Posts filed under “Cycles”

Market Capitalization (NYSE + Nasdaq) as %GDP

I always find these charts instructive in terms of where we are over the longer cycle in terms of valuation relative to economic activity of the US.

The two biggest changes post-1996 has been the increasing US exposure to overseas growth, and rates that started low went to ultra low.

Market Capitalization as % of GDP

click for larger charts


Market Cycles Above and Below Trend Line

Category: Cycles, Markets, Valuation

Wall Street Economists Have This Recovery All Wrong

> My Sunday Washington Post column is out, and its titled “Note to investors: It takes longer to bounce back from a credit crisis” The online version gets a different title, Wall Street analysts and economists have this recession recovery wrong. In it, I discuss how the post WW2 recession recovery cycle is the wrong…Read More

Category: Apprenticed Investor, Cycles, Economy, Employment, Really, really bad calls

FRBM: Recession and Recovery in Perspective

The Minneapolis Fed has a cool tool that lets you compare a variety of different attributes over past recessions and recoveries: > Recessions click for interactive graphics Recovery Source: Federal Reserve Bank of Minneapolis: The recession and recovery in perspective

Category: Cycles, Digital Media, Federal Reserve

Time Running Out?

A mention by David Rosenberg in a recent note sent me scurrying to find this report from the San Francisco Fed in August of last year.  The report — remember, it was almost one year ago — used the Leading Economic Indicators to assess the probability of another recession within the next 24 months (from that date,…Read More

Category: Analysts, Cycles, Data Analysis, Economy, Research

ECRI: Prolonged U.S. Slowdown Underway


The U.S. economy is “not yet” headed for a double-dip recession, but a sharp and prolonged downturn is underway and may make jobs growth even tougher to come by, an influential analyst said Monday.

In an interview with The Wall Street Journal, Lakshman Achuthan, the co-founder of the Economic Cycle Research Institute, said that over the last few months key indicators of long-term economic growth have all begun pointing in one direction: downward.

“We’re talking about a cyclical turn that’s pronounced pervasive and persistent, not a one or two month affair,” Achuthan said. He added that the slowdown is likely to last a couple of quarters at least — even as he stopped short of calling it a formal recession, which is defined by two quarters of economic contraction.


ECRI’s Achuthan: Prolonged U.S. Slowdown Underway
Javier E. David
Real Time Economics, June 13, 2011, 4:56 PM ET

Category: Cycles, Economy, Video

High Correlation Between Retail Sales and Job Creation

For the past 19 years, the levels of Real Retail and Food Services Sales and Total Nonfarm Payrolls have had a +0.96 correlation, so it’s hardly an overstatement to suggest this morning’s number bears close scrutiny. NOTE:  Until 2000, RRSFS (NAIC-basis) was RETAIL (SIC-basis) at FRED.  RETAIL has been discontinued.  The two can be spliced with…Read More

Category: Consumer Spending, Cycles, Data Analysis, Economy, Employment

Could It Happen Here?

10-year JGB first broke under 3% 16 years ago, on June 23, 1995, according to Japan’s Ministry of Finance.  It first happened here in November 2008, so we’re 2 1/2 years from that event. Below is a chart covering the ensuing period for each subsequent to the first break under 3%.  I’m unclear as to what,…Read More

Category: Credit, Cycles, Investing, Markets

Whither (and Withering) Demand?

I have long wanted to collect my thoughts about some of the issues — masked in part, I believe, by the two bubbles we’ve had in the past 11 years — that are exacerbating our current crisis and will continue to forestall any semblance of a robust recovery.

This issue has been vexing me for a while.  I think the reason is that there are so many disparate yet loosely connected ideas banging around in my mind that it’s been a challenge to figure out where to start and how to tie it all together.  That and the fact that my anger at our collective indifference to these matters is probably clouding my thinking.  So, apologies in advance if this is a bit disjointed.  All this stuff is most definitely interconnected, and I’ve tried to bring it together as coherently as possible without turning it into my master’s thesis.

I’ve written previously (maybe here, for sure elsewhere) that my biggest concerns are always jobs (that we create them) and incomes (that they’re decent and rising), in that order.  We are failing on both fronts, and the asshats in Washington (both sides, to be sure) seem to have decided there are more pressing issues to address and/or that we’ve reached the end of the line and there’s nothing that can be done on either front so we’d just better suck it up and adapt.  Worse, what really worries me is that there are very disturbing long-term trends that no one seems to want to acknowledge, no less try to remedy, that contributed mightily to the crisis we just struggled through — and may well again if corrective measures aren’t taken.

We know from the NFIB that the “Single Largest Problem” facing their membership is Poor Sales.  We know that Poor Sales and the Unemployment Rate are very highly correlated (+0.86), as I demonstrated here in February.  Poor Sales implies a lack of demand (or poor business decision-making, like selling parkas in Hawaii) — not uncertainty about Obamacare, tax rates, or other government rules and regulations (which are, by the way, also potential answers to that same poll question).  Larger corporations have also indicated soft demand for their products.  How to increase demand?  Well, real disposable income could go up, but it isn’t — or Americans could borrow more, which they aren’t.  Let’s have a look under the hood.

Here’s a brief discussion of the disturbing long term trends have only exacerbated our problems and are rarely, if ever, mentioned in my regular econo-surfing.

Income Inequality

Our Gini Coefficient has been rising for decades, indicating growing income inequality.

(Bonus points to the commenter who, without a shred of evidence, attempts to link the current financial crises in Greece, Ireland, and Spain to the fact that their Gini Coefficients have declined over 20 years.)

Our own Census data (chart below for the United States only) would indicate that United States income inequality has increased even more than that measured by OECD (I calculate it at just over a 5% percent gain from mid-’80s to mid-’00s, but in either case the trend is not a good one):

Source:, Income Inequality, Table F-4

There are many footnotes to all the Census data presented in this post; please see them here.

How is it that the Gini Coefficient is increasing?  Here’s a look at exactly how:

The chart immediately above is, by the way, completely consistent with the stock of a company like Tiffany (NYSE:TIF) recently hitting an all time high — as have some other luxury retailers.  You see where I’m going here?  If not, see here or here.  Or here.

Read More

Category: Consumer Spending, Current Affairs, Cycles, Data Analysis, Economy

ADP’s Job Data Reliability? Not Great . . .

> Yesterday’s selloff was triggered in part by a weak ADP report, and fears of a broader economic slowdown. Lets see if we can navigate the crosscurrents here to discern what, if anything, is happening. First off, the economy is slowing. At least, the 2nd derivative rate of growth is throttling back, from over 3%…Read More

Category: Cycles, Economy, Employment

ECRI: Global Slowdown to Hit by Summer


Global Slowdown to Hit by Summer, Even for U.S., Says Achuthan
Stacy Curtin
Yahoo Daily Ticker

Category: Cycles, Economy, Quantitative, Video