While debate rages whether the overheating of the US economy will is transitory - and thus any burst in inflation can be ignored as it will quickly reverse - or the strength will be permanent (resulting in the well-known concerns that the Fed is now woefully behind the curve), Goldman today has updated its proprietary Goldman Sachs Analyst Index (GSAI) which provides a snapshot perspective on the US economy (and thus differs from the BEA's GDP measure which is an average look at output over a period of time), and finds that it just hit an all time high.
Here are the details:
The Goldman Sachs Analyst Index (GSAI) rose 9.4pt to an all-time high of 76.0 in February. The composition of the survey was strong, as the orders, shipments, and employment components all increased.
Other major business activity surveys were strong on net in February.
A majority of our sector analysts report that business activity in their industry is at or above normal levels. Most also indicated that last week's winter storm in the South and Midwest did not significantly affect their industry.
Most regional business activity surveys were very strong in February with Goldman's manufacturing (+0.4pt to 58.2) and non-manufacturing (+1.7pt to 54.2) survey trackers both rising.
The overall composition of the GSAI was also strong in February.
The sales and shipments component surged +19.0pt to an all-time high of 90.2. The orders component increased (+13.3pt to 76.2) by more than the inventories component (+3.2pt to 53.2), increasing the orders-less-inventories gap to +23.0. The exports component also increased (+1.1pt to 63.6).
The employment component rose to its highest level since December 2018 (+0.9pt to 66.6), and the wages component rose to its highest level since May 2018 (+6.8pt to 81.8).
The output prices component decreased (-4.0pt to 77.3), while the materials prices component increased (+1.4pt to 80.0).
A majority of Goldman's sector analysts report that business activity in their industry is at or above normal levels. Most also indicated that last week's winter storm in the South and Midwest did not significantly affect their industry.
A detailed table of the GSAI is shown below.
Of course, in a month when household personal incomes exploded thanks to the $900BN stimulus checks, coupled with the collapse in covid cases and hospitalizations, the resultant burst of economic strength is hardly a surprise.
A bigger question is what happens to the economy after the next Biden stimulus hits, and more importantly, what happens 3-6 months later when the economy hits a fiscal reversal and the current overheating goes into reverse.