Brief Explanation of the Index
Blue World Economic Index®
Scale: -2 to +2
Release Date: Usually the Last or First Business Day of Each Month
Release Site: www.blueworldassetmanagers.com
Management Value: Critical
Release Site: www.blueworldassetmanagers.com
Date: Monday May 1, 2017
Brain Surgery is not Rocket Science to a Brain Surgeon©
The gulf between consumer and institutional optimism surveys, and the hard performance data continues to be the story in the Blue World Economic Index®. Consumer mood and anecdotal institutional survey data continue through the roof, although there was some pullback at the institutional level in April. Nevertheless, retail and consumer spending were bordering on abysmal for the month so the aforementioned gulf actually widened when the whole I’m-an-economics-geek world expected it to start showing signs of narrowing!
The composite index was essentially flat coming in at -.12 compared with -.11 in March. That flatness is on the back of a major surge and some trend upgrades very late in the month right up to and including Friday morning. It makes some sense to post the whole Major Category table this month in order to limit what could easily run into three pages of explanation, but we will hit the highlights and lowlights here in the text body. Let’s start with the weak, and work our way better.
Of the eight major categories, the far and away biggest losers were Services and Employment, both posting .17 drops. Yes, we said Employment, regardless of all the nonsense we hear about how great the labor market is. We still have WAY too many people in the Not in Labor Force camp to say employment is strong. Retail took a hit, and that was in large part due to a slowdown in auto sales.
On the upside, Consumer measures are on a rocket ride that just won’t slow down, and that even includes Sentiment which takes party affiliations into account. This is just bizarre when compared to consumer spending, which was the biggest hit to Friday morning’s GDP report.
As you can see above, the Fed subgroups did pull back a bit but are still strongly positive at .3, but the hard data from the non-Fed group breakout are decidedly negative and moving down.
Q2 will be fascinating to watch as this economy struggles to find a direction. In the meantime, look for the Blue World Jobs Report Analysis next Friday or Monday.
Have a great May and a happy spring!