The final report on the US labor market scheduled for release this year is widely expected to be a wash. Several surveys advise that economists see a flat to slightly higher number for tomorrow’s update on weekly jobless claims through December 22. The Capital Spectator’s average econometric forecast anticipates a rise to 363,000 in new filings for unemployment benefits (seasonally adjusted) vs. the previously reported 361,000. If the forecast holds, jobless claims for December are on track to post an encouraging decline vs. the year-ago monthly total. That outlook implies that the labor market’s growth trend, modest though it is, will roll on.
A Merry & A Happy To All…
So now is come our joyful feast,
Let every man be jolly;
Each room with ivy leaves is dressed,
And every post with holly.
Though some churls at our mirth repine,
Round your foreheads garlands twine,
Drown sorrow in a cup of wine,
And let us all be merry.
—George Wither, “A Christmas Carol”
And To All A Good Night…
A frosty Christmas Eve
when the stars were shining
Fared I forth alone
where westward falls the hill,
And from many a village
in the water’d valley
Distant music reach’d me
peals of bells aringing:
The constellated sounds
ran sprinkling on earth’s floor
As the dark vault above
with stars was spangled o’er.
Then sped my thoughts to keep
that first Christmas of all
When the shepherds watching
by their folds ere the dawn
Heard music in the fields
and marveling could not tell
Whether it were angels
or the bright stars singing.
–Robert Bridges, “Noël: Christmas Eve 1913”
A New Business Cycle Indicator
Interpreting the endless stream of macro data points in search of context for analyzing the business cycle confuses and confounds more than a few investors, and even some economists. The Capital Spectator Trend Index (CS-ETI) is one attempt at a solution, or a least a partial solution. The regular updates in recent months on CS-ETI, in fact, have done a decent job of telling us how the economy is faring based on a broad read of the numbers. But there are several ways of interpreting the data, and CS-ETI is only one approach. How can we stress test its signals? One answer is reviewing the same data through a different statistical lens. Enter The Capital Spectator Economic Momentum Index (CS-EMI), a companion to CS-ETI.
Best of Book Bits 2012 (Part I)
It’s time once more for The Capital Spectator’s annual recap of the year’s books and your editor’s struggle to choose ten titles that, for one reason or another, stand out as worthy releases in 2012. Just ten? Well, it’s a round number, and it’s easier than 20. It’s also a thankless task for an unusually productive year in publishing on matter of macro and money. The sad part is that there’s hardly time to read more than a handful of the fascinating works released this year, of which only a few are noted below. Sigh. But if one was limited to only ten books from a year that’s nearly complete, what would they be? An unfair question, of course, and all the more so since the list below is drawn exclusively from the Book Bits feature that appears regularly in this space every Saturday morning. What follows is a select remix of items previously published here. But enough with the explaining. Here’s my tally of ten, starting with five today and the balance paid off a week hence. Happy reading!
Chicago Fed National Activity Index Pulls Back From The Brink
The Chicago Fed National Activity Index (CFNAI) posted a sharp rise in November, an indication that “economic activity increased” last month, the Chicago Federal Reserve reports. CFNAI’s three-month moving average moved higher as well, rising to -0.20 last month. That’s close to The Capital Spectator’s average econometric forecast for CFNAI of -0.26, which was published yesterday. A reading above -0.70 for CFNAI’s three-month average suggests that the economy is growing, which is also the message in today’s news on personal income and spending for November.
Three Aces For November: Income, Spending & Durable Goods Orders
Today’s November updates for personal income and spending, along with fresh data on durable goods orders, offer another round of encouraging news on the side of growth. For those who argue that the economy is collapsing, today’s numbers offer a sharp rebuke. In fact, similarly robust numbers for November have been published for other indicators in recent weeks. Earlier this month I projected that the broad profile of economic activity in November was on track to improve over October, and today’s updates all but seal the deal. The main point is that the risk of a recession, based on the numbers in hand, continues to look like a low-probability event in the here and now. That’s been the message all along, and it remains the case today.
Personal Income & Spending: November 2012 Preview
Today’s personal income and spending update for November is widely expected to post a rebound after October’s disappointing results. The Capital Spectator’s average econometric forecasts for these indicators echo the market’s outlook: +0.3% for income and +0.4% for spending in today’s release. The gains are in line with market’s expectations. The release for this data hits the street later today at 8:30am eastern via the Bureau of Economic Analysis.
Chicago Fed Nat’l Activity Index: November 2012 Preview
Is the U.S. economy sinking into a new recession? Or has another downturn already started? Tomorrow’s November update of the Chicago Fed National Activity Index (CFNAI) may provide a quantitative answer. In the October reading, CFNAI’s three-month moving average slipped to -0.56, the closest to the red line of -0.70 since the Great Recession ended. A fall below -0.70 would be considered a sign of an “increasing likelihood that a recession has begun,” according to the Chicago Fed. No one can dismiss the risk, but The Capital Spectator’s average econometric forecast anticipates a rebound that moves CFNAI’s 3-month average away from the brink: -0.26, or up from -0.56 in October.
Jobless Claims Rise, But Remain Near 2012 Lows
Jobless claims increased by 17,000 last week to a seasonally adjusted 361,000. The pop isn’t surprising, nor is it particularly worrisome at this point. As I noted earlier today, before the report’s release, my average econometric forecast called for a gain to 361,000. That’s exactly what we got—a freak incident of specificity, no doubt. In any case, the higher level of claims looks like noise within the range that’s prevailed for much of this year. As a result, today’s number, despite what you might hear otherwise, is mostly a yawn.