Today's report on the economy, the Leading Indicator index, was touted as still further evidence of how "strong" our economy is.

The Leading Indicator report, considered a broad overview of the direction of our economy, was reported as increasing + 0.2%, slightly below the expected +0.3% predicted. A review of how today's total was calculated, however, reveals much cause for concern. Many important indexes declined. Many of the positives were only weakly positive. Manufacturers' new orders for non-defense capital goods declined 7% over the last month, for an annualized rate of decline of -84%. Building Permits declined 6.3% over the last month alone, and have and have declined 22% since April. Though Manufacturers' New Orders for Consumer Goods increased slightly (+0.4%), they are still 2% below August levels, and 4% below June's level. Even the big "gainers" are of dubious benefit. One big gainer was Stock Prices, which added +0.13% to the total index. Another gainer was the index of Consumer Expectations, which was +0.19. (Indicating media spin about the economy has been very successful.) The Average Workweek increased from 41.1 hours in August to 41.2 hours in October. This added +0.06 to the total. However, the Average Workweek was less than it was in August, July, and June, and the same as it was in May and April. Another very dubious positive.

The biggest gainer, however, was the increase in M2 money supply of 1.2% over the last month. This added a total of +0.43 points to the total +0.2 number. Had the money supply increase been 0, Leading Indicators would have shown a net change of -0.23%. Had the increase in money supply been the same as the previous month's +0.2%, the total Leading Indicator Index would have been -0.03%. Making the M2 number still more dubious is the fact that it is not an actual "recorded" statistic. It's an "imputed" statistic, meaning it is an estimate (quesstimate?) Meanwhile, the indicator considered most predictive of the health of the economy, the interest rate spread, was -0.52%.

Below is a copy of November 20th's Leading Indicator report from the Conference Board.



The Conference Board's Leading Indicator report can be found at:
http://www.conference-board.org/pdf_...ci/lei1106.pdf


Though this month's reading is touted as being "positive," a closer review indicates how spurious and artificial this increase is. Many of us cannot understand how an increase in the M2 money supply can be considered a positive. Stripping out the money supply increase alone would make Leading Indicators negative for October. Furthermore, is it really a "positive" for the money supply to increase at a 14.4% annualized rate in one month? Are we now considering inflation a positive indicator?

unlawflcombatnt

Economic Populist Forum

EconomicPopulistCommentary

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The economy needs balance between the "means of production" & "means of consumption."

Youre adjusting for inflation twice, and the second time your not even using a very good measure. Read the statistics the numbers are already in constant dollars.

M2 money supply is the most broad version of the money supply still being reported by the Fed. Its increases to not directly translate into inflation.

Translation: The economy is strong but it's not going to last. And last but not least it has nothing to do with the tax cuts.

Varus

Someone clue me in on M1 and M2. It has been 25 years since I took Macroeconomics.

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Don't startle him, Joe - it's almost full!

I contend that the Clinton economy had so much steam that it had the momentum to continue on through the last five years. Now it is running out of steam, and nothing the Bush administration has done, has contributed to its continuation. We are only now beginning to see the true effects of the Bush economic policies, as the money from the Clinton era runs out.

Foreclosures are on the rise, Briton is bracing for a real estate collapse. Could America be on the brink of another Republican depression? I think so.

Neo-Cons believe in the dog-eat-dog world mentality, the fittest shall survive doctrine of social engineering. There is nothing Christian or compassionate about conservative economics.

Thanks to conservative economic policies, America can't even produce safe cars. Our manufacturing is a shell of its former self, customer service jobs have moved overseas, we've gone from the largest exporter in the world to the largest importer in the world, from the largest importer of natural resources to the largest exporter of natural resources, our once American Corporations are being sold to the highest foreign bidders, and the sucking of America continues under conservative economic policies.

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Big Number of 2008
8,217,246
Obama's Margin of Victory

"Shake off all the fears of servile prejudices, under which weak minds are servilely crouched. Fix reason firmly in her seat, and call on her tribunal for every fact, every opinion. Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear."

-Thomas Jefferson

Of course you do.

Probably because so many people jumped into interest only loans and ARMs and bought homes they could not actually afford. Now, reality is setting in.

Wow. I didn't know the President set economic policy in the UK.

You mean economic depression only impacts a specific political party? Wow, maybe I need to switch.

Matt

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De duobus malis, minus est semper eligendum

M0: The total of all physical currency, plus accounts at the central bank which can be exchanged for physical currency.

M1: M0 + the amount in demand accounts ("checking" or "current" accounts).

M2: M1 + most savings accounts, money market accounts, and certificate of deposit accounts (CDs) of under $100,000.

M3: M2 + all other CDs, deposits of eurodollars and repurchase agreements.

http://en.wikipedia.org/wiki/Money_supply

reallY I guess the nasdaq bubble from 5000 to 1400 was our imagination....or that minority home ownership is at an all time high.....

and the last "lagging indocator" real wages increases is rising and is prpojected to continue....

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)

No, just that Republicans are always at the helm during a drpression.

__________________
Big Number of 2008
8,217,246
Obama's Margin of Victory

"Shake off all the fears of servile prejudices, under which weak minds are servilely crouched. Fix reason firmly in her seat, and call on her tribunal for every fact, every opinion. Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear."

-Thomas Jefferson

Yea, and 30,000,000 Americans have a hard time putting food on the table.

__________________
Big Number of 2008
8,217,246
Obama's Margin of Victory

"Shake off all the fears of servile prejudices, under which weak minds are servilely crouched. Fix reason firmly in her seat, and call on her tribunal for every fact, every opinion. Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear."

-Thomas Jefferson