One worry that investors have these days is that another "panic" may occur. They worry that, like 2008, all of a sudden the economy will fall off a cliff. The large drop in the University of Michigan consumer confidence gauge this morning has increased these fears. Most main government economic indicators are backward looking with at least a month lag, but there are a few indicators that provide much more up to date information, which we have been monitoring closely over the past few weeks.
The table above highlights a few of these important indicators. Initial claims fell 7,000 last week to 395,000 and are below 400,000 for the first time since April. Chain store sales and weekly retail sales from ICSC and Redbook Research respectively, show that retail activity is still growing in a range consistent with the past year or two. Movie receipt data from Box Office Mojo also shows that theater goers are still active. In fact, the four-week moving average of box office receipts, when compared to the average of the same four weeks in previous years, is at its highest level in the past decade. Finally, rail traffic remains in a range that is consistent with growth. While 1% year-over-year growth is somewhat slow, and is down significantly from recent years, it remains in a range consistent with data during the mid-2000s when real GDP was expanding.
So, while consumer confidence is falling and uncertainty is rising, high frequency data don't show any sign of a worrisome deceleration. Nowhere in the data is there evidence of a panic from consumers or businesses. Now is a good time to remain focused on the fundamentals and remember the resilience of the US economy.
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Posted on Friday, August 12, 2011 @ 1:28 PM
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