Written by Steven Hansen
At the end of every month, I take stock of the economic releases that month and try to quantify the affects on the median person in the USA. My forecasts over the past two years has been very weak growth.
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Overall the main street economy has strengthened over the last five months (relative to the previous 5 months) but that does not mean the improvement is noticeable on Main Street. The chart below is from our economic forecast which looks at elements which affect Main Street. You will note that our view is that the Main Street economy remains near the lower boundary of values seen since the end of the Great Recession.
One good way to measure the goods consumption end of the economy uses rail data – which is now doing better than it did last year – but remains below the levels seen in 2015.
Unfortunately a major contributor to rail movements is coal – which should be removed as coal consumption is not economically intuitive. The red line on the graph below removes coal and grain – and shows growth relative to the rolling averages one year ago.
Coal production has been growing recently and there are more coal rail movements. Currently the intuitive economic portions of rail remain below the levels of last year even though total rail movements are above the levels of one year ago.
Summing It Up
As discussed in last week’s post – GDP is not properly capturing the economy. If people are buying a higher percentage of used goods than they did in the last century – rail movements too would be understating the economy. But the real question is whether the USA will improve enough to be noticed?
Many of the non-monetary trend lines are improving (but are not relatively strong). I do not trust the monetary measures as they need to be inflation adjusted (and everyone sees a different inflation impact). Many others have found “religion” and are choosing a more modest lifestyle than was enjoyed in the last century.
What makes economic measurement difficult is that there is such a divergence of views of what is economically important. Measuring money flows (like GDP components) is not important to the average Joe. – with the majority asking a simple question – “will my life be getting better”. Is there any metric to measure quality of life?
Other Economic News this Week:
The Econintersect Economic Index for April 2017 improvement trend continues although the value remains in the territory of weak growth. The index remains below the median levels seen since the end of the Great Recession. Six-month employment growth forecast indicates modest improvement in the rate of growth.
Bankruptcies this Week from bankruptcydata.com: Ciber, Unilife
