Chicago Fed: Best Days Behind Us?
The Chicago Fed’s National Activity Index – one of my favorite measures — printed this morning. The monthly number edged down slightly, and the 3-month moving average, which the folks in Chicago tell us to focus on, rose somewhat.
Here, however, is the money shot from the release (my bold):
May’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. Moving above +0.20, the index’s three-month moving average in May also reached a level historically associated with a mature economic recovery following a recession. With regard to inflation, the CFNAI-MA3 in May indicates limited inflationary pressure from economic activity over the coming year.
So here’s the Chicago Fed letting us know that we may well have seen the best of what this “recovery” had to offer. I would note that the Personal Consumption and Housing sub-component of the index continued to be mired in negative territory, subtracting 0.42 from the overall print. Now, this is not to imply that a double dip is a foregone conclusion, though that is certainly one outcome. At the very least, it argues for a very slow growth scenario.>
Chicago Fed National Activity Index
click for larger charts
Having composed this post, I decided to reach out to my contact at the Chicago Fed to inquire specifically about their use of the word “mature.” He told me that I should read it as if it were “ongoing,” and pointed me to the headline of their piece — Index Shows Economic Activity Continued to Expand in May. I suppose that whether they should have substituted the word “ongoing” for the word “mature” may be a matter for linguists (cunning and otherwise). This may be hair-splitting and nit-picking, but I personally infer a meaning from the word “mature” that it appears the Chi Fed may not have meant to convey. What say you linguists — what does “mature” imply to you?
Tweet
Facebook
Reddit
Digg this!
June 28th, 2010 at 12:01 pm
Old and decrepit (coincidentally my back is killing me today).
June 28th, 2010 at 12:19 pm
Mature = senior (i.e. a person in their later years), right before or about the same time health care expenses rise a bunch.
June 28th, 2010 at 12:24 pm
Depends if you consider a 30 year old to be mature. Both physically and mentally (The frontal lobe is now fully developed) they have reached full maturity and there are plenty of “good years” ahead.
June 28th, 2010 at 12:28 pm
I am mature, but haven’t ended. Thankfully, I am ongoing.
“Mature” in this case does not equal old, unless 25-year-olds are old, in which case I may be in trouble.
June 28th, 2010 at 12:35 pm
Dead and dieing – the only good outcome is if you had a smile on your face.
June 28th, 2010 at 12:41 pm
To me, “mature” means “ripe” and also “strong” and “established”.
June 28th, 2010 at 12:45 pm
I guess/assume one does not need to have a PhD in economics to evaluate economic commentary posted by well respected PhD fund manager/economist or this indicator from the fed?
I will let them speak:
http://market-vipasyana.blogspot.com/2010/06/hussmans-updated-indicator-recession.html
June 28th, 2010 at 12:50 pm
Mature = not me, so I’m not really qualified to answer. [rimshot]
First, parsing words is part of the Greenspan legacy, so no sympathy for them for any imprecise word choice. No prisoners.
Sounds like they intended something around meaning 2c: “having achieved a low but stable growth rate,” but notice that “ongoing” is nowhere to be found:
http://www.merriam-webster.com/dictionary/mature
So my take on “mature” is along the lines of stable, rooted, not in doubt — for analysis by negative implication, insert the antonym “immature” and see what you get.
June 28th, 2010 at 12:53 pm
[...] The Chicago Fed National Activity Index shows a rise in May. (Calculated Risk, Carpe Diem, Big Picture) [...]
June 28th, 2010 at 12:59 pm
A 30 year old person has physically matured. Mentally, well, some people haven’t matured at the age of 70 or older and will never mature.
If the Fed economists wanted to say the “recovery” has fully developed and and economic expansion is ongoing, “mature” is the right choice of words, I would say. It doesn’t mean the best days have been behind us already.
On the other hand, whatever the Fed economists say, the best days of the “recovery” are behind us, very probably. As I have mentioned in the other thread already, Hussman gave a recession warning in his weekly market comment yesterday:
http://www.hussmanfunds.com/wmc/wmc100628.htm
Also The Daily Growth Index of the Consumer Metrics Institute indicates that another GDP contraction is likely impending or has started already:
http://www.consumerindexes.com/
It’s possible that the recession didn’t end last year, and this will be labeled by the NBER in a few years as a single one long recession that started in December 2007 and will have ended at the end of 2010 or in 2011. At calculatedriskblog.com it was pointed out today that real personal incomes minus transfer payments are still clearly below their peak of before the recession and have barely come off their lows of October 2009:
http://www.calculatedriskblog.com/2010/06/personal-income-up-04-spending.html
June 28th, 2010 at 1:02 pm
Mature = Like a banana on my kitchen counter.
The black spots are growing everywhere.
Soon there will be great squishiness followed by inedibility and the buzzing of flies.
June 28th, 2010 at 1:04 pm
The development phase is over. Not necessarily on the downward slope, but the days of “burgeoning” are long gone.
June 28th, 2010 at 1:15 pm
Ongoing implies that maturity may be an outcome.
June 28th, 2010 at 1:20 pm
Though I’m not fond of their definition of the word “mature”, I do have to point out that the chart seems to be in line with the “ongoing” idea. If you look at the periods following each of the prior recessions, it appears the 3 month MA has in EVERY case hit a level of at least .75 before turning back down into the next recession.
I would agree that the easy money has been made, but using this indicator there may still be some upside ahead or at least a long period of spinning wheels before we turn down again.
June 28th, 2010 at 1:27 pm
Mature implies that the peak has occurred and a meaningful downside awaits.
Of course that’s my interpretation of the word “mature” and not a prediction for this ongoing (ahem) recovery.
June 28th, 2010 at 1:43 pm
“Mature” means ‘fully developed; no further growth expected.’
That sample–the CFNAI-MA3 in May–is a lagging indicator. One of the observations I rely on is traffic in Home Depot and Lowe’s stores, and that, by my observation has fallen off sharply in the last month, at least in stores in my area. Deeply discounted “Sales” in retail stores lik Belk, Old Navy, etc are another indicator that retailers are having a hard time getting people into their stores. The parking lot at “recycled” stores like Goodwill, Salvation Army, St Vincent de Paul, etc seems to be full to overflowing, which indicates that the pressure is high and rising on household budgets.
Real estate sales closed will drop off the cliff when the $8,000 rebate ends.
June 28th, 2010 at 2:11 pm
Aren’t you something, hiding behind the mask “invictus,” no doubt hoping to cash in on some secondary meaning, and inviting linguists to rap on a word for you. Once again, you commit the fallacious sin of oversimplification/overgeneralization. Before you get into the meaning of words, you should read ‘one of the most influential critical works of the 20th Century: 7 Types of Ambiguity by William Epson – http://en.wikipedia.org/wiki/Seven_Types_of_Ambiguity_(Empson) Ambiguity is always present, and, lacking an authority to rid 6 types, we are always forced to guess what the word as used, really means.
It is interesting is that you are evidently unwilling to accept that the word means exactly what the user of the word tells you it means, and you want to torture secondary meanings out of its plain meaning, reinforced by the authority of the author.
It is also interesting that you are trying to get on the bandwagon and join those who believe the US economy is weakening, and will continue to weaken for as long as one can presently see. Sorry, the train has left the station, and you are too late. You are a johnny-come-lately.
June 28th, 2010 at 2:17 pm
I can speak to the nom de plume — Invictus is one of the many people who toil away at large banks.
I publish him here because I find his writings interesting (even when we disagree, which is often) and because he has no other non=professional outlet. At his wire house job, his work is rather constrained by the machinery.
His firm would fire him in a minute if they knew he was publishing here.
June 28th, 2010 at 2:19 pm
All I know for sure is that I am amused to see Mature, Cunning, and Linguist all in the same paragraph here at the BP.
June 28th, 2010 at 2:30 pm
@Fred C Dobbs:
Don’t you fallaciously overgeneralize if you claim a general validity of statements in a work that is about literary criticism and ambiguity in poetry? If you do you have founded your diagnosis of a fallacy in Invictus’s post on a fallacious argument yourself.
June 28th, 2010 at 2:46 pm
@Fred
“It is also interesting that you are trying to get on the bandwagon and join those who believe the US economy is weakening…”
Jump on the bandwagon? Surely you jest. I was writing of the imminent recession in late 2007, and have long maintained we have some severe structural problems that are going prevent the economy from gaining a full head of steam. My posts here and elsewhere are a matter of public record as long as the hosts maintain the domains.
As to the balance of your comment, I would only say that my contact appreciated the heads-up regarding my concern and promised that his team would continue to work on refining its language and message. That’s good enough for me. Lastly, among the definitions for “mature” is “at the height of bloom,” which in this case would imply growth has peaked.
June 28th, 2010 at 3:19 pm
Spanish for, “mister”, mispeled.
June 28th, 2010 at 3:42 pm
I would read it in the manner they described to you: ongoing, fully developed… not as ‘ready to decline’.
June 28th, 2010 at 4:15 pm
Invictus-
I would work on modifying the syntax that you use in your postings here. One’s sentences, phrasings, etc are ‘speech acts’, and the manner in which develops one’s thesis can produce an observable pattern. I would recommend reading (out of a book) a different poet prior to ‘penning’ a note.
Apart from that, I like the ‘demographics is destiny’ subtext.
“Personal Consumption and Housing sub-component of the index continued to be mired in negative territory…”
As the memory of our supple youth fades, will we turn our eyes south and seek a bride in Tijuca or Cidade de Deus?
http://noir.bloomberg.com/apps/news?pid=20601086&sid=akk9UO_tDojA
June 28th, 2010 at 4:51 pm
Maybe it means the green shoots are in full bloom, wilting on the way.
June 28th, 2010 at 5:38 pm
Once a tree matures it can live for centuries, how long do elephants and turtles live past maturity? You can have a mature operating system, which doesn’t mean that the future of said operating system is in decline (unless you’re talking about Microsoft of course)
Different meanings to different people depending on the context you use it in and the background (educational or professional) of the person reading the article.
June 28th, 2010 at 5:52 pm
@Araquipa01says
I would work on modifying the syntax that you use in your postings here. One’s sentences, phrasings, etc are ’speech acts’, and the manner in which develops one’s thesis can produce an observable pattern. I would recommend reading (out of a book) a different poet prior to ‘penning’ a note.
Would be interested in your elaborating on that point, if you wouldn’t mind.
June 28th, 2010 at 7:36 pm
ArEquipa- comes from Quechua. Means ‘sí, quedaos’. ‘Yes, you may stay (settle).’
BR suggested that some would be displeased if they were aware of your sharing here. I would say that you, like most of us, have a signature to your prose style (so to speak). That is, the way in which we write is like a gait. Sometimes seeing the silhouette is enough.
As far as the poetry recommendation, the rhythms can affect how one organizes and records one’s thoughts. One mask one’s voice by mimicking a poem’s voice. Try reading aloud Dylan Thomas first and then put pen to paper (or fingertip to key)…
And before you dismiss this out of hand, do recall that I advised Dylan Ratigan to modify his taste in ties- worked like a charm.
June 28th, 2010 at 8:19 pm
Obviously, they meant ‘manure’ economic recovery, in the sense that each weak and impoverished recovery, once properly composted and decayed becomes fertilizer for the next.
June 28th, 2010 at 9:10 pm
I tend to agree with Marcus and also note that the index has turned negative in front of or at worst co-incident with every recession since 1967. Not saying it can’t happen here, but it looks a little ways off yet.
June 28th, 2010 at 11:11 pm
Differentiate between the terminology “Mature” and the numerology +.2
I read the report of a +.2 as a Goldilocks number. This represents above long term growth rate which to me means that the recovery has definitely taken place. We have mature plants now instead of green shoots more green shoots. The CFNAI does tend to drop below zero , they call for -.7 to signify a recession and we are a long way from there. I know that PC and housing look like they are dead forever, but imagine if they can recover to a “Mild recession” level like -.2; the total number would be up to +.42 and GDP could be +4%-+5% for the next twelve months.
I know, the economy looks really bad. Let’s get back to the numbers. CFNAI above 0 means economic activity above long term growth, or above 3% GDP. Excepte for PC and housing the CFNAI is indicating growth at the 4% to 5% level.
June 28th, 2010 at 11:20 pm
GDP growth of 4% to 5% is not my forecast, it is my interpretation of what the CFNAI report could be telling us in 3-4 months. If we do not see a second collapse of housing following the expiration of the home buyer credit, PC and housing may rise to just a little soft, and the $3 trillion Fed stimulation could lead to an “OH SHIT” moment. If the economy does not die we could see a bond massacre which would make 1994 look like little league.
Pick your poison: Double Dip, The next depression(global sovereign debt crisis), or Oh Shit – runaway economy and too much money. I don’t see Goldilocks in 2011, I just think the Double Dippers are playing with blinders on.
June 28th, 2010 at 11:42 pm
@Cynic_FA:
And this diagnosis by you is founded on pure speculation about what may happen instead, isn’t it?
July 26th, 2010 at 10:01 am
[...] I will note — as I have before — that the Personal Consumption & Housing subcomponent remains mired in deeply negative [...]