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Guest Post: Charts Of The Day: The Economic Recovery Story

Tyler Durden's picture




 

Via Lance Roberts of StreetTalk Live,

The market has been rallying over the last few weeks as the bulls have definitely taken charge in the New Year.  Most of the recent analysis has pointed to signs of an improving economy and stronger employment as the driving force behind the advance.  My view has clearly been that it has been the impact of the Fed's liquidity injections pushing asset prices higher. 

The charts of the day show two different aspects of the current economic environment from output to employment.

The first chart is my economic output composite index.  This index is comprised of the Chicago Fed National Activity Report, ISM Composite Index, several Fed Manufacturing Regional Surveys, Chicago PMI and the NFIB small business survey.  This is a very broad economic composite index covering the entire country.

STA-EOCI-Index-011813

While this index has ticked up slightly post the impact of Hurricane Sandy, as we said was likely to happen, the index remains mired at levels normally associated with slower economic growth.  The recent drags in consumer confidence and slower manufacturing reports in recent weeks continue to point towards a very sluggish economic environment currently.

The second chart of the day is the STA Employment Composite Index.  This indexed is comprised of the employment components of the major surveys utilized in the economic output index.  

STA-Employment-Index-011813

While employment numbers have been improving mildly over the last couple of months, mostly due to seasonal hires for the holiday shopping season, real full time employment has waned.  To see how this index relates to actual unemployment I have overlaid the index in the next chart with unemployment claims (inverted rhs).

STA-Employment-Index-011813-2

As you will see downturns in the employment index, not surprisingly, leads changes to unemployment claims.  Currently, this chart suggests that aside from seasonal adjustments and anomalies we should begin seeing an increase in claims in the months ahead.

There is one caveat here.  Last winter was the warmest winter on record in 65 years which skewed much of the seasonal data by allowing work to continue when normally workers would have been shut in due to inclement weather.  We are seeing the exact same anomalies occur this year as the winter is currently the warmest in the last 55 years combined, and when combined with lower energy prices, is giving a temporary boost to incomes.  The skews to seasonal adjustments will also boost economic reports to seem better than they actually are.   As we witnessed in 2012 - when the seasonal adjustments come back into alignment in the spring the drop off in reported economic activity will be fairly severe.

Is the recent rally being driven by expectations of a strong economy ahead or is it just the continue chase of a stimulus fueled asset prices?  That is up for you to decide.  For me the evidence seems pretty clear that the economy remains very weak.  Of course, if the economy was truly improving we would have no need for monthly injections of $85 billion...would we?

 

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Sat, 01/19/2013 - 18:37 | 3169602 PAWNMAN
PAWNMAN's picture

The underlying fundamentals of the economy are STRONG! Kudlow, Cramer and Liesman all told me so!

Sat, 01/19/2013 - 18:59 | 3169638 Enslavethechild...
EnslavethechildrenforBen's picture

Tract houses going up everywhere, TV commercials trying to ram a home mortgage down your throat. Yep, they're back...

Sat, 01/19/2013 - 19:06 | 3169651 CheapBastard
CheapBastard's picture

It's a Flippers Paradise still with zero down FHA loans. Speculators Rule!

Sat, 01/19/2013 - 20:34 | 3169721 SafelyGraze
SafelyGraze's picture

tylerz now moonlighting as commenters over on si:

http://fyre.it/IlY9uT (wait for it to auto-scroll to the reply by "pannich")

"reporting no longer has any credibility.

Read everything and then ask yourself: Who benefits from this story? How does this publisher benefit from advancing this story? Are any other credible sources (shrinking number at this point) reporting the same set of facts?

If they are all referencing each other (now a common tactic) No one is doing any "real" journalism.

It's all editorial fiction disguised as the truth."

Sat, 01/19/2013 - 20:37 | 3169778 AldousHuxley
AldousHuxley's picture

just put your 401k into lowest fee index fund and turn off CNBC.

otherwise get a governmint job with pension.

CNBC is for suckers to lose money against wall st. machines.

 

 

Sat, 01/19/2013 - 21:18 | 3169836 knukles
knukles's picture

anthropogenic global retail spending

Sun, 01/20/2013 - 03:41 | 3170265 TheMerryPrankster
TheMerryPrankster's picture

economic propaganda. you hear it when they suddenly all speak the same phrases "green shoots' "lackluster recovery" "unexpected economic numbers"

ambigous phrases meant to give you a distorted sense of reality without supplying any real information.

face it we are in a depression and it ain't getting any better as long as the financial system is broken.

Sun, 01/20/2013 - 11:51 | 3170542 Seer
Seer's picture

Deception by humans, really? </sarc>

Only two things you need to know:

1) Perpetual growth on a finite planet isn't possible;

2) The TRUE fundamentals are: Food, Shelter and Water.

Oh, and see my first sentence, as that's the bonus tip.

And, just for grins, rolling this out to see if it'll fly (critique separately): Talking-heads are ALL beggars.

Sat, 01/19/2013 - 21:36 | 3169863 q99x2
q99x2's picture

Can you buy one with income from student loans?

Sat, 01/19/2013 - 22:45 | 3169987 Snakeeyes
Snakeeyes's picture

The US is booming ... at a rate lower than the most poverty stricken country in the EU: Bulgaria!

Way to go Obama/Congress! We can't even beat Bulgaria and Romania anymore.

http://confoundedinterest.wordpress.com/2013/01/19/is-the-us-economy-rea...

Sun, 01/20/2013 - 13:43 | 3170657 Winston Churchill
Winston Churchill's picture

Never could stand Bulgaria,always like being in a monochrome country.

Everything seemed grey.

Now its getting more appealing every day.

Sat, 01/19/2013 - 18:40 | 3169609 vmromk
vmromk's picture

The Fed's policies have and are failing. They need to force the market higher to prove to the American sheep that their fucked up policies are "working".

 

BERNANKE IS A CRIMINAL AND BELONGS IN PRISON.

Sat, 01/19/2013 - 18:55 | 3169630 100pcDredge
100pcDredge's picture

A prison with... or without a big window + many, many bars? http://www.commonsenseevaluation.com/wp-content/uploads/2012/09/ben-bern...

Sun, 01/20/2013 - 00:51 | 3170151 legorf
legorf's picture

I disagree, not that pumping money is good but that's their only tool and that's what the Fed was created for in the first place.

 

Instead of giving blank checks to everybody, the gvt. could have spent this money on infrastructures such as bridges, roads, sewers, building shools, prisons, whatever. They would have created jobs doing so instead of all the bad things that happen when you are given "free money". This would also have kept human capital alive. Now it is depreciating since while you stay home waiting for a check, you don't work, hence the loss of human capital.

 

The government could also have broken the too big too fail banks up and forbid any prop trading. You want free money from the Fed? cool, now lend it. Else, you can't do shit with it cause the law forbids it.

They could have prosecuted all the bankers  (and now Geithner) for fraud and market manipulation, among other things. I can't believe almost nobody is in jail right now.

I'll stop here but overall, all those "fuck you bernanke" lead to nothing. We should all say: "fuck you government, you screwed us once again".

 

Now, I know I'm gonna get alot of down arrows for this, go ahead, why should I care? This is just a blog after all.

 

 

 

Sun, 01/20/2013 - 11:58 | 3170549 Seer
Seer's picture

[I didn't down-arrow you]

"Instead of giving blank checks to everybody, the gvt. could have spent this money on infrastructures such as bridges, roads, sewers, building shools, prisons, whatever. They would have created jobs doing so instead of all the bad things that happen when you are given "free money"."

Two problems with this:

1) It does nothing to alleviate the debt, it STILL adds to it (keep in mind that someone has to loan that money);

2) When those construction projects end THEN what will people do? (how is this different than the housing bubble?)

Further, though this cannot be quantified at this time, in the future much of this infrastructure is going to become worthless.  Piling on a bunch more maintenance intensive stuff to a population that is increasingly unable to afford to fund the maintenance on its own homes, well...

Sat, 01/19/2013 - 18:48 | 3169620 francis_sawyer
francis_sawyer's picture

Stealing the economic incentives from the sweat of the brow of hard working people hardly inspires economic confidence [or fosters economic recovery]...

Sat, 01/19/2013 - 18:49 | 3169621 VATICANT
VATICANT's picture

I took a huge Bernanke this morning right after my coffee and doughnuts 

Sat, 01/19/2013 - 18:49 | 3169622 Meatballs
Meatballs's picture

Death by injection, bitchez!

Sat, 01/19/2013 - 20:28 | 3169771 Borrow Owl
Borrow Owl's picture

@ Meatballs:

You, sir......are too kind.

http://www.youtube.com/watch?v=OEMcDeEJ850

 

Sat, 01/19/2013 - 22:24 | 3169947 Meatballs
Meatballs's picture

Far out man...

Sat, 01/19/2013 - 18:57 | 3169633 OutLookingIn
OutLookingIn's picture

Very good report.

 

Thank you.

When combined with the BDI and the AAR (American Association of Railroads) reports, the future of the economy looks quite grim. Especially the amount of devaluation in the globes fiat currencies as the currency wars heat up.

Sat, 01/19/2013 - 19:00 | 3169641 Enslavethechild...
EnslavethechildrenforBen's picture

Is this guy for real?

Sat, 01/19/2013 - 19:01 | 3169646 tooriskytoinvest
tooriskytoinvest's picture

Bill O'Reilly: Warning To Americans....America Projected To COLLAPSE!

http://investmentwatchblog.com/bill-oreilly-warning-to-americans-america-projected-to-collapse/

Sun, 01/20/2013 - 12:00 | 3170552 Seer
Seer's picture

This prick has the nerve to "warn" when he was cheering for unending wars (and spending)?  He produces NOTHING.

Another talking-head that should be lined up against the wall...

Sat, 01/19/2013 - 19:19 | 3169679 RopeADope
RopeADope's picture

Excellent work.

We just need a lot more of this truthtelling before the looters

 

lose control of the media and we can begin fixing the structural problems in this country.

 

Sat, 01/19/2013 - 19:57 | 3169746 max2205
max2205's picture

Looks like the market thinks the economy will turn up in 18 months.

Think 1982....

Sat, 01/19/2013 - 20:18 | 3169765 yogibear
yogibear's picture

Currency wars now.

A world war seems like a good enough diversion for the money changers.

Sat, 01/19/2013 - 21:37 | 3169864 q99x2
q99x2's picture

Global warming Bitchez.

Sun, 01/20/2013 - 02:21 | 3170217 mkhs
mkhs's picture

I wish it would hurry up.  It has been below average temps here.

Guess we are on track for the hottest year ever, again.

Sun, 01/20/2013 - 20:58 | 3171550 massbytes
massbytes's picture

I hate to feed the deniers...but it is climate chaos.  Abnormal everything.  Too hot some places, too cold others, too wet some places and too dry others.

Sun, 01/20/2013 - 11:06 | 3170500 AynRandFan
AynRandFan's picture

According to Gallup, economic confidence and consumer spending are way up.  Unfortunately, these numbers track the latest line of bullshit from Washington and don't reflect things like capex:

http://ycharts.com/indicators/philly_fed_future_capital_expenditures

Sun, 01/20/2013 - 12:07 | 3170559 Seer
Seer's picture

"if the economy was truly improving we would have no need for monthly injections of $85 billion...would we?"

And that my friends is the elephant in the room...

Sun, 01/20/2013 - 12:40 | 3170602 dunce
dunce's picture

Govt. policies has skewed the data so even honest reporting does not reflect the truth. Millions have dropped out of the work force and are not counted because they have given up on finding a job. Perhaps as many as a million have claimed disability and dropped out of the workforce. That is only two of factors and are history. The only reported growing economy is China and no one believes their figures, so wherethe future growth to come from?

Sun, 01/20/2013 - 16:36 | 3171081 Seer
Seer's picture

"Govt. policies has skewed the data so even honest reporting does not reflect the truth."

Well, no, it does report truth, the govt's truth.

Remember: truth is subjective.

Better:

"Govt. policies has skewed the data so even honest reporting does not reflect reality."

"The only reported growing economy is China and no one believes their figures, so wherethe future growth to come from?"

I think we need to skip past this one and go straight to asking: how can we operate WITHOUT growth (and or negative growth)?

Growth itself is a bubble, a Ponzi.

Mon, 01/21/2013 - 00:47 | 3172008 Orly
Orly's picture

Love me some Lance!

Do NOT follow this link or you will be banned from the site!