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Pastimes : The Big Picture - Economics and Investing
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To: Arik T.G. who wrote (652)2/1/2001 5:21:22 AM
From: Arik T.G.  Read Replies (1) of 686
 
Let's see what we have so far:

1. Industrial production down three months in a row. Last time that happened was in 1991.

2. Capacity utilization down four months in a row, and is now at its lowest since 1993.

3. NAPM down sequentially 10 months in a row (today will be the 11th decline in a row) and is under 50 for 5 (6 after today's numbers) months in a row. We saw a similar decline in the NAPM in '98 (from which it recovered in '99) but the absolute numbers are lower now - Dec and Jan figures (out today) are going to be the worst since 1991. Chicago PM Jan numbers published yesterday came out below expectations and were even lower then 1990-1991 lows.

4. Consumer confidence down 4 months in a row but still relatively high. CC was on a rising trend since its 1992 low
until in 2000 it finally topped its 1968 high. The recent decline took CC back to 12/1996 "irrational exuberance" level.

5. M2 - From mid '91 to mid '95 money supply was practically unchanged, M2 rising very slowly from 3330 to 3540- a 6.3% rise in 4 years, giving a yearly rate of increase of only 1.5% . From mid 1995 to date, M2 has expanded from 3540 to 4935, a rise of 39.4% and an average yearly rate of just over 6%.
In the last 9 weeks a deviation to the upside from the 6% increase rate is apparent. In other words - AG started pumping money into the markets aiming to soften the landing.

So the hindsight figures of industrial production and capacity utilization are already showing a recession of 1991 proportions, but the forward looking CC and NAPM are saying it's going to get worse. Soft landing? Not IMHO.

ATG
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