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Old 09-27-2016, 05:32 AM
 
522 posts, read 332,101 times
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Hi Friends,

What are some of the best indicators of a economic slowdown?

I've read that car sales are the first to indicate a economic slowdown.

Here's a read on it.

On the other hand, we have this report that seems to indicate all is well?
LINK

BUT, what are some other indicators that work "in today's world?"

I think we live more in a international environment that affects our economy more so than ever.

Anyone else have an indicator that they follow that can be used as a barometer to "indicate future economic activity?"



Thanks!
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Old 09-27-2016, 05:58 AM
 
5,603 posts, read 4,211,347 times
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If you expect auto sales to be a barometer for future economic activity, I suggest you think again. Following the 2008-09 recession, auto sales were very low. Eventually old cars needed to be replaced. Sales have increased to the previous high levels. You can now expect the high level of sales to plateau. We have reached a level where that is probably going to start to happen.


No one has ever found a single, reliable marker to predict future economic activity. There is no reason to suppose there is a single marker that will ever come close on a consistent basis.
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Old 09-27-2016, 07:55 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
28,421 posts, read 50,646,420 times
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I agree with jrkliny. When there has been a long period of record car sales such as in 2015, eventually it has to end, because cars last so long. Those people that needed a new car in 2015 won't need one again for years, and due to the improved economy lots of them bought in 2015. The manufacturers base their production on the sales data, so with so many sold in 2015 they made more of them in 2016 to meet demand that is no longer there, so there are now good discounts to get rid of the excess inventory. In this case, it is not a sign of any change in the economy.
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Old 09-27-2016, 10:18 AM
 
3,701 posts, read 3,029,556 times
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The aggregate for those impressive auto sales was an unprecedented expansion of manufacturer credit policy coupled with one of the most inviting lease campaigns ever that resulted in very low monthly payments. Also, the cash for clunkers program can be considered as a anomalous feature of record auto sales. In light of those factors, auto sales is not a valid example of normal, nor predictable economic activity.

I don't know why the cyclical nature of economic ups and downs provides so much angst for the average American. There is certainly plenty of evidence of a recovery taking place, and it's also evident to those who are really looking, that we still have pockets of resistance to any measurable relief from the 09 meltdown. Some want to believe that we have a monolithic construct that is called, "the American economy." All ups and downs in this view are imagined as a universal lockstep system, affecting all of the population simultaneously. I try not to read about "the economy" too much.

Economic growth at a slow pace is always a better thing when trying to determine the length of the present positive cycle, I'd be alarmed if the stats showed an overly rambunctious growth. The future: How many people have made their living from speculating on future events? And, knowing that the legions of economic forecasters have been spectacularly wrong on many occasions, I'll take things on a day by day basis content in the understanding of change as a natural part of everything. To be fair, that guy named Bobby, down at the track, certainly does have a knack for picking the winners...
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Old 09-27-2016, 10:35 AM
 
4,229 posts, read 1,908,443 times
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Quote:
Originally Posted by jrkliny View Post
No one has ever found a single, reliable marker to predict future economic activity. There is no reason to suppose there is a single marker that will ever come close on a consistent basis.
There are leading, lagging, and concurrent economic indicators, all of which are watched by boatloads of talented and well-trained professionals. The best that can be done by anyone with any of these is a pretty fair stab at what the next 3-4 months might be like. You just can't see any further than that.

Projections of course are made many decades out into the future. In the fine print, all of those will note that they are based on what we know as of today. If what we know and believe right now continues to be the case, then a projection will continue to identify the most likely path that a given variable will take over time. As soon as the foundations of the projection become fluid or dynamic, all bets are off, and you need to redo the projection using new data and/or new understandings.
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Old 09-27-2016, 10:57 AM
 
Location: Paranoid State
12,685 posts, read 9,443,087 times
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Quote:
Originally Posted by Balkins View Post
Hi Friends,

What are some of the best indicators of a economic slowdown?
This topic is one of the most extensively studied by professional economists for the past 100 years.

Start at the National Bureau of Economic Research, and then graduate to the Federal Reserve.


At any rate, look at:

1) nonfarm payroll employment
2) the index of industrial production
3) real personal income excluding transfer payments, and
4) real manufacturing and trade sales.

(Real means adjusted for inflation).
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Old 09-27-2016, 11:49 AM
 
Location: Oregon, formerly Texas
5,242 posts, read 3,400,294 times
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Quote:
Originally Posted by Balkins View Post
Hi Friends,

What are some of the best indicators of a economic slowdown?

I've read that car sales are the first to indicate a economic slowdown.

Here's a read on it.

On the other hand, we have this report that seems to indicate all is well?
LINK

BUT, what are some other indicators that work "in today's world?"

I think we live more in a international environment that affects our economy more so than ever.

Anyone else have an indicator that they follow that can be used as a barometer to "indicate future economic activity?"



Thanks!
To tell the truth, if any of us had the answer to that, we'd be billionaires because we'd know exactly when to buy low and sell high every time.

Generally you want to read the work of professional economists. Determining and analyzing indicators is their job. I think good macroeconomic analysis comes from the various Federal Reserve branches. I tend to like the reports put out by the Fed of San Francisco.

You could also search out the work of prominent university economists or more readable pop media ones like Nassim Taleb, Paul Krugman, etc... but keep in mind that because they write for popular audiences, they typically have an agenda.
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Old 09-27-2016, 07:42 PM
 
2,621 posts, read 2,028,654 times
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There is so much pent up demand for cars right now, I don't think it is a good indicator anymore.

People are buying cars because they have been putting it off for so long they finally don't have any choice. They are also making it so if you can fog a mirror, you can get a car. Well, not quite, but close.

It seems that this last recession has really changed the game so much that it is going to be much harder to predict anything.
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Old 09-28-2016, 04:13 AM
 
6,827 posts, read 4,417,727 times
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Presumably the topic here isn't indicators of future trends in the economy per se, but in investment-opportunities. Impending recession, or burgeoning growth, have their respective implications for what investors ought to be doing with stocks and bonds, real estate and pork bellies and antique rugs. Maybe.

The economy moves slowly, and it is reasonable to surmise that – however erroneous or contradictory – there are indicators of broad trends. But is this information tradable, in the sense of providing accurate and reliable signals for how to make money? This I most highly doubt, for reasons already delineated in this thread; namely, that lots of smart people will have already observed the indicator and traded accordingly, rendering moot the indicator. For investment purposes, all news is already too late.

To be somewhat blunt: when it comes to investing, there is no such thing as useful knowledge.
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Old 09-28-2016, 08:05 AM
 
4,229 posts, read 1,908,443 times
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Quote:
Originally Posted by redguard57 View Post
Generally you want to read the work of professional economists. Determining and analyzing indicators is their job. I think good macroeconomic analysis comes from the various Federal Reserve branches. I tend to like the reports put out by the Fed of San Francisco. You could also search out the work of prominent university economists or more readable pop media ones like Nassim Taleb, Paul Krugman, etc... but keep in mind that because they write for popular audiences, they typically have an agenda.
The work of "pop" writers may be provocative, interesting, or entertaining, but thanks to the dynamics of "spin," it is not all that often going to be actually informative. As you note, even if more difficult to find and understand, the work of professional and academic economists is apt to provide more actually useful information and analysis. Bias and the promotion of an agenda are the kiss of death in such environments, as peers will cheerfully rip you to shreds for it. Professional standards and the scientific method itself demand that one remain as absolutely neutral as possible when engaged in serious economic work.

Policy-makers it should further be noted are rarely interested in your political views. They are interested in clear, concise, untainted economic work. That's what you must provide if you wish to be invited back.
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