Economic & Profits Indicators

Weekly Leading Economic Indicators
The weeklies I follow moved up substantially over the Jun. '12 / Jan. '13 period, although
there was unusual volatility involving jobless claims in the wake of Hurricane Sandy. The
weeklies have flattened out since Feb., but there has been no break down of trend yet. The
pattern still suggests better economic growth through April.

Monthly Coincident Indicators
I use a combine of retail sales, production, the real after tax wage and jobs growth all
measured yr/yr to derive my coincident indicator. On this measure, 3.0% is a good
number and would indicate the economy is or can hum along nicely. Not so, recently.
For Feb., the reading was a low +1.1% and reveals a growing imbalance between sales
and production on the one hand and the income components on the other. The data is lousy
and suggests that consumers must continue to dip into savings and tap borrowing to sustain
spending. With gasoline prices dipping some here in Mar., the heavy pressure on the real
after tax wage may ease up some. It is fair to say that my view may be conservative since
consumers do have stronger borrowing power now but it is also fair to say that pressure on
real personal income will, if sustained for a while, eventually pull down consumer spending.

Profits Indicators
Stronger sales and industrial output in Feb. brought my yr/yr measure of business sales up
to nearly 4%. The price / cost ratio was slightly in favor of cost, so there could still be
companies experiencing profit margin pressures. Feb. also saw some currency translation
penalties on a stronger US$. On balance, profits were a bit lower going into Mar., but it
must be said  recent higher sales and production numbers still hold out promise for
improved quarterly earnings yr/yr.