econintersect .com

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

Originally posted on 22 August 2010

Hello world!

Posted by John Lounsbury or Steven Hansen

Welcome to Global Economic Intersection. is entering its Beta Testing Mode, and will focus on the economic effects on finance, investing, social interactions, and politics / public policy.  It will feature original economic commentary, debate, and economic analysis of economic indicators.

Original Economic Forecast published 08 September 2010

Econintersect USA Economic Outlook – Updated 08 September 2010

The USA has not returned to the economic levels of December 2007 when the Great Recession was deemed to have begun. Without getting bogged down with se tics using the words “recovery” or “depression“, it is clear that conditions for business and the consumer (Joe Sixpack) are still below (and well below) this December 2007 peak. With hat tip to David A. Rosenberg in his 07 September 2010  Breakfast with Dave, the levels of decline:

  • Wages & salaries are still down 3.7% from the prior peak;

  • Corporate profits are still down 20% from the peak;

  • Real GDP is still down 1.3% from the peak;

  • Industrial production is still down 7.2% from the peak;

  • Employment is still down 5.5% from the peak;

  • Retail sales are still down 4.5% from the peak;

  • Manufacturing orders are still down 22.1% from the peak;

  • Manufacturing shipments are still down 12.5% from the peak;

  • Exports are still down 9.2% from the peak;

  • Housing starts are still down 63.5% from the peak;

  • New home sales are still down 68.9% from the peak;

  • Existing home sales are still down 41.2% from the peak;

  • Non-residential construction is still down 35.7% from the peak.

To a significant degree, business and Joe Sixpack understand there has been little recovery but the question is where is the economy headed. Econintersect has developed a forward looking economic indicator which uses non-monetary economic pulse points that have a general – not specific correlation with Gross Domestic Product (GDP). These pulse points are geared to anticipate consumer and industrial income / spending for 30 to 60 days after the indicator is issued. Econintersect uses relative scales in evaluating the economy – zero means tomorrow will be the same as today. The economic flows below retail level are still building, although the rate of growth is slowing. The strength of the growth peaked in February 2010, and the economic speed has dropped off roughly 15% by August 2010. But the economy is stronger than most realize. A 15% change in economic speed is not significant – these kind of changes happen in an economy. And even a three month decline trend is not unusual. Our concern is that we never recovered fully from the Great Recession now approaching three years since the Great Recession began. This type of non-recovery is unprecedented in any “recovery” since WWII – and for that reason, Econintersect cautions of an uncertain future.

The Econintersect Economic Indicator

The EEI is built using non-monetary pulse points below retail sales / personal income receipt. The EEI would have called the Great Recession in August 2007 (NBER date December 2007) and the 2001 recession in February 2001 (versus NBER March 2001). The difference between the NBER and the EEI is that this index is determined within 25 days after period closing.  Most likely, the recession call would have been made in November or December 2007 - a full year before the NBER made the recession call.  This indicator has several parts - the historical data for the part which is used to call the recession is summarized on the graph below:

Data for several elements of the EEI were not available prior to 2000.

Calling the end of the recession is problematic. The data shows four shifts :

1) indications of economic improvement Mar 2009,

2) evidence of recovery dip September 2009 (sliding back into recession),

3) evidence of full blown recovery underway December 2009, and

4) peak recovery rate of growth Feb 2010.

Econintersect provisionally calls the end of the recession as December 2009 – based on when the economic underlying flows returned to relatively healthy growth. This “provisional” end is subject to revision as the economy's flows are still below pre-recession peaks, and belief that the stimulus may have masked the true economic trough.

At this point, Econintersect is now concerned that the underlying flows are losing strength before regaining pre-recession peaks.  Econintersect's analysis is not based on money flows which will most likely show the Great Recession ending in mid-2009.

Listing of all Wordpress posts

Listing by Author for Wordpress posts

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

Facebook Comment

Econintersect Wordpress Historical

advertisement - our newsletter sponsor

Biggest transfer of Wealth in US history has begun

A Maryland multimillionaire says the biggest legal transfer of wealth in American history has just gotten underway - here is the No. 1 step you must take

More details here...

[Click here to subscribe to our newsletter]

Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2020 Econintersect LLC - all rights reserved