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Guest Post: The Economy In Pictures

Tyler Durden's picture




 

Submitted by Lance Roberts of Street Talk Live blog,

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.

 

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Fri, 06/14/2013 - 20:08 | 3659863 icanhasbailout
icanhasbailout's picture

I was expecting Dr. Seuss.

Sat, 06/15/2013 - 10:35 | 3660710 PD Quig
PD Quig's picture

Shit. I completely forgot we were in an 'expansion,' Mr. Roberts. If this is 'growth,' I can't wait to see what recession looks like the next time around.

Get your hollow points before DHS buys 'em all up.

Fri, 06/14/2013 - 20:10 | 3659868 NidStyles
NidStyles's picture

If they keep printing, they are damned; if they stop, they are damned.

Fri, 06/14/2013 - 20:19 | 3659891 lolmao500
lolmao500's picture

Russia to America : fark you bitchez!

http://rt.com/news/syria-chemical-weapons-moscow-692/

Moscow unconvinced by US evidence of Syrian chemical weapons use

Russia is not convinced by the evidence which the US provided alleging that the government of Syria’s President Bashar Assad used chemical weapons against rebel forces.

Russia’s Foreign Minister Sergey Lavrov has stressed that arming rebels is a step fraught with possible “escalation in the region” while allegations of the use of chemical weapons “are not supported by reliable evidence”.

The aide added that the news will not affect Russia’s position on delivering S-300 surface-to-air missiles to the Syrian government. Moscow has a years-long standing contract with Damascus to supply the advanced air defense system, but has not fulfilled it yet.

Fri, 06/14/2013 - 20:22 | 3659898 stinkhammer
stinkhammer's picture

shomer shabbis!

Fri, 06/14/2013 - 20:26 | 3659906 knukles
knukles's picture

But if you flip those charts upside down they look fine.
  -CNBS critique of presentation by big tittied boobella

Sat, 06/15/2013 - 07:23 | 3660550 Esso
Esso's picture

That was cute.

Fri, 06/14/2013 - 20:25 | 3659908 Dre4dwolf
Dre4dwolf's picture

Recessions happen because FIAT money encourages mal-investment.

IE: Money is drawn to sectors of the economy that don't produce anything of real world value, because central banks and banks loan money into existence inflating those areas.

When those areas crash down to reality, you have a recession that ripples into the rest of the economy.

 

If you do away with FIAT, you will do away with future recessions and depressions.

 

In B4 "we had depressions when on a gold standard"

This country never really had a gold standard, in the early 1800~1900s, banks were still printing more gold certificates than they had gold in their vaults.

So, all the crashes, like the one in 1920s etc... were because of banks fractionalizing the gold they had.

Instead of a Fractional Debt Based Reserve System.

In the 1912~1930s you had a fractional gold reserve system, which is the same thing as a FIAT system.

 

If you had a real gold/silver standard, and each gold/silver coin had an unique RFID crypto tag core embedded into it, and everytime you spent the gold it was accounted for, then you would have no inflation, no fractionalization.

and no BUSTS or DEPRESSIONS.

You would have slow steady growth forever as long as there is oil, food, and water and people on the planet.

 

But this gold standard comes at a price.

you must give up the prospects of artificial booms like "housing booms" or other "asset booms" because those are based on speculation with worthless FIAT currency.

 

To get rid of the cyclical depressions you must get rid of the booming casino.

 

Instead of people gambling for a living, they will have to work and produce VALUE.

 

Fri, 06/14/2013 - 21:15 | 3659977 Droel
Droel's picture

I think you got TD by a gambler, er I mean investor.

Fri, 06/14/2013 - 23:55 | 3660285 css1971
css1971's picture

Recessions are caused by debt. They are quite literally reductions in debt. Debt is recessing not growing.

 

So recessions are caused by banks.

Sat, 06/15/2013 - 00:45 | 3660337 NidStyles
NidStyles's picture

Recessions are caused by a shortage of capital, not debt. It doesn't matter whether it's created by excessive debt or just lack of capital.

 

The banks are under-capitalized and they will remain so as long as they are technically insolvent, which honestly is never going to happen.

 

Sat, 06/15/2013 - 05:55 | 3660499 Dre4dwolf
Dre4dwolf's picture

Recessions happen, because you can't just keep printing money exponentially to "grow" an asset class without it eventually being obviously over-priced, causing people to sell - off in mass.

 

Also

 

The more money you print, and loan into existence through fractionalization: (The process of banks counterfeiting money, loaning it out, collecting interest on money they never had to loan out but somehow did) is what fuels the INITIAL over-capitlization.

Its not that there isn't enough capital, its that they got too much capital, in the wrong place/business to BEGIN WITH, and when reality hit the fan they couldn't keep "growing" FOREVER because its impossible to "just grow expoenentially forever".

Companies need slow steady capital in-flows, not mega thrusts of cash that they don't know what to do with so they endup gambling.

 

When money is scarce, it holds value and protects the futures of savers that worked hard to earn and save.

When money is scarce, it pushes prices down, inflating living standards instead of banker wallets.

When money is scarce, prices stay more stable in the things that matter, like Food, Gasoline etc.

There just needs to be enough COIN to break-up and make change.

Candy bars will cost 5 cents, so you need to have coins.... pennies, dimes nickles etc...

FIAT is the same shit, with useless zero's attached to every transaction.... business will adjust and DO WELL in a deflationary environment so long as their COSTS deflate at the same rate together.

A gas station will lower its workers pay, because its selling gasoline at a lower price , but its also buying it at a cheaper price because the currency is strong.

Deflation is a good thing if your goal is to make everyone richer in living standards.

Deflation is a bad thing, if you are in-charge of the printing press and you are not allowed to print to make yourself richer.

 

 

The only thing more money printing will give us, is more crashes.

 

Sat, 06/15/2013 - 10:38 | 3660719 NidStyles
NidStyles's picture

Recessions occur without Fiat money.

Best you not assume that they only occur with it, as that is simply not accurate. They occur due to graft and misallocation of capital due to intervention.

Fri, 06/14/2013 - 20:34 | 3659927 Yen Cross
Fri, 06/14/2013 - 20:55 | 3659955 involuntarilybirthed
involuntarilybirthed's picture

Any "new normal" charts?   These are comparing old ways with changed ways.  Maybe these pieces (individual charts) are not of the same puzzle?  Maybe the new puzzle is not finished and therefore no pieces are yet identified that fit the "new normal puzzle"?  Maybe that's why we have so many different projections by "experts"?     Musing (and drinking)

Fri, 06/14/2013 - 21:01 | 3659958 q99x2
q99x2's picture

Feinstein, Graham, Obama and McCain are getting ready to start ethnic cleansing against Arabs again so my question would be how does the economy do when the UN mercinaries rip Arabs and their families to smitherines. Killing Arabs could be a real game changer.

Fri, 06/14/2013 - 21:13 | 3659972 ArmyofOne
ArmyofOne's picture

Green shoots in our collective ass cracks.   

 

Fri, 06/14/2013 - 23:51 | 3660280 css1971
css1971's picture

In the past, every recession has been accompanied by a reduction in interest rates. Not really possible now. How do they get debt growing again?

Sat, 06/15/2013 - 02:02 | 3660403 WAMO556
WAMO556's picture

Don't take this the wrong way, but the lines go up and down. Not much evidence that "the end is near"!

I see these lines that are posted EVERYDAY posted on here, but... There is little spatial relationship to where these lines are say where we are at!

My personal economy is just fine. There is food on my table and gas in my tank.

I have read plenty of folks who have said that the END IS NEAR! Really???

How about this: THERE IS NO FATE THAT I DONT MAKE..

I have not been given a spirit of fear and will not wish that death, destruction, debasement or any other nonsense come to me and mine.

I have been given eyes that see and ears that hear...I see what is going on and hear the devilry.

THE GREAT LIAR used to carry the light, but that light was taken from him and given to us. WE carry this light in each and every one of us and have one thing that even the most powerful have not - CHOICE. A choice to give that light back to providence from whence it came or to have it extinguished for all time by giving your light to THE GREAT DECEIVER.

Do not be afraid.... Guard yourself for true. Beat your plowshare into swords, carry the shield of truth and armor of light. Strengthen yourselves with fortitude.

Those who would proclaim themselves your masters, are not!

Sat, 06/15/2013 - 06:11 | 3660506 Tall Tom
Tall Tom's picture

You write that your personal economy is fine and there is food on your table and gas in your tank.

You write that there is no fate that you do not make.

 

Yeah I see. The entire World revolves around you. What arrogant, Narcissistic, self absorbed tripe.

 

You are seduced by the Great Liar and it is you who are deceived.

 

Look in the Mirror pal. I am certain you have one in every room so that you might admire yourself.

Sat, 06/15/2013 - 04:35 | 3660461 luna_man
luna_man's picture

 

 

Economic Recession!...Charts, just validate what my eyes are telling me everytime I go about my way...FOR SALE or LEASE signs everywhere!

american dream of the past

Sat, 06/15/2013 - 07:48 | 3660567 stiler
stiler's picture

"In my opinion the economy is far too weak to stand on its own two feet."

One of those would be employment. If you don't have employment, you ain't got nothin'.

 

To Wamo556: is this kind of like the thousand points of light of GHW Bush, aka NWO? No man is an island unto himself in the sense of fatalism. We should beat our plowshares into swords?  How 'bout beat our shares into gold?

Sat, 06/15/2013 - 09:13 | 3660638 AynRandFan
AynRandFan's picture

No worries.  BernanQE will give us our monthly allowance until he goes back to academia and writes endless papers justifying his actions.

Sat, 06/15/2013 - 09:18 | 3660643 blindman
blindman's picture

Our kind of rain - Alex Mc murray
http://www.youtube.com/watch?v=-3afF3Pc0L0

Sat, 06/15/2013 - 11:31 | 3660814 falak pema
falak pema's picture

A burning issue of CB risk as exposed by this paper in Naked Capitalism.

CB risks are not private sector risks! Changes the picture of CB risk taking and losses as argued by ECB in front of Karsruhe Court.

http://www.nakedcapitalism.com/2013/06/why-you-should-stop-worrying-abou...

Sat, 06/15/2013 - 11:48 | 3660840 Crash Overide
Crash Overide's picture

Does this effect the real economy or the fake one...?

 

Singapore disclosed today that it has censured 20 banks for attempting to rig its benchmark interest rates. Among the 20 are B of A, Citigroup (NYSE: C ) , and JPMorgan (NYSE: JPM ) . The banks allegedly bid to set the Singapore Interbank Offer Rate, rates for swap instruments, and currency benchmarks. The Monetary Authority has stated that it will begin taking steps to make rigging of benchmark rates a criminal offense and has ordered the banks to set aside as much as $9.6 billion as it continues its review.

Sun, 06/16/2013 - 01:13 | 3662070 starman
starman's picture

The survival of he fittest (game) has begun! Europe defeted, Japan cripled, next China! Whos next? Australia?

Currency war, bond war , interest rate war, Syrian war and the list goes on!

Great species, humans are. 

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