Data Watch

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“Curve-edge” analysis can mislead

Leading to conclusions such as this one: From the news: U.S. industrial output rose sharply in April, a sign of underlying strength in the economy. And Industrial production—a measure of output at factories, mines and utilities—jumped 1.0% from a month earlier, the Federal Reserve said Tuesday. That was the largest gain in more than three years

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Retail Sales indicate weakening economy

You wouldn´t guess that from the news: Retail sales improved in April, suggesting stronger U.S. consumer spending this spring that should bolster broader economic growth as unemployment stays low. In reality, what we see is that after a boost in the first two years of the expansion, which only partly compensated for the deep and

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Falling inflation contradicts Fed

For example, Cleveland Fed Loretta Mester reflects the consensus opinion at the FOMC:  “I believe the conditions are in place for a sustained return over the next year or so to our symmetric goal of 2% inflation. Those conditions include the strength of the labor market and expectations for stronger economic growth.” However, inflation, even

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The recent Change in Labor Market Conditions Index has been revised up

Note to readers: The LMCI is derived from a dynamic factor model that extracts the primary common variation from 19, seasonally-adjusted, labor market indicators. The entire history of the LMCI may revise each month. Three sources contribute to such revisions. The first source is new data that were not available at the time of the

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The Employment Report misleads

From the News: The strong April jobs report means the Federal Reserve is even more likely to raise short-term interest rates at its next meeting, June 13-14, and keep lifting them gradually this year to keep the economy from overheating. Yes, the Fed seems eager to raise rates. I would wager they can´t be sure

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Yesterday, as well as seeing the growth in nominal personal income and expenditure weaker than expected in March and revised down to sub-5% YoY growth rates, the ISM Manufacturing PMI was very disappointing. The main PMI fell back considerably to 54.8, the levels of last December. The sometimes more important Employment sub-index also fell back

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PCE Inflation: What a difference one month makes.

One month ago: It was the strongest annual gain for the price measure since March 2012. That’s a healthy signal for the economy, showing excess capacity and high unemployment that long held inflation near historically low levels have finally abated. Firmer inflation could give Fed policy makers leeway to consider additional interest rate increases this year.

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The GDP Report: Pictures of a “Broken Economy”

Fed officials are loath to admit the economy is “broken”, so they “appeal” to “temporary factors”, things like the “temporary” effect of the drop in oil prices on inflation or, in the case of annualized RGDP growth, as they put in the minutes of the FOMC March 15 Meeting: Although GDP appeared to be expanding

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Durable Goods Orders “disappoint”

What makes Durable Goods Orders a “high profile” indicator is that it can foreshadow significant changes in economic activity sooner than other statistics. It is important to keep in mind, however, durable goods orders are highly volatile month-to-month due, in large measure, to sudden large changes in orders for defense goods and aircraft. In order

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Confidence “wanes”

The “hard-data” “soft-data” dissonance has been a fixture of the environment since the November election. It appears the “soft-data” is bowing-out to the “hard-data”. In other words, the “soft-data” is starting to reflect reality rather than some fantasyland where a “positive” Trump agenda would be quickly enacted. There is dissonance even among pairs of “soft-data”.

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