Van Schaik's                                                                                   
        Economic Outlook                                 
                                                                                                                            
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.. "Look Out Below"..
 
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Bexley, Ohio                                          vanschaik@columbus.rr.com                                                 http://twitter.com/vanschaik

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 Focus Your Lens
 and
Keep The Facts In Perspective...

See how the current economic data really compare with the past -

CAPACITY UTILIZATION

CONSUMER SENTIMENT

DEBT

EMPLOYMENT 

GROSS DOMESTIC PRODUCT

INDUSTRIAL PRODUCTION

INSTITUTE OF SUPPLY MANAGEMENT -   Manufacturing Report
 
 

PRICES - PPI and CPI

RETAIL SALES

 

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See more information on our Business Cycle Indicator in our first website post from April 4, 2007:
 
 
 
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We Would Like To Hear YOUR Opinion...   
 
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Follow Us On Twitter  
@vanschaik
 
  When we update our Charts we  post notifications on Twitter: Follow us on Twitter and save your valuable time and ensure you don't miss any of the latest economic information and commentary...

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  Van Schaik's  

            Economic Outlook

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  About The Author: 

Peter Van Schaik is an economic geek. For the past 37 years, while others were out in the sunshine having fun, Van Schaik spent all his spare time hunched over in front of a computer screen crunching numbers. When he wasn't playing with his countless spreadsheets he was busy reading economic textbooks and Wealth Of Nations. His greatest thrill is performing horizontal and vertical analysis on a wide variety of economic statistics. There is little hope for the guy...

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Contact Us: 

 

vanschaik@columbus.rr.com

 

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  Moneysmartz Personal Finance Directory and Guide

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July 20, 2013
 
ISM Manufacturing Index
 
     In a search to find an economic statistic that supports a record high Dow, I decided to revisit the ISM number. Take a look at the charts and you'll find it SURE isn't the manufacturing sector. The search. will continue.
 
- Van Schaik
 
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June 22, 2013
 
Another Contraction?
 
     The business cycle model entered positive territory in May after being negative for 15 months. Recent recessions have usually started right before the model turned positive but the 1990-1991 downturn started 7 months after the model went above zero. It is currently forecasting a recession of 17 to 19 months. Read more about the model and recessions.
 
- Van Schaik
 
 
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June 6, 2013
 
ISM Manufacturing
        Manufacturing contracted in May, falling to 49.0. That is the lowest level since the end of The Great Recesssion and the fifth month the manufacturing sector contracted as the economy has wallowed in the post-recession doldrums. Check out the charts for yet another reason I haven't been upbeat about our economic future.
 
- Van Schaik
 
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June 3, 2013
Gross Domestic Product
   
     The first quarter GDP estimate was recently revised downward from 2.5 to 2.4% growth so we revised the GDP per Capita charts. Take a look at the charts: the economy is still reeling from that one-two punch called The Great Recession. Watch out for that next left jab.
 
- Van Schaik
 
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June 2, 2013
Consumer Sentiment
 
     Consumer Sentiment's final May number hit 84.5, a healthy gain from April's 76.4. That's a post-recession high and the best reading of the mood of the consumer since July 2007's 90.4. The chart, however, puts the number in historical perspective. All considered, it is still an extremely weak recovery.
 
 
- Van Schaik
 
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May 18, 2013
ISM Manufacturing Index
 
     The ISM Manufacturing Index fell for the second straight month in April, hitting 50.7. While that does indicate growth in the manufacturing sector, the growth is anemic at best. No matter how hard we squint we still fail to see a recovery capable of supporting the current stock valuations. The liquidity the Fed is throwing at the economy continues to support Wall Street, not Main Street. Check out the charts.
 
- Van Schaik
 
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May 8, 2013
 
Gross Domestic Product
 
     The stock markets in the US are rallying to new highs while the Gross Domestic Product, measured in real dollars per capita, is still reeling like a boxer unable to find his feet after a near knock-out punch. And, just like that rattled boxer, it won't take a great left hook to send the economy to the mat for the KO. Check out the current charts and be prepared to bail.
- Van Schaik
 
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April 17, 2013
 
The Recession Forecast 
 
     While the pressure on the business cycle did ease a bit in March, my model was still solidly negative: It has been negative for the past fourteen months and is now forecasting a recession of 16.5 to 19 months in length. This model tends to be an early indicator of a recession. It turned negative 13 months before the 2001 downturn, 15 months before the recessions of the 1980s, and a long 32 months prior to the Great Recession. However, in recent recessions it has had a tendency to turn positive around the onset of the downturn. See more about the model's record at forecasting a recession's length.  
 
- Van Schaik
 
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April 17, 2013
 
Retail Sales
 
     Total Retail Sales took a tumble in March, dropping a little over two billion dollars. That works out to about $7.60 per capita. Wail until we really tighten our belts and close our wallets. You can see the charts here.
 
- Van Schaik
 
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April 13, 2013
 
Consumer Sentiment
 
     Consumer Sentiment fell in the preliminary April reading, dropping to 72.3 after finishing March at 78.6. When you consider the importance of the consumer to our economy, this does not bode well for our economic future. Take a look at the three charts.
 
- Van Schaik
 
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April 7, 2013
 
Employment

     The employment picture disappointed the markets on Friday with total non-farm employment only gaining 88,000 jobs in March. Less often mentioned, of course, is the fact the household survey indicated a decline of 206,000 jobs.

     Which is most accurate as an indicator of our economic future? Consider the period prior to the Great Recession: In April 2007 non-farm payrolls gained 76,000 positions while the household survey showed a loss of 734,000 jobs. We all know what happened a short eight months later.

     Take a look at the chart below.
-Van Schaik
 
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April 4, 2013
 
Exports - Imports
 
     January's Export and Import numbers showed total exports of goods and services declined while total imports increased. Total exports are now 1.18% of GDP while total imports are 1.43%. The fact remains that international trade just doesn't play that large a role in our 15.8 trillion dollar economy. Take a look at the charts.
 
- Van Schaik
 
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April 2, 2013
 
ISM Manufacturing
 

     The ISM Manufacturing Index took it on the chin again in March. At 51.3 it indicates growth but not at a rate indicative of a recovery. Take a look at the long and short term charts and you’ll see the underpinnings of an economic calamity.

- Van Schaik
 
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March 28, 2013
 
Industrial Production
 
     Industrial Production improved in February, 98.88 vs January's 98.29, but that is still 3.3% below the pre-recession peak. Take a look at the charts and keep the numbers in perspective .
 
- Van Schaik
 
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March 25, 2013
 
Capacity Utilization
 
     While Capacity Utilization did improve in February to a post recession high, it is still below 80% which is still lower than the pre-recession level... and the pre-recession numbers were historically weak. Take a look at the charts and keep your focus on the long term facts.
 
- Van Schaik
 
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March 24, 2013
 
Consumer Sentiment

     Consumer Sentiment took a dive in March: The preliminary number dropped to 71.8 after February’s rather robust final reading of 77.6. The various stock markets may be hitting, or flirting with, new highs but consumers are definitely telling a different tale about our economic future and, especially when we are witnessing government spending cut-backs, consumers provide the only fuel that will power our economic growth.

     We are a long way from the post recession high of 82.7 in Consumer Sentiment hit in November 2012 but we are well on our way to the next recession. Take a look at the charts.
 
- Van Schaik
 
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March 9, 2013
 
Employment/Unemployment
 
 

     The unemployment rate did provide some good economic news Friday, falling from 7.9% to 7.7 %. However, we need to remember 7.7% is still higher than the peak unemployment rate witnessed in eight of the last eleven recessions. Based on the number of unemployed, we are still at a level seldom seen in our post war economic history.

     While February’s Household Survey did show an increase in the number of Americans working, up 170,000 to 143,392,000, that is still fewer people employed than during most of the last recession.

     Over three and a half years after the recovery began, we have yet to see the recovery really begin. Take a look at the charts.

 
- Van Schaik
 
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March 9, 2013
 
Employment
 
     Meanwhile, while Wall Street uncorks the champagne...
 
 
 
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March 6, 2013
 
The Business Cycle
 
     The last time the Dow Jones Industrial Average was hitting a record high was October 11, 2007. The high that day was 14,198.10.
     Nine days later I posted this on my web site:
October 20. 2007

     Recent interest rate cuts by the Fed, while welcomed by consumers and stock markets, will do nothing to alleviate the strained economy in the near term. It takes at least 9 and up to 24 months for monetary changes to affect the nuts and bolts economy so the damage has already been done. Even though our Business Cycle Indicator was signaling a recession before Ben Bernanke was sworn in as Fed Chairman in February 2006 (it turned negative in April 2005 and was -3.39 at the end of January '06), the recession will be seen as the Bernanke Recession. Greenspan kept inflation under control at the expense of the economy and Bernanke had no choice but to continue this absurd battle in the eyes of all the experts even though it was destined to wreck the economy. We will all pay a bit of the price as the economy wheezes and sputters to a halt.

      
    Now it is 2013 and, as the chart below indicates, my Business Cycle Model is once again negative, forecasting a recession of 16 to 18 months, and the Dow is once again hitting record highs. Past performance does not guarantee future success, of course… but I think it is time to bail and sell.
- Van Schaik
 
 
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March 4, 2013
 
ISM Manufacturing Index
 
     The ISM Manufacturing Index finished February at 54.2, its third consecutive month above 50, which signifies growth, and its best performance since April 2012. You may want to keep the champagne on ice: It is still far below the post-recession peak of 59.9 hit in January, 2011. Take a look at the long and short term chart.
 
- Van Schaik
 
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March 3, 2013
 
Consumer Sentiment
 

     Consumer Sentiment finished February on a positive note, the final reading was 77.6, but it is still well below the post-recession high of 82.78 hit in November of last year. Looking at the long term view, current Consumer Sentiment is still at, or below, recession levels. Take a look at the three charts...

- Van Schaik
 
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March 1, 2013
 
Gross Domestic Product
 
     The Real Gross Domestic Product for the 2012 fourth quarter was recently revised from a decline of 0.1% to an increase of 0.1%. I expected a small revision and that is just what we experienced: It is statistically insignificant. Our economy has stalled and additional reductions in government spending will only exacerbate the problem. You can check out the updated charts but they look the same as before to the naked eye.
 
- Van Schaik
 
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February 28, 2013
 
The Anatomy Of A Long Term Business Cycle
 
 
     We are witnessing the end of a long term economic cycle... eventually we can start anew. With appreciation to the work of the Dutch economists Jacob van Gelderen and Samuel de Wolff who wrote about the 50 to 60 year cycle in 1913, twelve years before the more famous Russian, Nikolai Kondratiev, for whom the long term cycle is named.
 
- Van Schaik
 
 
 
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February 25, 2013
 
Producer and Consumer Prices
 
     The popular price indices remained relatively flat in January. Inflation isn't, and hasn't been, the problem facing our economy, unless you're talking about financial asset inflation which, once again, has reached the levels of bubbles about to burst. Our primary problem remains sluggish economic growth and the risk of deflation. When a debtor nation tries to be correct its spendthrift ways and release itself from the shackles of debt, low, or negative, economic growth and deflation is the likely scenario.
 
     Take a look at the Price Indices.
 
- Van Schaik
 
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February 17, 2013
 
Industrial Production
 
     The Industrial Production Index was slightly higher in January but, as the chart below shows, it is still over 4% below its pre-recession peak. I don't expect it to fully recover from the previous recession before the onset of the next recession. I believe this collapse in Industrial Production will exceed the damage inflicted on the index by The Great Depression.
 
     While you're at it take a look at the three regular charts for Industrial Production.
 
- Van Schaik
 
 
 
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February 16, 2013
 
Consumer Sentiment
 
     The February Preliminary Consumer Sentiment rose from January's final reading. But, as the charts indicate, 76.3, at this point in the recovery, isn't all that special.
 
- Van Schaik
 
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February 16, 2013
 
Capacity Utilization
 
     Capacity Utilization edged lower in January, 79.06 vs December's 79.28. Take a look at the long and short term charts and keep these numbers in perspective.
 
- Van Schaik
 
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February 15, 2013
 
Retail Sales
 
     Retail Sales hit a record high in January? Well, as always, it all depends on high you view the numbers. In raw terms, yes, we saw a record high. In inflation adjusted dollars per capita? We still have a long way to go. Don't take my word for it- just take a look at the four updated charts. And remember- If the consumer ain't buyin' the economy's cryin'.
 
-Van Schaik
 
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February 8, 2013
 
Deja Vu?
 
 
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February 7, 2013
 
The Business Cycle
 
     The business cycle model stayed relatively flat in January, -2.79 vs December's -2.99, but it was still negative. That was enough to lengthen the expected recession to 15-17 months. 
 
 
 
- Van Schaik
 
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February 5, 2013
 
Manufacturing Inventories
 
     The post recession accumulation of inventories is now starting to slow. That rapid rate of inventory growth couldn't last forever but it sure did help the GDP and it's demise will lead to slower economic growth. Take a look the charts.
 
- Van Schaik
 
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February 4, 2013
 
Employment - Unemployment
 
     The Employment and Unemployment charts have been updated with the January numbers. Eleven charts, from the basic Unemployment Rate to Debt per Employed Person. They show how far we've come from the recession's bottom but, more importantly, they show how far we still have to go.  It looks like we will be on the way back down before we ever really got up. See the charts.
 
- Van Schaik
 
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February 3, 2013
 
Capacity Utilization
 
     On November 23, 2011 I wrote, "Capacity Utilization improved in October, up to 77.76, but it's still suffering its post recession blues. I don't think it can break 80% in this business cycle." Unfortunately it is now February 2013 and Capacity Utilization remains flat in the upper 70s: In December it was 78.77%; November hit 78.68%; October's number was 77.98%. Its best reading since November 2011 has only been 79.19.
 
- Van Schaik
 
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February 2, 2013
 
 
Consumer Sentiment and ISM Manufacturing
 
     The bulls ruled Friday as the Dow roared to heights not seen since, well, not seen since right before the crash that preceded the last Great Recession. Part of the great news that inspired the bulls to throw caution, and, apparently, sanity, to the wind was the surprising strength in the ISM Manufacturing Report and Consumer Sentiment. But were the numbers really that impressive?
 
     Consumer Sentiment improved in January, the final reading hitting 73.8 compared to December's 72.9, but that is still 1.6% lower than January 2012.
 
     The situation is similar when considering the ISM Manufacturing Report. Sure, January's 53.1 is at least growth, but it is 1.8% lower than January 2012. We're going backwards but evidently the stock market moguls think it is powerfully bullish simply because we aren't going backwards quite as fast as we were last month.
 
     When you consider the pressure Congress will be feeling in the months ahead to cut government spending even further and when you look at the lackluster recovery which has propelled stocks to near record highs, I find it impossible to believe we can escape a market collapse later this year which will eventually test, and beat, the previous lows.
 
     Take a look at the Consumer Sentiment and ISM charts and try to remian bullish. I would be surprised if you can.
 
- Van Schaik
 
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February 2, 2013
 
Stocks
 
    Stocks are putting a lot of pressure on previous highs even though consumer sentiment and employment remain weak and major debt and budget battles are looming before Congress in the not too distant future. We've already witnessed what reduced defense spending brings. If the consumer decides to take a breather and Congress maintains its irrational zeal for deficit cutting the economy has nowhere to go but down. The stock markets are exhibiting irrational exuberance unlike any ever witnessed.
 
     Adjusted for inflation, however, we still see a major bear market in stocks, especially in the S&P 500.  Take a look at the charts: It is hard to believe the nominal levels can hold for long. Then again, the mountain of money the Fed has tossed into our economy has to go somewhere.
 
- Van Schaik
 
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January 30, 2013
 
Gross Domestic Product
 
     Consumer Confidence in the economy has been waning,  Consumer Sentiment has been falling (see January 18th post below), and government spending has been slowing so it really should come as a surprise to no one that Real GDP fell in the final quarter of 2012. That is what tightening our belts brings: a decline in economic growth and we ain't seen nothin' yet.
 
     Real GDP per Capita over the past year only grew an unimpressive .032% according to the first estimates of fourth quarter production. Sure, the figure may be revised upward but how far up can that revision possibly take us?
 
     As usual, you can check out the charts...
 
 
- Van Schaik
 
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January 27, 2013
 
Consumer and Producer Prices
 
     As the PPI and CPI charts show, inflation has been subdued, at least on a percentage basis. The problem is a 5% increase in a price index of 300 digs a lot deeper into your wallet than a 5% increase in a price index at 200. But the fact remains most consumer prices have been relatively stable recently. So where is the inflation from the massive amounts of purchasing power being created by the Federal Reserve?
 
     Keep in mind the classical definition of inflation is too much money chasing too few goods. But if the banks aren't lending the created dollars for real purchases in the Main Street economy that money isn't chasing goods so the prices of the goods are unaffected. Instead, the piles of cash the Federal Reserve is throwing at our economy is chasing financial assets, primarily stocks and bonds.
 
     So the DOW is near record highs while the economy is still mired in the worst recovery since the Great Depression. Interest rates are at or near record lows for a reason: Our economic future is not as bright as the stock indices indicate, but the new money has to go somewhere so, at least for now, stock markets will inflate. Just watch out for the deflation of stock prices when interest rates start to rise.
 
 
- Van Schaik
 
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January 26, 2013
 
Exports - Imports
 
     Recently we have increased the rate we Import goods and services relative to our Exports, but the difference is still small relative to our total economy. Imports less Exports are about one fourth of one percent of our total GDP. That won't make or break our economy. Take a look at the five updated charts.
 
- Van Schaik
 
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January 22, 2013
 
Industrial Production
 
     The Industrial Production Index rose slightly in December, 97.0 vs November's 96.7, but it's still below June 2012's post recession high of 99.3 and still well below the pre-recession peak of 102.2 hit in August 2007. Check out the three charts.
- Van Schaik
 
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January 21, 2013 
 
Debt
 
     The Total Debt of the Non-Financial Sectors per Capita, adjusted for inflation, declined in August and September of 2012. At this point in the long term economic cycle, I don't believe we can have strong economic growth without the stimulation consumption financed with debt would provide. Just as we can't save our way to economic growth and prosperity, neither can we pay down our debt, whether public or private, without a reduction in economic activity which means a slower economy. Take a look at the charts.
- Van Schaik
 
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January 18, 2013
 
Consumer Sentiment
 

     It wasn’t really surprising that Consumer Sentiment took another hit in January. If the underlying economic problems weren’t enough to convince us hard times were on the way, we were also bombarded with near constant dire warnings of the perils awaiting us over the fiscal cliff.

     While the decline wasn’t as severe as the drop in December’s final number, January’s preliminary reading of 71.3 was still nearly 5% below January 2012 and it is also below the Consumer Sentiment reading at the onset of the last four recessions

     The only real surprise is realizing so many in positions of power still think reducing spending will bring us prosperity. It won’t. As I’ve said before: When consumers are afraid to spend businesses have no reason to spend so governments better spend. Or the house of cards we call an economy will collapse with the slightest ill wind.

     Feeling brave? Take a look at the charts...

- Van Schaik

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January 17, 2013

 
The Next Recession
 
     While the financial news has been focused on the dire consequences of the fiscal cliff, the negative pressure on the US economy continued to ease in December but, fiscal cliff or no fiscal cliff, my business cycle model is predicting a recession in the not so distant future. This model is a leading indicator and it generally turns positive either before or near the start of the downturn. Based on past performance, I now expect a recession of 14.5 to 16.5 months. 
- Van Schaik
 
 
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January 16, 2013
 
ISM Manufacturing Index
 
     The ISM Manufacturing Index took a plunge in November 2012. Even though the index recovered a bit in December the trend is still negative. Take a look at the ISM Charts.
 
- Van Schaik
 
 
 
 
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Copyright 2013 - John Paul Jones

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December 17, 2012

 
Business Cycle Update
 
     The negative pressure on the direction of the business cycle eased a bit in November, fromOctober's -6.0 to -5.1, but that is still a negative so the length of the expected recession is now 14 to 16 months. The longer the model stays in negative territory, the longer the coming downturn.
 
- Van Schaik
 
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December 17, 2012
 
Capacity Utilization
 
     November Capacity Utilization improves but only to 78.42%. It will not improve without stimulating demand. See the charts...  
- Van Schaik
 
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November 27, 2012
 
The Business Cycle Forecast
 
     The recessionary pressure on the economy eased a bit in October but the pressure was still negative. The model is now forecasting a recession of 13-15 months. Over the last five recessions the model turned negative an average of 17 months before the onset of the recession. It has currently been in negative territory for nine months.
 
- Van Schaik
 
 
 
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November 26, 2012
 
ISM Manufacturing Report
 
     The ISM Manufacturing Report edged slightly higher in October, 51.7 vs September's 51.5. This was a welcome relief after 3 straight months coming in below 50, which is a sign of a contracting manufacturing sector, but hardly indicative of an authentic reversal. We fear the worst is yet to come as we slowly reduce our debt, both public and private. Take a look at the charts.
 
- Van Schaik
 
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November 17, 2012
 
Imports/Exports
 
 
     A new page has been added: Check out the charts for Imports and Exports.
 
- Van Schaik
 
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October 24, 2012
 
Imports/Exports
 
     According to popular political rhetoric, we can export our way to economic prosperity. This just isn't realistic, especially during a period of slower global economic growth. Consider the chart below. Even if we double our exports, in reality an impossibility in the near future, and maintain the same level of imports,  which we must do if we expect to increse exports, we still only add 1.2% to our GDP.  That will not bail us out of our financial situation.
 
- Van Schaik
 
 
 
 
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October 20, 2012
 
Consumer Sentiment
 

     The Preliminary October Consumer Sentiment took another leap higher, even better than last month’s impressive final number. October’s first reading is 36.5% higher than a year ago. Although historically still low, a reading above 80, finally, is a good sign. It looks like consumers are starting to believe the last recession is finally behind us. Click to view the three charts.

- Van Schaik

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October 19, 2012

 
Capacity Utilization
 
     Capacity Utilization improved only slightly in September, 78.26, after August's stomach churning drop to 78.04 from July's post recession high of 79.25.  On November 23, 2011 I wrote I didn't expect it to rise above 80 but sometimes it doesn't feel good to be right. Check out the charts...
 
- Van Schaik
 
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September 17, 2012
 
The Business Cycle Forecast
 
     In August the Business Cycle Model was negative for a seventh straight month, although it did ease off its record low hit in July. August's number came in at -6.13, bringing the total to -34.67. Plug in the cumulative number into the formula and you get a recession of a minimum11.5 to 13 months. 
 
- Van Schaik
 
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September 17, 2012
 
Gross Domestic Product Per Capita
 
     The revised second quarter GDP figure still leaves us well below our pre-recession level in terms of real dollars per capita as the chart below shows. See the regular charts with the revised GDP/Capita numbers.  
 
 
 
 
 - Van Schaik
 
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September 7, 2012
 
Capacity Utilization
 
     See the Capacity Utilization charts, updated through July, here. It is still well below 80%. The recovery will soon be gone before it ever really arrived.
 
- Van Schaik
 
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September 4, 2012
 
Retail Sales
 
     The Retail Sales charts have been updated with the June numbers. Click here to see the charts.
 
- Van Schaik
 
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September 4, 2012
 
ISM Manufacturing
 
     The ISM Manufacturing Report continued its decline in August, hitting 49.6. That is three straight monthly declines and fifteen consecutive months of declines when measured year over year. It peaked in January 2011 at 59.9. Take a look at the charts.
-Van Schaik
 
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August 18, 2012
 
Six Negative Months... and a Record Low
 
     The Van Schaik Business Cycle Model hit a record low in July, sinking below the December 1980 low of -5.71 with a -6.31. This is six consecutive months of negative numbers and it currently indicates a downturn of 10-11 months.
 
 
 
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August 10, 2012

 Why Austerity Won't Work
     
     It is a fact the world's major economies have amassed an amazing amount of debt. The prevailing wisdom says we must reduce this debt if we want the global economy to experience economic growth and avoid a catastrophic depression even though no economist can accurately state the amount of debt any particular economy can support since it depends on many factors, one being the real production of the economy. 

     While politicians and economists debate possible maximum levels of debt and various austerity programs we need to impose on economies with levels of debt deemed too high, they are missing the key point: For developed economies, especially those with free market systems and a large income/wealth disparity between the working class and the wealthy, debt is a requirement for economic growth. Unless we are borrowing and spending we won't experience any significant economic expansion. Click here for the full article.
- Van Schaik

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July 30, 2012

Consumer  Sentiment

     Consumer Sentiment finished July slightly higher than the preliminary figure of 72.0 with a final reading of 72.3,  beating expectations by 0.3.   
-  Van Schaik

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July 19, 2012
 
Consumer Sentiment
 
     Consumer Sentiment took another dive with the preliminary reading dropping to 72.0. I've said it before but, with the presidential election looming, it is worth repeating: Consumers are unwilling or unable to support a recovery and, with demand low and dropping worldwide, business has no incentive to support a recovery. Government is the last recourse to minimize the economic damage but if we elect a president and Congress willing to snap shut the Federal government's wallet even tighter we will experience first hand what the Great Depression was really like. The business world does not need more money to invest to increase supply and create jobs. The demand simply isn't there. Take a look at the charts.
 
- Van Schaik
 
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July 12, 2012
 
Another Step Closer
 
     In June the Business Cycle Model was negative for the fifth month in a row, turning sharply lower. Although the indicator is still not as low as seen for brief periods prior to the two 1980's recessions, it is already lower than the level which preceded the last recession. There is still time to turn things around but we are almost completely out of wiggle room and there is absolutely no margin for error. Stay tuned.
 
- Van Schaik  
 
 
 
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June 24, 2012
 
Total Debt of the Non-Financial Sectors
 
     Total Debt Of The Non-Financial Sectors was up sharply in March, finishing the first quarter up slightly over 1% year over year.This is its largest gain since January 2011. Will it continue? With the focus throughout the world on the necessity of balancing our budgets, both public and private, and the belief of the the, hopefully, well intentioned but still seriously misguided that a substantial dose of austerity will cure all our economic ills, I really don't expect to see a continued rise in debt. We quit borrowing and spending at the expense of economic growth. Check out the charts...
- Van Schaik
 
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June 14, 2012
 
 Is A Recession Looming?
 
     Van Schaik's Business Cycle Model was negative for the fourth consecutive month in May. This doesn't mean an economic disaster is inevitable in the near future but it does make a recession more likely. Based on past performance over the previous seven recessions I am now expecting a future slowdown of 8 to 9 months in duration. In other words it is not yet signaling the end of life as we know it. It is also subject to a dramatic revision if we see a new low in 3 month T-Bills. I would not rule that out. Keep the facts, rather than the emotion, in focus.
 
- Van Schaik
 
 
 
 
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June 4, 2012
 
Employment/Unemployment
 
     As you know, the May employment numbers were dismal. They weren't, however, trend changers. The economic recovery has been losing, and will continue to lose, momentum. This is the result of the flight from debt we've been experiencing since the end of the so called Great Recession. As the chart below clearly shows, historically debt expands after recessions and declines prior to recessions. The one exception was the first post war recession when the Federal Government reverted to a post war budget and consumers slowly started to borrow and buy once again.
 
     This growth in debt fuels the post recession economic recovery. We can try and deny it but an increase in debt is necessary if we want to have enough economic activity to end a recession, lower the unemployment rate, and increase the GDP.
 
     The pundits in the mainstream financial media tend to attribute the current slowdown to a variety of reasons: Europe, high fuel prices, President Obama, the inability of Congress to reduce the federal debt even further, and, quite possibly, sun spot cycles.  I maintain they are wrong. I've been warning of a slowdown in our economy for quite a while now based primarily on the chart below. I will continue to watch this statistic closely in the coming months. It is going to get ugly. The long term expansion is over: It is now time for the contraction.
 
     See the rest of the employment charts here...
- Van Schaik
 
 
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June 1, 2012
 
Gross Domestic Product
 
     Real GDP per Capita Charts updated: The economy could be worse... and in time it will be. 
 
- Van Schaik
 
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May 31, 2012
 
Still Heading In The Wrong Direction 
 
 
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May 26, 2012
Consumer Sentiment
 
     The headlines look fantastic: "Consumer Sentiment highest in four years." Sounds great. But May's final reading of 79.3 , while much improved of April's 76,4, is still anemic when you focus your view on the longer term rather than just this recession/post-recession period. Don't take my word for it: Take a look for yourself... 
 
- Van Schaik
 
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May 22, 2012
 
Manufacturing Inventories
 
     Manufacturing Inventories continue to expand. The inventory expansion began almost immediately after the recession's end and has continued unabated. That can not continue.
 
 
 
 
 
 
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May 11, 2012
 
Consumer Sentiment
    
     May's Preliminary Consumer Sentiment was a silver lining in the dark clouds gathering on our economy's horizon.The 77.8 figure was the highest we've seen since January 2008 when it hit 78.4. Rejoice: We're almost back to where we were at the start of the recession . At least the consumer thinks so... Take a look at the charts.
 
- Van Schaik
 
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May 9, 2012
 

The Business Cycle Forecast

 

     Van Schaik's business cycle model has been in negative territory the last three months. February's -4.78 was the first negative number since January 2008. The negative pressure eased a bit in March (-3.6) and April (-3.7). Prior to the last seven recessions this indicator has entered negative territory an average of 17 months and a mean of 15 months prior to the onset of the recession with a range of 9 to 32 months. On December 13, 2007 the model indicated a recession of 21 to 25 months: The recession was 18 months in length. You can see more information on the model, and its record for forecasting a recession’s length, at The Business Cycle Forecast.

 

 

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May 4, 2012
Capacity Utilization
    
     March Capacity Utilization saw the third consecutive monthly decline, dropping to 78.6 from its post recession peak of 78.7 which, historically, is still low. See the charts here.
- Van Schaik
 
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May 4, 2012
Retail Sales
 
     Retail Sales continued to expand for the third consecutive month but, in real dollars per capita, we still have a long way to go reach our pre-recession peak. Take a look at the updated charts.
 
- Van Schaik
 
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May 1, 2012
 
Gross Domestic Product
 
     The Gross Domestic Product softened a bit in the first quarter and, as the chart below shows, we are still 2.7% below where we were at the onset of the recession when measured in real dollars per capita. See the regular charts here...
 
-Van Schaik
 
 
 
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May 1, 2012
ISM Manufacturing Report
 
     The ISM Manufacturing Report showed a gain in April, 54.89 v 53.4 in March, and apparently it was enough to convince Wall Street that happy days are indeed here again as traders pushed the DOW to its highest level since December 2007. The charts, however, still show an anemic recovery. Take a look...
 
- Van Schaik
 
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April 28, 2012
 
A Few Quotes For Your Contemplation
 
     “No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”
     - Calvin Coolidge December 4, 1928

    
“There will be no interruption of our permanent prosperity.”
     - Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928
 
     “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
     - Irving Fisher, Ph.D. in economics, Oct. 17, 1929

     "The U.S. financial system is in a very strong position to withstand the foreseeable pressures we might face from Europe,"     - Timothy Geithner, U.S. Treasury Secretary, April 27, 2012

    

     Do you really think it is different this time?

- Van Schaik

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April 22, 2012
 
Industrial Production
  
     The Industrial Production Index improved in March, 96.7 vs February's 95.9, but we are still below where we were at the onset of the recession when the index was hitting 100.0. Peruse the charts below and the regular charts for the complete picture...
- Van Schaik
 
 
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   April 21, 2012
Consumer Sentiment
     The Preliminary Consumer Sentiment number slipped a bit in April, keeping the long term downtrend intact. Consumers may be tightening their belts but if consumers don't buy the recovery will die since our various levels of government are unable, or unwilling, to spend, and the corporate world doesn't need to unless consumers pick up the pace of consumption. We are definitely between the proverbial rock and a hard place. Take a look at charts.
 
-Van Schaik
 
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April 18, 2012
 
It IS Different This Time...
 

 
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April 17, 2012
 
Manufacturing Inventories
 
     The rate of growth of Manufacturing Inventories is slowing but the pile of unsold goods is still growing. This inventory level will dampen the struggling recovery: The economy simply can't keep amassing an ever larger stock of inventory. We will either have to pick up the pace of buying, which will entail more borrowing, or we will have to reduce the amount we are producing. With the Prevailing Wisdom being debt is the greatest evil, and the scourge of prosperity, I'm betting on a slowdown in output.
 
- Van Schaik
 
 
 
 
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April 15, 2012
 
Employment/Unemployment
 
     The economy continued to add jobs in March but at a slower pace. The 120,000 non-farm jobs added was only half February's adjusted 240,000 gain. The civilian labor force lost 164,000 which helped lower the unemployment rate to 8.2%. Take a look at all the charts, as well as the two below.
 
- Van Schaik
 
 
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April 13, 2012
 
Exports/Imports
 
      Exports are improving compared to imports, as the first two charts below indicate, but don't count on exports bailing out our economy. The world economy is slowing and, as the third and fourth chart show, international trade is a small part of our service based economy.
- Van Schaik
 
 
 
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April 6, 2012
 
Debt
     The anti-debt sentiment is taking its toll on our economy. 2011 fourth quarter stats indicate nine consecutive months of year over year declines in Total Debt per Capita in real dollars and economic growth is now beginning to cool. I've said it before but it's worth repeating: The primary thing we have to fear is our fear of debt. Economic austerity leads to economic depression. Take a look at the charts...
- Van Schaik
 
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April 2, 2012
The Stock Market
    
     They say pessimists see the glass as half empty while optimists see the glass as half full. If this is true it appears stock traders see the glass as filled to twice its capacity. This is not optimism: It is irrational exuberance. Very little supports current stock market valuations except great expectations for an extremely robust economy somewhere around the next corner. It is almost time, once again, to look out below. Take a look at the stock charts, real and nominal dollars, updated through March. 
 
- Van Schaik
 
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March 31, 2012
 
Real GDP Per Capita
 
     The chart below tracks Real GDP per Capita from the start of the post war recessions until Real GDP per Capita recovered to its pre-recession level. Recovery?
 
- Van Schaik
 
 
 
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March 31, 2012
 
Consumer Sentiment
 
     Consumer Sentiment finished March with a nice gain, 76.2 compared to February's 75.3 and the March preliminary 74.3, but the charts show us how far we still have to go to hit the levels of most recoveries. Take a look...
- Van Schaik
 
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March 25, 2012
 
Industrial Production
 
     The Industrial Production Index was still only 95.4 in February, 2012. The recent decline doesn't come close to the devastation of the Great Depression, see the chart below, but, as the regular charts show, the recovery is, at best, anemic. Take a look at the rest of the charts...
- Van Schaik
 
 
 
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March 20, 2012
 
Consumer Sentiment
 
     Preliminary Consumer Sentiment was down a bit in March compared to February's final figure, 74.3 v 75.3, but how that really looks depends on your vantage point. Take a look at the charts and keep the numbers in perspective.
 
- Van Schaik
 
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March 6, 2012
 
Manufacturing Inventories
 
     While the rate of inventory growth declined in December, we still accumulated more unsold inventory. This pile of unsold goods will weigh heavily on the economy in coming months, especially since consumers still aren't expecting a secure employment future. Friday's employment/unemployment numbers are huge. As we've said before, if consumers are afraid to spend we will experience another recession before the so called recovery can deplete the excess inventory.
 
- Van Schaik
 
 
 
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March 2, 2012
Consumer Sentiment
 
     Consumer Sentiment finished February stronger than it started the month, 75.3 vs. 72.5, but we still aren't back to where we were a year ago. We finished February 2011 at 77.5. Take a look at the charts...
 
- Van Schaik
 
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March 1, 2011
ISM Manufacturing Report
 
     What a difference a month makes. After four consecutive months of higher numbers, the ISM Manufacturing Report hits the wall of reality and declines to 52.4, erasing two months of gains. In the previous post we said it was well below post recession highs. Now it looks like the post recession highs we've already seen will be the post recession highs. Take a look at the charts.
- Van Schaik
 
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February 22, 2012
 
ISM Manufacturing Report
 
     The ISM Manufacturing Index rose for the fourth consecutive month in January, hitting 54.1. The manufacturing sector is still expanding but well below the post recession highs. Click here to see the charts.
 
- Van Schaik
 
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February 20, 2012
 
Consumer Sentiment
 
     The University of Michigan's Preliminary Consumer Sentiment number headed lower once again in February, to 72.5, after finishing January at 75.0. It has still been unable to surpass the post recession peak of 77.5 hit in February 2011. It will be hard to keep the recovery going if business doesn't need to spend, government doesn't want to spend, and consumers are afraid to spend. Take a look at the charts...
- Van Schaik
 
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February 12, 2012
 
Employment, Unemployment, Labor Force 
 
     The charts have been updated with January data. 13 views of employment, unemployment, and the labor force. The big news: a large expansion of the labor force and still a decline in the unemployment rate. See it all here... 
 
- Van Schaik
 
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February 6, 2012
 
Taxes: They Aren't What They Used To Be 
 
 
 
 
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January 27, 2012
 
Total Debt
 
     In September the Total Debt of the Non-Financial Sectors, in real dollars per capita, declined for the sixth consecutive month, the rate of decline increasing to 0.94%. Since 1947 we have seen a period of decline only once in this statistic that wasn't also accompanied by a recession. We may escape a serious downturn for a while but continued expansion in 2012 is extremely unlikely, especially when you consider the high level of inventories. See the charts...
 
- Van Schaik
 
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January 24, 2012
 
The Trend Is Clear...
 
 
 
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January 21, 2012
 
Consumer Sentiment
 
     January's Preliminary Consumer Sentiment reading jumped to 74.0. Celebrate if you wish but remember historically 74.0 is still recession territory. See the charts and see if you agree.
 
- Van Schaik
 
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January 18, 2012
 
 Capacity Utilization
 
     Two and a half years after the recession's official end and Capacity Utilization is still floundering below 80%. No wonder cash laden corporations are buying back their own stocks with their surplus funds instead of investing in real production. See the charts here.
- Van Schaik
 
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January 13, 2012
 
Retail Sales
 
     Retail Sales have been updated for December. They still have a long way to go in real dollars per capita to get back to pre-recession levels. Take a look at the charts...
 
- Van Schaik
 
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January 12, 2012 
Total Manufacturing Inventories
 
     Total Manufacturing Inventories continued to expand in November, albeit at a slower pace. Still, it is hard to envision a scenario of  an energetic economic expansion in the near future with the current level of inventories and consumers once again keeping such a tight grip on their pocketbooks and wallets. Check out the charts below...
 
-Van Schaik
 
 
 
 
 
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January 8, 2012
 
Employment/Unemployment
 
     The employment/unemployment charts have been updated with the December data. Eleven charts  provide a variety of views of the job market. Take a look... 
- Van Schaik
 
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January 8, 2012
 
Federal Employment
 
     Think an unproductive bloated Federal bureaucracy is behind our economic problems? In reality the percent of our total population employed by our Federal Government hasn't been this low since December 1940. 
- Van Schaik
 
 
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January 5, 2012
 
Consumer Sentiment
 
     2011's final reading for Consumer Sentiment hit 69.9, up from December's preliminary 67.7 and well above November's 64.1. Sign of a recovering economy? Keep the champagne corked: Historically 69.9 is still in serious recession territory. Take a look at the charts and keep the facts in perspective...
 
- Van Schaik
 
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January 4, 2012
 
ISM  Manufacturing Report
 
     The ISM Manufacturing Index hit 52.7 in November. It has been flirting with 50, that tiny spot between expansion and contraction, since July 2011 but it is still indicating expansion. Barely... Take a look at the long and short term charts.
 
- Van Schaik
 
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January 1, 2012
 
Retail Sales
 
     Retail Sales grew 6.8% year over year in November, its slowest annual rate since August 2010. In real dollars per capita Retail Sales expanded 2.5% year over year. Take a look at the four charts...
 
- Van Schaik
 
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Copyright 2012 - John Paul Jones

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December 19, 2011
 
Consumer Sentiment
 
     Consumer Sentiment hit 67.4 in December's preliminary reading. Take a look at the charts and temper your enthusiasm: It's still well below May 2011's 74.3 and, when viewed with a long term perspective, not out of recession territory.
 
- Van Schaik
 
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November 27, 2011
 
Industrial Production
 
     The Industrial Production Index fell slightly in October, to 94.5 from 94.8, but still grew 3.9% year over year. The recent chart pattern looks a lot like the early 1980's with the double recession. Take a look and see if you agree...
 
- Van Schaik
 
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November 24, 2011
 
Debt... and Our Economic Future
 
     Total Debt of the Non-Financial Sectors in Real Dollars per Capita declined year over year the past months. Take a look at the chart: Declines, or even low growth, tend to result in recessions. History shows there can be false negatives and, for now, I  think this is one. But robust growth in 2012 is out of the question unless we change our present attitudes regarding spending and debt. That is unlikely.
 
- Van Schaik
 
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Novenber 24, 2011
 
GDP
     Real GDP per Capita is still heading lower, percent change year over year. Take a look at the trend.
 
- Van Schaik
 
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November 23, 2011
 
Capacity Utilization
 
     Capacity Utilization improved in October, up to 77.76, but it's still suffering its post recession blues. I don't think it can break 80% in this business cycle.
     If nothing else, Capacity Utilization is one of the best indicators for predicting a recession's end.
     See the charts here.
 
- Van Schaik 
 
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November 22, 2011
 
Exports/Imports
 
     The updated Export/Import Charts below tell a tale. Sure, it boosts our economy a bit when we export more and import less but imports are not our primary problem. Imports less exports are only about one third of one per cent of our total economy. Check out the import gap in the GDP plus Imports and GDP chart below.
 
- Van Schaik
 
 
 
 
 
 
 
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November 19, 2011
 
On Corporate Responsibility
 
      The argument persists: Should a corporation’s policies be designed for the primary benefit of the stockholders or management? Or should the welfare of the employees be the main concern in corporate decisions? How about none of the above? There is another group that seems to be forgotten in all the noise surrounding the issue. That group is the general public: The salt of the earth; the huddled masses yearning to just provide for their families and get on with their lives. In reality it is this group whose consideration should be first and foremost in all corporate operations and decisions.
 
 
- Van Schaik
 
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November 13, 2011
Manufacturing Inventories
 
     The rate of growth of Manufacturing Inventories continued to slow in September but they were still up 11.8% year over year. Inventories are huge for this point in the business cycle. Unless sales exceed expectations look for cut backs in manufacturing output to reduce the inventories. See the charts below.
 
- Van Schaik
 
 
 
 
 
 
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