Please note: This is the latest in a series of articles, the last being “Charts Implying Economic Weakness – June 2020.”

U.S. Economic Indicators

Throughout this site there are many discussions of economic indicators. This post is the latest in a series of posts indicating U.S. economic weakness or a notably low growth rate.

The level and trend of economic growth are especially notable at this time. As seen in various measures and near-term projections, the U.S. economy is undergoing an outsized level of economic contraction. However, most people believe that this historic level of contraction will be temporary in nature and that an economic rebound will start in the third quarter of 2020.

As seen in the July 2020 Wall Street Journal Economic Forecast Survey, the consensus (average estimate) among various economists is for -5.64% GDP growth in 2020 and 4.70% GDP growth in 2021.

Charts Indicating U.S. Economic Weakness

Below are a small sampling of charts that depict weak growth or contraction, and a brief comment for each:

The Weekly Economic Index (WEI)

A recently-introduced indicator, the Weekly Economic Index, is an economic indicator that is a composite of 10 different weekly indicators. It is (purportedly) designed to provide a timely depiction of the U.S. economic trend. As seen below, it depicts the severity of the recent plunge in economic activity.

The Weekly Economic Index with a value of -6.83, updated as of July 9, 2020 (incorporating data through July 4):

source: Lewis, Daniel J., Mertens, Karel and Stock, James H., Weekly Economic Index (Lewis-Mertens-Stock) [WEI], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed July 11, 2020; Weekly Economic Index (Lewis-Mertens-Stock)

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Total Business: Inventories to Sales Ratio (ISRATIO)

Many indications of problematical business conditions have been featured on this site. One area that continues to indicate abnormal conditions is the historically (very) high levels of inventory, as seen in various measures, such as Total Business: Inventories to Sales Ratio, with the current value (through April 2020) of 1.67, last updated June 16, 2020:

Source: US. Bureau of the Census, Total Business: Inventories to Sales Ratio [ISRATIO], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed July 10, 2020: Total Business: Inventories to Sales Ratio

Value of Manufacturers’ New Orders for Consumer Goods Industries (ACOGNO)

A measure for consumer goods exhibiting a recent outsized weakening is the “Value of Manufacturers’ New Orders for Consumer Goods Industries” (ACOGNO). Shown below is this measure with last value of $161,493 million through May 2020 (last updated July 2, 2020):

Displayed below is this same ACOGNO measure on a “Percent Change From Year Ago” basis with value -24.0%, last updated July 2, 2020:

source: U.S. Census Bureau, Value of Manufacturers’ New Orders for Consumer Goods Industries [ACOGNO], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed July 10, 2020: Value of Manufacturers’ New Orders for Consumer Goods Industries

Industrial Production: Consumer Goods (IPCONGD)

The “Industrial Production: Consumer Goods” measure is currently exhibiting outsized contraction. Shown below is a long-term chart of this measure (displayed from 1939), with last value of 90.3382 through May 2020, last updated June 16, 2020:

Displayed below is this same IPCONGD measure on a “Percent Change From Year Ago” basis with value -14.0%:

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source: Board of Governors of the Federal Reserve System (US), Industrial Production: Consumer Goods [IPCONGD], retrieved from FRED, Federal Reserve Bank of St. Louis; accessed July 11, 2020: Industrial Production: Consumer Goods

Unemployment

I have written extensively concerning unemployment, as the current and future unemployment issue is of tremendous importance.

Of note, the current unemployment situation, as depicted by various statistics, is in many ways incomparable to past periods given various dynamics of the current situation and how these dynamics are being reflected and otherwise portrayed.

However, even given these issues, various metrics indicate that current unemployment is very high from a long-term historical perspective.

My analyses indicate that the underlying dynamics of the unemployment situation remain exceedingly worrisome, especially with regard to the future. These dynamics are numerous and complex, and greatly lack recognition and understanding, especially as how from an “all-things-considered” standpoint they will evolve in an economic and societal manner. Further discussion of the long-term U.S. employment situation can be seen on the “U.S. Employment Trends” page.

While there are many charts that can be shown, one that depicts a worrisome trend is the Employment-Population Ratio for those ages 25–54 years. [The Employment-Population Ratio is the Civilian Employed divided by the Civilian Noninstitutional Population]. Among disconcerting aspects of this measure is the recent plunge as well as the long-term (most notably the post-2000) trend, especially given this demographic segment.

The current value as of the July 2, 2020, update (reflecting data through the June employment report) is 73.5%:

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Data Source: U.S. Bureau of Labor Statistics, Employment Population Ratio: 25–54 years [LNS12300060], retrieved from FRED, Federal Reserve Bank of St. Louis, accessed July 11, 2020: Employment-Population Ratio – 25-54 Yrs.

Other Indicators

As mentioned previously, many other indicators discussed on this site indicate economic weakness or economic contraction, if not outright (gravely) problematical economic conditions.

The Special Note summarizes my overall thoughts about our economic situation

SPX at 3185.04 as this post is written

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.



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