There’s no big economic news today.

So while we wait to see if initial jobless claims continue to worsen tomorrow, and what happens with real personal spending and income, as well as real business sales on Friday, let me point you to an updated detailed discussion of why the Fed’s rate hikes haven’t yet caused the economy to turn down (hint: gas prices plus pent-up demand in several crucial sectors).

Additionally, as I discuss in that article, the evidence is simply compelling that leading manufacturing indicators do not have the importance that they used to before the “China shock,” i.e., the offshoring of much of the previous US-based manufacturing to China that began almost 25 years ago.

This means that consumption, which is about 70% of the entire economy, has assumed greater importance. Lance Roberts (whose economic analysis I usually find facile and ideologically motivated) nevertheless deserves credit for positing that an economically weighted average of the ISM manufacturing and non-manufacturing index is now more useful. And here it is:

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On that same subject, I’ve been watching the weekly update of Redbook’s consumer spending measure like a hawk since at least the beginning of this year, because it has strongly suggested that consumer spending on goods peaked probably late last year. Because it is a nominal index, it doesn’t account for inflation, but nevertheless, I’ve been waiting for it to cross the zero threshold. It’s been like watching paint dry, and it continues to tantalize:

(Click on image to enlarge)

The last 4 weeks have all seen YoY readings of less than 1%. The average is presently +0.6%.

We’ll get a much more complete picture, updated through May, on Friday.

More By This Author:

Higher New Home Sales, With Lower Prices In May: Good!
House Prices Increase For Third Straight Month, But Case Shiller Index Now Negative YoY
Back To The Basics: How Do Initial Claims, Total Hours Worked, Aggregate Real Payrolls, And Job Growth Relate?