Economic Outlook Updates

Economic Outlook Update: November 2012

In our economic analysis,

we look at the three economic components of a healthy economy: full employment, stable prices, and economic growth. We track three economic indicators to guage the health of the economy, more specifically, to guage whether the economy is getting better or getting worse:
• Unemployment numbers to monitor employment • The Consumer Price Index (CPI) – to monitor
prices / inflation
• Manufacturing Output – to track economic growth

Consumer Price Index

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Consumer prices are showing no signs of inflationary pressure. It appears the economic stimulus has not yet triggered rising prices. As a result, policy makers are able to continue on a track of accomodative monetary and fiscal policy at least in the near term. We will continue to monitor this indicator closely. The next reporting date is December 14, 2012.

Unemployment

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The general trend in the rate of unemployment continues to be an excruciatingly slow but steady decline since its peak three years ago in October, 2009. Expect policy makers to take credit for the improvement in the unemployment rate and continue on their path of accomodative fiscal and monetary policy, especially while there are no signs of inflation on the horizon. We will continue to track the unemployment numbers. The next reporting date is Dec. 7, 2012.

Manufacturing Output

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After 12 quarters of strong growth following the recession of 2008-09, the recovery in manufacturing output appears to have stalled here (temporarily, we hope) in the third quarter. We see the numbers are down -0.7% from the previous quarter. Again, the threat of a slowdown in manufacturing output would give cause for the fiscal and economic stimulus to continue in the near term. Fourth quarter preliminary numbers will not be released until February 7, 2013. We will have to wait until then to see if the drop was just a temporary set back or the beginning of a possible trend.

The three statistics seem to indicate policy makers will be keeping rates low for now. As the saying on Wall Street goes, “Don’t bet against the Fed.” Please stay posted for further Economic Updates as new data is released.

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Economic Outlook for August 2012

The three components of a healthy economy are full employment, stable prices, and economic growth. We track three economic indicators monthly to gauge the health of the economy, more specifically to gauge whether the economy is getting better or worse:

  • Unemployment numbers to track employment
  • The Consumer Price Index (cpi) to track prices/inflation
  • Manufacturing Output to track economic growth

Unemployment Statistics

The unemployment rate has actually begun to rise slightly since the Spring of this year despite continued massive fiscal and monetary stimulus. As a result we expect accomodative fiscal and monetary policy to continue in the near term. The next reporting date is September 7, 2012.

Inflation

Despite massive fiscal and monetary stimulus, consumer prices have been rising at a very modest rate. Inflation is a major concern to policy makers. Until signs of inflation begin to emerge, expect the stimulus to continue. The next reporting date is September 14, 2012.

Output

Manufacturing output has surprisingly rebounded quite strongly in the last two years, but appears to have stalled in the second quarter of this year. Preliminary numbers came in at 1.7%. Based on the data, we don't expect the current policy makers to change their accomodative fiscal and monetary policy stance any time soon.  For now we would expect the Federal Reserve to continue to hold rates down, at least in the near term, not wanting to derail the fragile recovery. We will continue to monitor these economic indicators closely. Second quarter revised numbers will be released September 5, 2012.

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Economic Outlook for July 2012

The three components of a healthy economy are full employment, stable prices, and economic growth. We track three economic indicators monthly to gage the health of the economy, more specifically to gage whether the economy is getting better or worse:

  • Unemployment numbers to track employment
  • The Consumer Price Index (cpi) to track prices/inflation
  • Manufacturing Output to track economic growth

Unemployment Statistics

The unemployment rate is stubbornly holding steady at 8.2% despite continued massive fiscal and monetary stimulus. As a result we expect accomodative fiscal and monetary to continue in the near term. The next reporting date is August 3, 2012.

Inflation

Despite massive fiscal and monetary stimulus, consumer prices have been rising at a very modest rate. Inflation is a major concern to policy makers. Until signs of inflation begin to emerge, expect the stimulus to continue. The next reporting date is August 15, 2012.

Output

Manufacturing output has surprisingly rebounded quite strongly in the last two years. First quarter 2012 revised output was up 10% from the prior year. Based on the data, it appears the massive fiscal and monetary stimulus are having the desired effect of improving output and employment without triggering inflation. That being said, the magnitude of the improvement leaves much to be desired, especially in the area of employment. For now we would expect the Federal Reserve to continue to hold rates down, at least in the near term, not wanting to derail the fragile recovery. We will continue to monitor these economic indicators closely. Second quarter preliminary numbers will be released August 6, 2012.

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