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Monday, July 15, 2013

A few interesting charts

This first chart makes me scratch my head a little.


Both exports to China and imports from China are falling off a cliff all of a sudden this year.  The year over year growth rate of imports has gone negative for the first time since the last recession.  Take a look at the longer term history.

The exports to China have gone negative once in a while over the last 28 years, but imports going negative is a rare event.  The only time they went this negative was during the depths of the last recession.  This may be saying something about weakness in the U.S. economy, but it clearly is not going to help an already struggling Chinese economy.  Time will tell if this is a blip or longer lasting weakness.  Obviously persistence would be bad for the global economy and could be a sign the U.S. is weakening.

This next chart is kind of interesting.


The black line is a weekly leading economic indicator (WLIr).  The blue line is the number of mortgage backed securities sold shifted forward 12 months.  I have to say there is a good bit of correlation there.  If that continues this chart suggests the economy could weaken for the next year.  I also find the WLIr interesting in the 2011 period.  When the ECRI was out saying a recession was immediate and irreversible this indicator never crossed into recession territory.  It also did a good job of warning of the last two recessions ahead of time.  This web site is subscription based, but I am guessing they will make their WLIr indicator chart public if it indicates a recession is coming to get notoriety.  If the economy is going to weaken over the next year that seems likely to happen with growth as slow as it is already.

This chart sums up nicely how QE is not helping the economy.


Do any of these charts look like the economy is picking up speed?  I think the economists that keep forecasting higher growth and keep getting disappointed will likely continue to be disappointed.  With global growth looking weak and seemingly getting weaker it is possible the U.S. economy slows down even more.  I am seeing some estimates of Q2 GDP in the .5 to 1% growth range.  Since the estimates tend to be high it is looking like a very weak quarter.  Remember people were talking about 3% growth in the first quarter that ended up 1.8%.  If the FED tapers QE I don't think it will be because of economic strength.  It will be the costs out weighing the benefits. 


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