Summary

• High frequency indicators can give us a nearly up-to-the-moment view of the economy.
• The metrics are divided into long leading, short leading, and coincident indicators.
• The recently strongly positive long-term forecast remains intact.
• The recently volatile short-term forecast rebounds from neutral to positive.
• Thus the forecast remains slowdown only vs. recession.

Purpose

I look at the high frequency weekly indicators because, while they can be very noisy, they provide a good nowcast of the economy and will telegraph the maintenance or change in the economy well before monthly or quarterly data is available. They are also an excellent way to "mark your beliefs to market." In general, I go in order of long leading indicators, then short leading indicators, then coincident indicators.

A Note on Methodology

Data is presented in a "just the facts, ma'am" format with a minimum of commentary so that bias is minimized.

Where relevant, I include 12-month highs and lows in the data in parentheses to the right. All data taken from St. Louis FRED unless otherwise linked.

A few items (e.g., Financial Conditions indexes, regional Fed indexes, stock prices, the yield curve) have their own metrics based on long-term studies of their behavior.

Where data is seasonally adjusted, generally it is scored positively if it is within the top 1/3 of that range, negative in the bottom 1/3, and neutral in between. Where it is not seasonally adjusted, and there are seasonal issues, waiting for the YoY change-to-change sign will lag the turning point. Thus I make use of a convention: data is scored neutral if it is less than 1/2 as positive/negative as at its 12-month extreme.

With long leading indicators, which by definition turn at least 12 months before a turning point in the economy as a whole, there is an additional rule: data is automatically negative if, during an expansion, it has not made a new peak in the past year, with the sole exception that it is scored neutral if it is moving in the right direction and is close to making a new high.

Recap of monthly reports

December data included blowout positive readings for both housing starts and permits, while industrial production declined. CPI and PPI came in positive as expected. Nominal retail sales were solidly positive, but adjusted for inflation were barely above zero.

In November, manufacturers and wholesalers sales were also positive, while inventories declined, a positive. In the JOLTS report, new openings declined sharply, while hires rose slightly (but were still negative YoY). Quits, however, improved, while layoffs declined (also positive).

Important Note: For all series where a graph is available, I have provided a link to where the relevant graph can be found.

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