Tuesday, June 30, 2009

Where Are the Green Shoots?

Despite the strong signals for economic growth from the Leading Indicators, it is disconcerting to find consumer confidence down in May (Conference Board today), as well as the following:

Restaurant Industry Outlook Softened in May as Restaurant Performance Index Posted First Decline in Five Months

The outlook for the restaurant industry was dampened somewhat in May, as the National Restaurant Association’s comprehensive index of restaurant activity registered its first decline in five months. The Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 98.3 in May, down 0.3 percent from April and its 19th consecutive month below 100.

“With the performance of the current situation indicators holding relatively steady in May, the RPI’s decline was the result of restaurant operators’ dampened outlook for each of the four forward-looking indicators,” said Hudson Riehle, senior vice president of Research and Information Services for the Association. “


Bad news out of the Chicago Fed on the Midwest Manufacturing Index

The Chicago Fed Midwest Manufacturing Index (CFMMI) declined 3.1% in May, to a seasonally
adjusted level of 78.2 (2002 = 100). Revised data show the index was down 1.4% in April, to
80.7. The Federal Reserve Board’s industrial production index for manufacturing (IPMFG)
was down 1.0% in May. Regional output in May declined 24.4% from a year earlier—lower
than the 15.2% decrease in national output.

Past is not prologue. Cycles turn. However, it sure looks as if too many business trends are flat to down so far into an economic downturn and despite an almost uncountable number of Fed and Federal programs.

Whither prices of financial assets if the expected recovery is below expectations?

Today's price action, with stocks and gold down and Treasuries flat, may tell that tale.

Copyright (C) Long Lake LLC 2009

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