After reading a large amount of data, there appear to be two economic issues domestically that are indicators of the slowdown.
1.) Manufacturing. We're seeing one month slowdown readings from a variety of regional Fed indexes. We've seen weaker readings from Dallas, Richmond and Kansas City. This month, we've seen drops in Philadelphia and New York's readings. These readings are confirmed by the latest industrial production number from the Federal Reserve, which took a big hit from auto production decreases caused by Japan's earthquake.
2.) Initial unemployment claims: these spiked to very uncomfortable levels over the last few weeks, but have since dropped back to just over 400,000. We've heard continually that the increase was caused by one-time, seasonal factors. The latest drop adds some credibility to these thesis, but we're still not out of the woods.
I mention these points, because the latest leading indicators dropped by .3, with the drop caused by lower readings from a majority of the sectors.
Right now the incoming date continues to be mixed; the caution flag is still waving.
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In a comment here on March 14th, I wrote:
"Seeing as how I'm usually the one around here to be harping qualitatively on the risk of shocks, let me add this: If the global economy should weather this recent storm of insults successfully, I will finally come to trust in the resilience of the recovery, but I think it'll be three to six months before I come to that conclusion."
Well, it's only been two months so far, and while I'm willing to wait another one to four months before coming to a firm conclusion about "the resilience of the recovery", I have to say that with the latest round of data, I'm starting to lean against it.
P.S. If you haven't seen me around here much in the last month-and-a-half, it's because I've been busy with the chaos of a move from Long Island to beautiful Prescott, Arizona. You may recall me saying that I'd let you know when new hiring was about to pick up because my wife's childcare business would be a leading indicator. Well, let's just say that after two years of trying to survive on expensive Long Island with virtually no new business, we finally had to pack it in and move to less costly environs. We always said we'd retire here to Prescott (highly recommended for that BTW!) so we really just came here a couple of decades early!
The "good" news about the weaker manufacturing data is, it does seem to center on supply disruption relating to the Japan earthquake. I say good, because that will likely sort itself out, and the issue isnt something more structural.
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