(02-12-2019, 04:26 AM)pbrower2a Wrote:(02-07-2019, 05:00 AM)Galen Wrote:(02-06-2019, 11:50 AM)Hintergrund Wrote: And meanwhile the stock market has recovered pretty well. Find some better explanation.
Maybe that have but it seems to me that this is a bear market rally. There are plenty of signs that the economy is in recession or about to be in recession. Truck orders falling off is a big clue that something isn't quite right. I will leave it as an exercise for the reader to find the others.
Average weekly hours (manufacturing)
Average weekly jobless claims for unemployment insurance
Manufacturers' new orders for consumer goods/materials
Vendor performance (slower deliveries diffusion index)
Manufacturers' new orders for non-defense capital goods
Building permits for residential properties
Stock prices of 500 common stocks]
Money Supply (M2)
Interest rate spread
Index of consumer expectations
https://en.wikipedia.org/wiki/Economic_i...Indicators
Basically, as the economy strengthen, employers tend to lengthen hours for existing workers because such is easier to undo than to hire new workers. New workers require training that makes them more costly to employ at first. But there are limits, and workplace efficiency drops off rapidly after ten hours a day. During World War II, the British ramped up hours of toil in industrial plants -- but found that at a certain point they had to cut back hours so that workers would be more efficient in the hours that they worked. That was not charity; there were just too many industrial accidents, and productivity by tired people was falling off. At a certain point, employers seek new workers for industrial jobs.
On the other side, hours get reduced as industrial demand weakens. It is easier to cut back on hours than to lay people off -- especially if people laid off might find work elsewhere and no longer be available. New hires and mass firings come later in a boom or a recession.
Old claims for unemployment insurance change nothing as an indicator. New claims suggest that people are losing jobs. Fewer new claims indicates that people are not losing jobs. Termination of unemployment may indicate that people completely drop out of the paid labor force or join the precarious informal sector.
Manufacturers' purchases for raw materials or sub-assemblies for consumer products indicate reflect what those manufacturers expect to do in the next few months. Thus if an automotive manufacturer is buying up lots of glass or leather, such can only suggest taht the manufacturer expects to build more automobiles. But should the vendor requests go down, such suggests a lower level of manufacturing.
Related to such is the relative difficulty of getting raw materials and components. Suppliers may have surpluses in slack times, and in slack times one can buy such things and get them rapidly. In boom times, such things may not be so readily available. Do people want them -- or do they not?
Purchases of new capital goods typically imply re-tooling for new lines or expansion of productive facilities. This may also reflect that equipment has been damaged in calamities. Capital expenditures are huge (and this applies to people buying transportation equipment such as eighteen-wheelers, obviously huge capital costs to truckers or trucking businesses) and are not made for trivial reasons. Capital expenditures are among the most cyclical of purchases.
Building permits for residential property? New construction of any kind suggests a huge increase in hiring as construction workers go from being unemployed or underemployed to fully employed. Construction labor can really cut into unemployment. On the other hand, as construction activity diminishes, construction workers lose jobs and their participation in the economy falls. This is the classic example of a leading indicator.
Prices of the top 500 stocks? This is highly visible, and even proles pay attention to the Dow Jones. High prices create a wealth effect in expectations of people who do not even own stocks. Note also that high stock prices might reflect low interest rates. When Obama was President, owning stock shares made more sense than savings for many people. Why get 0% interest on a savings account when you can own a stock that pays dividends? On the other side, falling stock prices suggest the inverse of a wealth effect -- and low stock prices may reflect high interest rates.
Governments set the money supply to justify their economic objectives, whether by fostering investment or 'cooling' an over-heated economy. Interest rates get to feel the effect.
The spread between short and long interest rates suggests whether people might want to invest. Borrowing short for long-term investment is risky, but any opportunity suggests risk. If people think that they can get away with the risk they might take the chance. But borrowing short when long-term lending is less expensive is something that one does only in desperation.
Finally -- consumers generally make rational choices on big-ticket purchases from cars to appliances to furniture -- and of course housing. If they think things shaky they might make things do or do without while waiting for better times. Consumers have typically been largely blue-collar workers, whether construction laborers or industrial toilers. They can tell when fewer and less-expensive things are going in and out the loading dock. They are the first to know when production lines slow. Construction workers know when their role in building things comes to an end.
End of lesson.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.