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The Economy In Pictures

  • Written by Syndicated Publisher No Comments Comments
    June 15, 2013

    I have been writing extensively about the data behind the headline media reports and discussing the importance of the underlying data trends relative to the broader macroeconomic perspectives.  However, it is sometimes helpful just to view the various economic indicators and draw your own conclusions outside of someone else’s opinion.

    With the economy now 48 months into an expansion, which is long by historical standards, the question for you to answer by looking at the charts below is:

    “Are we closer to an economic recession or a continued expansion?”

    How you answer that question should have a significant impact on your investment outlook as financial markets tend to lose roughly 30% on average during recessionary periods.  However, with margin debt at record levels, earnings deteriorating and junk bond yields near all-time lows, this is hardly a normal market environment within which we are currently invested.

    Therefore, I present a series of charts which view the overall economy from the same perspective utilizing an annualized rate of change.   In some cases, where the data is extremely volatile, I have used a 3-month average to expose the underlying data trend.   Any other special data adjustments are noted below.

    If you have any questions or comments you can email me or send me tweet:  @streettalklive


    Leading Economic Indicators

     

    LEI-Coincident-To-Lagging-061413

    LEI-GDP-061413

    Durable Goods

     

    Durabld-Goods-Orders-061413

    Investment

    Private-Investment-GDP-061413

    GDP-GDI-061413

    ISM Composite Index

    ISM-Composite-061413

    Employment & Industrial Production

    Employment-fulltime-joblessclaims-061413

     

    Employment-IndustrialProduction-061413

     

    Capacity-Utilization-061413

    Personal Income & Consumption

    Personal-Income-PCE-061413

     

    Retailsales-061413

    Economic Composite

    (Note: The Economic Composite is a weighted index of multiple economic survey and indicators – read more about this indicator)

    STA-EOCI-Index-061413

    If you are expecting economic recovery and a continuation of the bull market then economic data must begin to improve markedly in the months ahead.  If not, the drag of economic growth will ultimately continue to erode corporate earnings, profitability and weigh on the financial markets.

    For the Federal Reserve these charts do make it clear that despite continued monetary interventions are not healing the economy but simply keeping it afloat by dragging forward future consumption.  The problem is that it leaves a void in the future that must be filled.

    In my opinion the economy is far to weak to stand on its own two feet.  Therefore, while the Fed may  ease off on the current rate of bond purchases, likely not before September, it is highly unlikely that they will remove their “highly accommodative stance” anytime soon.

    Images: Flickr (licence attribution)

    About The Author

    Lance Roberts – Host of Streettalk Live

    lance robertsAfter having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; Lance has pretty much “been there and done that” at one point or another. His common sense approach has appealed to audiences for over a decade and continues to grow each and every week.

    Lance is also the Chief Editor of the X-Report, a weekly subscriber based-newsletter that is distributed nationwide. The newsletter covers economic, political and market topics as they relate to the management portfolios. A daily financial blog, audio and video’s also keep members informed of the day’s events and how it impacts your money.

    Lance’s investment strategies and knowledge have been featured on Fox 26, CNBC, Fox Business News and Fox News. He has been quoted by a litany of publications from the Wall Street Journal, Reuters, The Washington Post all the way to TheStreet.com as well as on several of the nation’s biggest financial blogs such as the Pragmatic Capitalist, Zero Hedge and Seeking Alpha.

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