Main US Economic Indicators, Update December 21, 2012

The four best “recession” indicators, in form of coincident economic indicators, can be seen at Doug Short/Advisor Perspectives, here in detail.

Update December 21th, 2012

Big 4 Indicators: Industrial production, retail sales, real income,

We observe the following:

US indicators point upwards, when the rest of the world is slowing.

The rest of the world was slowing for the whole for the fourth quarter, just China has restarted its recovery. After capital left many emerging markets and Europe, this capital helps the United States to push up house prices, consumer sentiment and stocks. Gasoline prices are not rising any more, which is positive for consumer sentiment.

Real income has risen far more slowly than industrial production, overtime work

Real income has risen far more slowly than industrial production. Companies are increasing profits, the US is becoming more productive. Productivity comes from both higher production and slowly increasing real wages, hence the US is becoming more “Chinese”. A point which is not covered in Doug’s charts is that real income per hour is not rising.

source Zerohedge

Employment cannot cope up with population growth, creates a split society

Employment remains subdued. It cannot cope up with population growth. Like often around Christmas, job creation is better. In addition the Fed’s QE3 let people spend more.

If we take the September value of 114’000 new jobs, then job creation cannot cope with population growth and the 11.8 million jobs lost since the financial crisis.

 jobs creation needed based on September (source)

College Premium (source Paul Krugman), click to expand

This leads to a split American society:

• entrepreneurs, stock owners, well qualified people
• the ones with negative real increases in income,
• the ones without work (the “not in labor force has increased by 8.5 million since 2008) and/or the ones who live on foodstamps (from 31.1 in 2008 to 47.6 million)

Real sales are rising more quickly than real income: Deficit spending

Real sales is rising more quickly than real income: Last but not least thanks to the Fed’s actions, Americans are deficit spending again.