Friday, July 25, 2014

The Upward Trend Continues

The JRB Economic Index continues its upward trend. The May, 2014 reading of +1.09 indicates slow but steady growth in the economy.  The unemployment rate is declining and automobile sales are climbing. Let us hope this economic progress continues well into next year.

Sunday, June 15, 2014

More Slow Growth.

The JRB Economic Index rose again in April to a reading of +0.96, indicating that the recovery continues at a slow pace.  We expect a continuation of the recent upward trend.

Wednesday, May 7, 2014

Slow And Steady Growth

        The JRB Economic Index fell slightly in February. The new reading of +0.85 was slightly lower than the January, 2014 reading. The 288,000 jobs added in April, was the largest gain in two years. Vehicle sales are rising and consumer sentiment is on the rise as well.  The problem causing the slow growth path the economy has taken, is the lack of wage growth.  The jobless rate continues to decline, but the trend in hourly wage growth is hurting the purchasing power of consumers.  So we continue on this path of continued slow growth.  Because economic growth remains slow and inflation remains in check, it is quite possible that this recovery may well prove to be longer in length than most economists estimate. Let's hope this is genuinely the case.

Monday, March 24, 2014

An Upward Trend Has Begun.....Again

Here we go again. The JRB Economic Index
has started to rise yet again. The January, 2014 reading was a positive 0.90 and marks a new upturn in our Index. The economic picture we see in our Index is one of slow uneven growth. With the Federal Funds Rate remaining at such a low level for an extended period of time, a true picture of economic growth has emerged. Expect slow growth moving forward as short-term rates remain low.  The Fed is attempting to unwind its stimulus at a slow and steady pace so as not to rattle the markets. It should be interesting to see what the new Fed Chief will do going forward.  How soon will it be before a rate increase? At this point, it would seem that any Fed Funds hike is a year or more away. And with no rate increases in sight, it appears that a continuation of our chart trend seems likely.

Wednesday, January 22, 2014

Revised Data for the Index

The JRB Economic Index fell again in November to a reading of plus 0.76.  A prior reading showing an upward slope in the index is incorrect. Due to an unusually large disparity between the preliminary monthly reading and the final index reading, what appeared to be an upward trend, turned out to be a slight downward movement for the index instead. However, even though the Index continues to show weakness, we believe that the Index will turn in an upward direction prior to reaching the zero mark. All signs point to a rebound in our Index sometime in the near future. Please remember that for the Index to signal that a recession has started, the plunge in the Index would have to fall below a minus one reading. If the Index does fall below the minus one mark, it would signal that a recession was already in progress, and that the recession had its beginning sometime between the peak in the Index and the subsequent reading below the minus one figure.

Sunday, November 24, 2013


As Good It Gets?

It may just be that the economy may continue on its current bumpy path for several years to come.  It would appear that Janet Yellen will become the next Federal Reserve chairwoman. In all likelihood, this would signal no new change in policy from that of the outgoing chairman Ben Bernanke. The recovery, which began over four years ago, has been tepid compared to previous recoveries. It may just be that because of the slow pace of growth, the recovery may last longer than in past economic cycles. Inflation remains quite low and the unemployment rate is still quite high. The current economic numbers point to an economy slowly on the mend. We see no reason for the Federal Reserve to exit its stimulus efforts in the near term.

The JRB Economic Index rose in September for the first time in several months. The September reading of plus 1.06 points to a continued slow growth rebound in economic activity. We continue to believe that the real danger to our economy going forward is deflation and not inflation. With a slack economy and little sign of inflation ahead, the Fed can not afford to tighten monetary policy in the coming months. A faster pace of job growth would be needed for the Fed to feel comfortable enough to raise short term interest rates. At least for the next year or so, the bumpy economic ride we are on, may well be as good as it gets.

Thursday, September 19, 2013

No Taper

In our last post we suggested that the stock and bond markets had been mistaken in their reaction to the proposed Fed tapering by the end of the year. Yesterday, the Federal Reserve was right not to begin to reduce their monthly bond purchases. Economic data of late did not point to a "substantial improvement" in the economy. The labor market continues to struggle, as wages continue to stagnate and job growth has not grown very fast. Additionally, inflation seems to be nowhere in sight. The Federal Reserve would like inflation to rise quite a bit so as to make the markets actually favor a tapering move. The ten year treasury bill rate exploded to the upside last month after the Fed said it might start tapering in the coming months. Any further rise in rates in the short term could prove to be a disaster for the recovery in the housing sector. So the Fed decided not to taper at this point. It now seems evident that the Federal Reserve is sticking to its dual mandate of price stability and full employment.

The JRB Economic Index fell again in July to a reading of plus 1.00.  The recent downward slide is but a continuation of a pattern of slow growth in the economy. We fully expect the Index to turn upward again in the coming months. Let us hope that the upcoming budget negotiations are resolved without damaging the economy. Failure to raise the debt ceiling would be a disaster. At the time of this writing a government shutdown seems to be a distinct possibility. Let us hope that cooler heads prevail.