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Thursday, December 22, 2011

Well, Claims Are Good

Quite good. The four-week MA for initial claims is down to 380,250. The four-week MA for continuing claims (six-month) is down to 3,631,750.

Unfortunately, that is where the goodness stops. CFNAI was most disappointing for November, with the three month MA at -0.24, unchanged from October. The monthly index was -0.37, the worst since August, which was -0.38. At this level CFNAI-MA3 does not necessarily imply recession, but does imply weakness:

Definitely not a thing of joy and beauty.

Last, but not least, Q3 GDP was revised down again to 1.8% annualized. Next month we get the first glimpse on Q4. Economists have recently been shooting for the higher 2s; I think it will wind up being around 2.4%.

Over the last year (Q3 2010 to Q3 2011) US real GDP has increased by 192 billion dollars, or by 1.46%. That is a very, very weak performance. Over the previous 4 quarters Q3 2009 to Q3 2010), it had increased by 3.5%. This brings up the awkward implication that we are already in a recession:

If we are not, this time is different.

I still believe we probably now will hit the "skipping" recession thing, based on freight, which has always worked for me. But the other thing that has always worked for me is utilities, and those don't look so positive.

The YoY % change in GDP line for recession has a very long historical basis. Below 2% and you are through, done, burnt flesh, doomed to walk the recession plank.

Am I nuts for thinking that this time will be different? There is so much money in the banks and our lending/deposit ratios have finally gotten back into sane territory that I think it pushes us over the edge and allows us to oscillate between the negative and the positive GDP territory next year - which is what we have really been doing this year. Business inventories haven't been overbuilt so far, which is another positive.

Recession. The system can't take any shocks, and there will inevitably be at least one.
What;s it mean when only the lagging indicators (employment) look good? Uhoh.
Treading water while they devalue the dollar.
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