?  In 2008, the rail traffic did not rebound as the recession took hold. 

We are starting out the year with poor manufacturing and rail data.  There is definitely a risk that we are already in a recession.  I see a lot of people claiming the economy is getting stronger, but I don't see how you can make that claim unless you pick and choose what data you pay attention to.  I think the pervasive weakness in the manufacturing data is significant.  I can't say the odds of a recession are 100%, but I am pretty sure they are above 50%.  The manufacturing data  looks a lot like we are in a recession.  Will the drag from higher taxes finish the job and ensure we go into a recession this year? 


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