Wednesday, March 18, 2015

Ice Patch or Soft Patch? (excerpt)

Most economic indicators are seasonally adjusted. Nevertheless, the latest winter was unusually bad. It was brutally cold and pounded the Midwest and Northeast with one snowstorm after another. On Sunday, Boston received the two or so inches of snow it needed to break its all-time recorded snowfall mark for a single winter, previously set back in 1995-96 (107.9 inches). The new record, as of 7:00 p.m., March 15, 2015: 108.6 inches. Down South and Southwest, several severe ice storms disrupted travel and business.

That might explain why the Citigroup Economic Surprise Index plunged from its most recent peak of 40.0 on December 29 to -72.0 yesterday, the lowest reading since August 23, 2011. This index also fell sharply during the previous two winters from December through February. Economists face enough challenges forecasting seasonally adjusted data. So they leave weather forecasting up to meteorologists and groundhogs.

Manufacturing production seems to have hit an ice patch as well during the latest winter and the previous two. It was down 0.2% m/m during February. January's was revised down significantly from +0.2% to -0.3%. During the three months through February, factory output rose only 1.8% (saar), the weakest since March 2014. It was also weak during the previous two winters.

Today's Morning Briefing: Ice Patch or Soft Patch? (1) Chauncey Gardiner’s forecast. (2) Our forecast: Spring will start on Friday. (3) Citigroup Economic Surprise Index can be moody, and depressed during the winter. (4) Factory output slips on ice and oil. (5) Regional business surveys down, but not out. (6) Optimism should blossom in March and April. (7) Real retail sales not too bad really. (8) In the spring, there will be shopping. (9) More Texans collecting jobless insurance. (10) The downside of the dollar’s upside. (11) Fed depending on slippery data. (12) What’s the rush to normalize? (13) Focus on market-weight-rated S&P 500 housing-related industries. (More for subscribers.)

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