CMI: Consumer Contraction Continues to Soften

The CMI Daily Growth Index has now moved well off the historically low bottom that it reached roughly a month ago:

The above chart follows the course of our Daily Growth Index (actually just a 91-day moving average of the Weighted Composite Index, converted from the base 100 index to a +/- percentage) since that index first went into contraction (on January 15, 2010 — over 530 days ago). The chart also shows what the Daily Growth Index was doing during the consumer contraction that occurred within the formally defined “Great Recession” of 2008-2009. The progress of each event is recorded as a track of Daily Growth Index values commencing on the left margin on the date that the index first went into contraction.

Although the recent movement of the Daily Growth Index has been encouraging, the key is whether it will continue to rise or whether it will plateau in the -3% to -5% range — which based on the recent past may be more likely. If nothing else, this contraction has been protracted. And “bottom bouncing” aside, we would like to see some substantial and sustained year-over-year increases in on-line consumer demand for durable goods before we declare that the end of that contraction is nigh.

The good news is that our Weighted Composite Index momentarily broke into positive territory, briefly showing day-to-day expansion of consumer demand on a year-over-year basis:

The bad news is that it just as quickly receded to levels consistent with a longer term plateau of contraction in on-line consumer demand in excess of -3%. But that upward blip did manage to break a string of 413 consecutive days of day-to-day contraction in year-over-year demand. For the record, our Daily Growth Index (which includes the smoothing of a 91-day moving average) has now been steadily contracting for 531 days, or nearly 6 consecutive quarters.

The upward blip was caused in large part by a temporary strengthening of the year-over-year data in our Housing sector, which benefited from year-over-year comparisons to periods immediately following the expiration of new home buying incentives. We have now cycled past those favorable comparisons:

The important thing is to keep all of this in perspective, especially as we face the expiration of the Federal fiscal and monetary stimuli that have to some extent levitated the GDP even as “Main Street” consumers have been retrenching:

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