Econintersect has been playing with an economic index based on the world as seen by Joe Sixpack. For lack of a final name, we have used a development tag of “Joe’s Index” which is based on Joe’s real income and the change in his home value, which, to various degrees, Joe sees as income (and/or wealth) gain or loss. Joe’s Index is indicating Joe Sixpack is coming back to the consumption trough. [Let us explain why we have come to that conclusion.] Words: 380
So say John Lounsbury and Steven Hansen (www.econintersect.com) in edited excerpts from their co-authored original article*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
They go on to present, in part, the following:
The New York Times this week posted Consumers Unlikely to Rekindle the Recovery and to “prove” their point they presented three nasty but, unfortunately, correct graphics.
This NYT post presented reasons for optimism as well, and we believe fairly presented the current situation. Forward looks at the economy are educated guesses – there are no proven formulas.
If you look closely at the first graphic (for disposable income), you will notice a slight uptick at the end. The downward trend in disposable income has been broken for at least one month – both on a real and per capita basis.
Econintersect has been playing with an economic index based on the world as seen by Joe Sixpack. For lack of a final name, we have used a development tag of “Joe’s Index”. Joe’s Index is indicating Joe Sixpack is coming back to the consumption trough.
We believe the Joe’s Index leads GDP in both trend and exaggerated intensity. More time will test this belief. Joe’s Index is based on Joe’s real income and the change in his home value, which, to various degrees, Joe sees as income (and/or wealth) gain or loss.
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At this point the index is only telling us that Joe Sixpack should have expanded consumption in 2Q2012. Joe’s Index needs to be refined further to estimate home prices in real time. As things stand now, Joe’s Index has a data lag of one quarter. This improvement will allow vision into 3Q2012.
For now, the economic trends are not all negative – and the future USA economy is not written in stone irrespective of pundits’ opinions.
*http://econintersect.com/wordpress/?p=23779#more-23779 (To access the above article please copy the URL and paste it into your browser.)
Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
The permabears are coming out the woodwork. Bad, scary articles and news seem to attract more attention and eyeballs than good news articles or those that offer a counterbalanced view. Whenever someone gets interviewed on US TV, it’s for someone proclaiming the end of the expansion – you never see them interviewing someone offering a counter view of a more positive nature. This article gives you a balanced, opposing view to the tiresome popular perma-bear consensus so that you can make your own balanced decision. [As for our own conclusion, we don’t see imminent recession. Here’s why.] Words: 1315
Why read: It is foolish not to consider the possibility of depression, particularly in the face of the preponderance of commentary over the past many months that rampant inflation is on the horizon. [Here I review, analyze and comment on one such article on that possibility.] Words: 697
This past week we received the latest PMI readings for the world as a whole (48.9), the eurozone (46.4), and for 30+ individual countries [Read: Telling It Like It Is: Latest PMIs Reveal Truth About the Global Economy]…and the latest numbers signal contraction and even more so when adjusted to reflect the concentration of GDP by countries/region. [Let me explain.] Words: 600
I am amused by the Shadow Weekly Leading Index Project which claims the probability of recession is 31%. I think it is much higher….Let’s take a look at why. Words: 530
“The most important issue in this year’s election is the economy. Unfortunately, this topic has now been “politicized,” which means that you can’t talk about it without being instantly cheered or jeered by fans of each respective political team…[the truth of the matter, however, is that] the economy is much more important than this year’s election or either political team….The first step is getting past the political blame-game and understanding what’s wrong…. Let’s go to the charts.”
The U.S. economic recovery has been weak and the looming fiscal cliff threatens to act as a further drag on the economy. Europe is imploding with the chances of a ‘Grexit’ increasing, and Spain’s economy deteriorating and risking contagion. David Rosenberg looks at the state of the U.S. and global economy via 51 depressing charts.
The deficits aren’t going to stop anytime soon. The debt mountain will keep growing…Obviously, the debt can’t keep growing faster than the economy forever, but the people in charge do seem determined to find out just how far they can push things….The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for….[and] the Federal Reserve will hear their prayer. When will the economy reach the wall toward which it is headed? Not soon, I believe, but in the meantime there will be plenty of excitement. [Let me explain what I expect to unfold.] Words: 1833