U.S. Economy Deteriorating or Not

The last couple of months have been confusing and many companies have reacted with extreme caution. The two dominant worries have been the status of the dollar and whether interest rates will rise. The consensus view earlier in the year was that rates would be going up in June and the dollar would be close to parity with the euro at about the same time. Now these views have shifted somewhat and the rates may not go up until September and the dollar’s surge has tapered off just a little. The impact of winter has faded and it really only affected a small part of the country while there has been some rise in the price per barrel of oil and the sector feels a bit more stable. Is that sufficient to describe the roller coaster in the CMI data? We may have to wait for May data to be able to determine that.

The rest of the CMI data has remained relatively stable. The category of sales moved up slightly from 58.4 to 59.1, but for the bulk of the last year it was in the 60s. The new credit applications data also improved a little and went from 56.6 to 58.6. Dollar collections improved a little as it went from 57.6 to 58.8. Thus far this is about where it has been for the last few months, but close to the lowest reading back in December. Overall the index of favorable factors improved—going from 58.3 to 59.8—back to the levels seen through most of the last several months.

There is continued distress in the unfavorable categories and it seems that the problems of the last couple of months have been manifesting in the unfavorable readings. The overall index has fallen slightly from the revised
50.1 reading in March and now sits at 50.0. Most of the other categories worsened in the past month and left the overall index at an even 50.0—right on the brink of sinking back to the contraction zone again.

...This is a month with some mixed messages. The overall CMI index number improved from where it was last month, but only by a fraction. The 53.4 reading in March is at 53.9. This is good, but it is also evident that the last couple of months did some damage as there are weak numbers throughout the unfavorable categories. It would appear that a collapsed energy sector, winter worries and trepidation regarding dollar values and the interest rate weighed pretty heavily on previous months. But most of these shouldn’t be issues by summer.
Report for April 2015

Mish: Consumer Confidence Plunges Below Any Economist's Estimate; Consumers Shock Economists
In a huge shock to economists, consumers actually did what consumers said they would do rather than what economists models predicted.

And economists still don't believe it. They are looking for 3% growth this year, whereas I think the US is in recession.

Raw data looks better as noted in QE Screwed Up GDP Reporting?, and there's a major historical data revision coming on July 30......

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