U.S. Economic Trend Update
James Picerno | Oct 18, 2012 01:59AM ET
The September data profile is nearly complete and the numbers provided so far reflect an economy that continues to grow. Of the 12 indicators published to date for The Capital Spectator Economic Trend Index (CS-ETI), 9 are trending positive. That’s a strong signal for assuming that recession risk was still low last month.
As the table below shows, there are relatively few signs of trouble according to a broad set of economic and financial indicators. In fact, one danger sign for July and August turned positive last month (ISM Manufacturing).
The 3-month moving average for CS-ETI, which is calculated from the numbers in the table above, is currently at 75.0% through September, based on the published data. As the next chart suggests, recession risk at these levels is a low-probability event according to the historical record. A drop below 60% would be a warning sign, and sliding under 50% would indicate that a new recession is a virtual certainty. Fortunately, CS-ETI’s 75.0% reading appears relatively stable and comfortably above the hazard zone. Although the September level to date is slightly below August's 76.2% on a 3-month moving average basis, that's a slight fall and well within the normal range of fluctuations during periods of economic growth.
For some perspective on CS-ETI’s outlook for the immediate future, consider “forecast package, which optimizes the model's parameters based on each data set's historical record.
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