More Economic Indicators

Coincident Indicators
Viewed yr/yr, the coincident indicators are down 5.8% through Apr.
That represents a slight improvement from Mar. Only the real
wage remains positive, with employment, retail sales and production
all in deep negative territory. Viewed month-to-month, the coincident
indicators have lost some of the downward thrust, but do not yet
indicate the economy has hit bottom. The big losses to date in 2009
have come in production and employment as inventories are pared.
When measures of new orders are added in, the picture looks more
stable.

The 13.9% yr/yr decline in the dollar cost of production matches the
Mar. number and shows that non-financial profits remain depressed.

Capital Slack
Measures of capital input remain depressed across the board.
Capacity Utilization in the US is down to 69.1%, and the growth of
capacity over the past year is a scant 0.3%. With more mothballing
on tap, the physical component of capital could shrink at some point
ahead. Large production losses are also evident globally as well.
Business credit demand is starting to contract at a faster pace
reflecting reduced working capital needs.

Inflation (Deflation) Thrust
Yr/yr through Apr., the CPI declined by 0.7%. Thus, we are seeing
mild price deflation as expected. The thrust indicator looks now like
it will bottom in Jun. before turning up from deeply depressed levels.
A broader measure of inflation thrust based on monthly data could
be bottoming now.

The CPI without seasonal adjustment has been rising since Dec. '08
on higher fuels prices. However, the Apr. reading remains 3.8%
below the Jun. '08 all time high. Even so, it is wise to keep an eye on
gasoline prices and entire commodities price composites as the year
progresses.

Long Term Economic Indicators
This composite is still positive, but it has shown some deterioration
because of the rapid recovery of the inflation adjusted crude oil price
this year. Crude market players are betting on a significant recovery
of oil demand over the next 12 months even though carry or cover
stocks remain at high levels in a depressed demand environment.
As we have learned in recent years, this type of wagering can have
significant economic effects.