Our real narrow money index continues to decline and is sending an increasingly bearish cyclical signal for the global economy and commodity prices. Our real narrow money index has now declined for 4 months running and is now tracking below 7% for the first time since October 2010.
Our leading indicator for China has turned down further which adds to the impression of an overall weak turn in Chinese growth. We would still term the turning point as intact, but all components of our leading indicator recently came in with negative readings.
Short-leading indicators for the US and global economy continue to show very strong signals mainly driven by low credit spreads and strong stock market performance.
The US economy is currently marked by weak manufacturing, but with a housing market showing signs of a sustainable recovery. However, the Fed is focused on the job market, leaving the option open for more quantitative easing if it doesn’t begin to materially improve (which is highly unlikely in the near term)
So far the recovery in output, income and employment following the 2008/09 recession has been the weakest on record with only industrial activity appearing to buck the trend. Most remarkably, however, is the steady decline in post-recession expansions of employment and personal income growth. In the US, these have fallen since 1982, but have currently hit a new low point.