Friday, October 18, 2013

Philly Fed

Because of the shutdown, there are no "official" data releases about the latest economic conditions, although I suppose one could regard the Philadelphia Fed as official!

I've plotted it with a 3 month moving average (it's very "spiky" unadjusted), and this measure of it is well correlated with overall national economic activity.

So for what it's worth, it does look as if the economy is picking up, despite the political shenanigans.



Tuesday, October 15, 2013

Rational Economics



"Rational Economic Behaviour" is peculiar to market capitalism and is an embedded set of beliefs, not an objective universal law of nature.  The myth of economic man explains the organizing principle of contemporary capitalism, nothing more or less.

                                    John Gowdy, quoted in Sex at Dawn by Christopher Ryan & Cacilda Jetha

You can read more of John Gowdy's insightful views here.

Wednesday, October 2, 2013

ISM & PMI for September

These two surveys provide the earliest national estimates each month for the previous month's economic performance.  They are derived from sample surveys of buyers at major corporations.  You would think they would give identical results, but they don't.  That's called random variability.  All economic "data" have random fluctuations.  But if (if!) the fluctuations are truly random and not correlated, then averaging the two should in principle produce an outcome closer to reality.  Maybe.

Anyway, the chart below shows the PMI and the ISM and the unweighted average of the two.  Remember that for both times series, 50% represents a turning point.  Above 50%, the economy is rising; the further above the faster.  Below, the economy is contracting, and so on.  My take on it: the economy continues to expand.   How much longer that will continue with the Federal government shutdown is another matter.  The Feb to May downturn was a direct result of the forced fiscal tightening, the so-called "sequester".   A prolonged shutdown could push the US back into recession.