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Economic indicator


hyten1
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I like the home construction numbers, I think they are very good for the bulls.  Construction is huge, impacts so many jobs.

 

Reason #1:  they can't get much worse (low risk of that industry doing much further damage)

Reason #2:  they have a long way to run to get back to normal (potential to support a sustained recovery)

 

I would be more worried if home construction were presently at normal levels, instead of lowest-ever levels.

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folks, i was wondering what are some of everyone favorite economic indicators to help guide you on what the current state of the economy is doing.

 

Personally, my main concern is if we are turning Japanese. Housing, Banking and Consumer Debt in my opinion are the key issues that are stopping the economy from recovering to trend.

 

Banks: Texas ratio and 30-89 delinquencies http://variantperceptions.wordpress.com/2011/08/29/charting-banking-xxii-three-years-after-lehman/

Consumer: Total debt and debt service

http://www.barelkarsan.com/2010/09/context-to-consumer-debt.html

Housing: absorption

http://www.usatoday.com/money/economy/housing/2010-03-01-buffett01_ST_N.htm

 

Europe might be a second concern, but I think it is more critical if you are investing there.

 

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Instead of railcar freight data, home construction, and many other various economic data, I think hands-down the best macro data are longer dated Treasury securities.  They're the best economists in the world-- 10yr and 30yr Treasury yields.  They've been right consistently and for a long time.  In terms of being forward-looking, they're better than any other data I know of.

 

Some people would argue that we are in a treasuries bubble (compared for example with corporate bonds and dividend yields). How would you know one way or the other?

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What did the long term bond yields forecast in the 1940s?

 

Did the long term bond yields in 2006 and 2007 forecast what was about to happen in 2008?  Then at the bottom in late 2008, did they forecast the turn that took place in 2009?

 

Personally, I think they are reactive.

 

EDIT:  And of course, what did long term bond yields forecast in the 1980s when they were in the teens?

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folks, thanks for your comments

 

i was thinking of comming up with a comprehensive list of economic indicators (actually collect as many as i can) and put it up on a website so that everyone can get a snapshot of what is going on at once

 

hy

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i was thinking of comming up with a comprehensive list of economic indicators (actually collect as many as i can) and put it up on a website so that everyone can get a snapshot of what is going on at once

 

That would be a great idea hyten.

 

One small comment, with economic indicators you have to know what you are looking for. You need an hypothesis and a point of view and from there the most useful indicators become obvious. If not, you are going to get swamped by the the sheer number of them.

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Are you sure your goal is just to retire?

 

I already did that.  Currently I have a little one that's in preschool and another that just started kindergarten.  Being at home with them is a full time job.  I feel like if I went and got really busy right now in a job I'd be missing out on quite a bit -- how long will they want to hold my hand in public?

 

Once they get older perhaps my life will get empty, although I like flyfishing quite a bit and could easily travel around the country catching fish for a while.

 

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