The project that brought about this website is not about modeling or understanding the economy. Furthermore there are presently no plans to create a portfolio management scheme that incorporates macroeconomic variables. That said, this page will be of interest when the US economy next begins a recession. The charts, but for the one on rail freight volumes, are all based on US government data— the Conference Board data too, for the most part.
The first chart on the right— below if your screen is not of sizeable width— features the world-famous Leading Economic Index (LEI) of the Conference Board. The LEI for the United States has just about returned to the peak value that it had attained prior to the Lehman Brothers/subprime financial crisis of 2008. But not all of the recent months have been up months.
Clicking on that chart loads a web page. On the left side of it you can select China in place of the United States, and find an LEI chart for China. It's stunning— an unbroken meteoric rise since the late 1980's. However, prior to becoming the Premier of the State Council of the People's Republic of China, Li Keqiang, who is an economist, stated his distinct lack of trust in official Chinese government statistics on economic conditions. He prefers to rely on such things as “the cargo volume on the province's railways, electricity consumption and loans disbursed by banks”.
And that brings us to the next three charts, which respectively pertain to freight movement on railways, to the sales volumes of distillate fuel oil and to electricity production. The oil is primarily made into diesel fuel for trucks and locomotives; a bit of it goes to space heating, industrial process heat or the generation of electricity. If you click on the Association of American Railroads chart and scroll down to the bottom of their page you'll see that there has only been a partial recovery of freight traffic— it has yet to return to 2008 volumes— and that while the last three quarters of 2016 and January of 2017 saw strong growth there has most recently been a downturn, with volumes approaching the depressed levels of the spring of 2016. So the chart still bears watching to see if the recent improvements are not vanishing. (The pronounced seasonal dips that appear on the chart that is shown here are evidently for national holidays: Easter, the Fourth of July Independence Day, Labor Day, Thanksgiving and Christmas. The holidays do not always fall during the same week every year and the drastic plunge in February of 2015 may have been due to record occurrences of blizzards affecting the populous northeast. However, the pronounced decline going into the 12th week of 2016 is without any such explanation.)
The distillate fuel oil chart covers a longer time span and on it we can see a steady increase in usage from 1991 until the 2008 crisis. Since then there has only been a partial recovery and current volumes are not much different from what they were in the year 2000, notwithstanding the fact that the population of the United States has increased from about 282 million persons in 2000 to about 323 million today.
Electricity generation in the United States has fared better— there was essentially no dip during the 2008 financial crisis. However, the generation, which naturally fairly equals the usage, has not increased in more than a decade notwithstanding the aforementioned population increase. Conservation? No doubt, in some measure, but there has been a fairly large increase in electricity prices in the last decade that has outrun consumer price inflation by more than a factor of three.
The Loans and Leases in Bank Credit chart basically represents private-bank lending activity to businesses. It dipped markedly during the 2008 financial crisis but has grown steadily since then in a way that has outstripped producer and consumer price inflation (which this very growth in credit partly effects) and population growth.
We would like to focus on real things, and so when it comes to the money that ordinary people have it's not so much how much money but how much it will buy. It would not do to hear about how many jobs have been created or lost, or the length of the work week, or the percentage of respondents who said that they were unemployed and looking for work. Such statistics as those on job growth, which could be due to a shift to more numerous but part-time and temporary jobs, have to be considered in relation to the fact that the income has to be spread over a population that is growing. The next two charts on wages and salaries and income are inflation-adjusted, essentially referenced to the current purchasing power of a US dollar.
And we do also take into consideration population growth, putting the data on a per capita basis, thus creating in the form of the Per Capita Inflation-Adjusted Wages and Salaries chart an index that represents something like “citizens' earned purchasing power per mouth to feed”. You can see that the inflation-adjusted dollar amounts generally grew from the 1960's through to about the year 2000, but that there had been little or no progress since then... until quite recently when new all-time highs were reached. That the annual income amounts on the generally similar last chart exceed the stated wages plus salaries amounts of the prior chart is due to the fact that the Census Bureau counts transfer payments such as from the Social Security Administration or from the US Department of Agriculture (food stamps) as income, in addition to wages and salaries. (Sharp peaks on the second-to-last chart are artifacts due to the use of seasonally-adjusted data.)
Mike O'Connor is a physicist who now develops and tests computerized systems for optimizing portfolio performance.
— Mike O'Connor
Comments or Questions: write to Mike. Your comment will not be made public unless you give permission. Corrections are appreciated.
Update Frequency: Weekly (but the government statistics are often quite late)