US Economic Indicators: Animal Spirits y 19, 18 Dr. Edward Yardeni 16-972-7683 eyardeni@ Debbie Johnson 48-664-1333 djohnson@ Mali Quintana 48-664-1333 aquintana@ Please visit our sites at www. blog. thinking outside the box
Table Of Contents Table Of Contents Consumer Confidence 1-3 Purchasing Managers 4 Small Business -7 CEOs 8 Regional Business 9 Home Builders S&P Forward Earnings 11 Boom-Bust Barometer & S&P 12 Employment 13 y 19, 18 / Animal Spirits www.
Consumer Confidence 18 Figure 1. 18 1 1 1 CONSUMER SURVEYS Consumer Confidence Index (198=, sa) Consumer Sentiment Index (Q1-1966=, nsa) 1 1 1 8 8 2 1 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 CURRENT CONDITIONS Consumer Confidence Index (198=, sa) Consumer Sentiment Index (Q1-1966=, nsa) 2 1 1 1 1 1 1 1 9 8 7 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 EXPECTATIONS Consumer Confidence Index (198=, sa) Consumer Sentiment Index (Q1-1966=, nsa) 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: The Conference Board and the University of Michigan Survey Research Center. 1 1 1 1 1 1 9 8 7 Page 1 / y 19, 18 / Animal Spirits www.
1 Figure 2. CONSUMER OPTIMISM INDEX* Consumer Confidence 1 1 1 8 8 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 1 1 CURRENT CONDITIONS 1 1 1 1 8 8 1 1 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 EXPECTATIONS 1 1 9 9 7 7 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 * Average of Consumer Sentiment Index (nsa) and Consumer Confidence Index (sa). Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: The Conference Board and the University of Michigan Survey Research Center. Page 2 / y 19, 18 / Animal Spirits www.
7 7 6 4 Figure 3. Consumer Confidence CONSUMER CONFIDENCE SURVEY: JOBS AVAILABILITY (percent saying so) Jobs Plentiful* (.) Jobs Hard To Get* (14.9) 7 7 6 4 67 69 71 73 7 77 79 81 83 8 87 89 91 93 9 97 99 1 3 7 9 11 13 17 19 21 * Every other month from 1967 through mid-1977, then monthly since y 1977. Seasonally adjusted. Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: The Conference Board. Figure 4. NFIB SMALL BUSINESS SURVEY: JOB OPENINGS & JOBS AVAILABILITY (percent) 7 7 6 4 Small Business with Job Openings* (3-ma) (34.7) Consumer Confidence Survey: Jobs Hard to Get** (14.9) 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 12 14 16 18 22 * First month of every quarter from 1974 to 1986, then monthly. ** Every other month from 1967 through mid-1977, then monthly since y 1977. Seasonally adjusted. Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: National Federation of Independent Business and The Conference Board. Page 3 / y 19, 18 / Animal Spirits www.
7 7 Figure. Purchasing Managers US MANUFACTURING PURCHASING MANAGERS INDEXES (sa) 7 7 6 6 4 4 M-PMI Total (.2) New Orders (63.) Production (62.3) Employment (6.) 6 7 8 9 11 12 13 14 16 17 18 19 Source: Institute for Supply Management. 7 Figure 6. US NONMANUFACTURING PURCHASING MANAGERS INDEXES 7 NM-PMI Total (9.1) New Orders (63.2) Production (Business Activity) (63.9) Employment (3.6) 6 7 8 9 11 12 13 14 16 17 18 19 Source: Institute for Supply Management. Page 4 / y 19, 18 / Animal Spirits www.
Small Business 1 Figure 7. NFIB SMALL BUSINESS SURVEY: OPTIMISM INDEX (1986=, sa) 1 9 9 9 9 8 Monthly data* (7.2) 12-ma (.7) 8 8 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 12 14 16 18 22 8 * First month of every quarter from 1974 to 1986, then monthly. Source: National Federation of Independent Business. 8 7 Figure 8. NFIB SMALL BUSINESS SURVEY: OUTOOK FOR GENERAL BUSINESS CONDITIONS (percent better minus worse 6 months from now) 8 7 Monthly data* (33.) 12-ma (36.) - - - - - - 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 12 14 16 18 22 - - * First month of every quarter from 1974 to 1986, then monthly. Source: National Federation of Independent Business. Page / y 19, 18 / Animal Spirits www.
4 - - - - - - - Figure 9. NFIB SMALL BUSINESS SURVEY: REAL SALES (Net percent expecting higher in 6 months) Small Business Monthly data* (26.) 12-ma (24.8) 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 12 14 16 18 22 4 - - - - - - - * First month of every quarter from 1974 to 1986, then monthly Source: National Federation of Independent Business. Figure. NFIB SMALL BUSINESS SURVEY: OUTOOK FOR EXPANSION (percent good time to expand next 3 months) Monthly data* (29.) 12-ma (27.2) 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 12 14 16 18 22 * First month of every quarter from 1974 to 1986, then monthly. Source: National Federation of Independent Business. Page 6 / y 19, 18 / Animal Spirits www.
39 36 Figure 11. Small Business NFIB: PERCENT OF FIRMS WITH ONE OR MORE JOB OPENINGS 39 36 33 33 27 27 24 24 21 21 18 18 12 9 monthly (36.) 12-ma (33.3) 12 9 6 87 88 89 9 91 92 93 94 9 96 97 98 99 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 21 Source: National Federation of Independent Business. 6 12 8 6 4 2 Figure 12. NFIB SMALL BUSINESS SURVEY: JOB OPENINGS & UNEMPLOYMENT RATE NFIB: Small Business with Job Openings* (percent, 3-month average) Unemployment Rate (percent) 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 12 14 16 18 22 41 39 37 33 31 29 27 23 21 19 17 13 11 9 7 * First month of every quarter from 1974 to 1986, then monthly. Note: Shaded areas denote recessions according to the National Bureau of Economic Research. Source: National Federation of Independent Business and Bureau of Labor Statistics. Page 7 / y 19, 18 / Animal Spirits www.
1 Figure 13. CEOs CEO ECONOMIC OUTLOOK & CAPITAL SPENDING IN NOMINAL GDP 1 8 Q1 Q2 CEO Outlook (>=expansion) Capital Spending (yearly percent change) - - - - 3 4 6 7 8 9 11 12 13 14 16 17 18 19 Source: Business Roundtable, Bureau of Economic Analysis, and Haver Analytics. - 1 1 1 9 7 - - - 1 1 1 9 7 - - - Figure 14. CEO ECONOMIC OUTLOOK & CAPITAL SPENDING IN REAL GDP: EQUIPMENT & STRUCTURES CEO Outlook (>=expansion) CEO Outlook (>=expansion) 3 4 6 7 8 9 11 12 13 14 16 17 18 19 Source: Business Roundtable, Bureau of Economic Analysis, and Haver Analytics. Capital Spending: Equipment (yearly percent change) Capital Spending: Structures (yearly percent change) Q1 Q2 Q2 - - - - - - Page 8 / y 19, 18 / Animal Spirits www.
Regional Business Figure. REGIONAL MANUFACTURING INDEXES* - - - - - - - - Composite NY & Philly (=24.2) NY, Philly, and Dallas (=27.1) NY, Philly, Richmond, and Dallas (=.4) NY, Philly, Richmond, KC, and Dallas (=.9) NY, Philly, Richmond, KC, Dallas, and Chicago (=.8) 11 12 13 14 16 17 18 19 New Orders NY and Philly (=24.8) NY, Philly, and Dallas (=22.9) NY, Philly, Richmond, and Dallas (=22.7) 11 12 13 14 16 17 18 19 NY, Philly, Richmond, KC, and Dallas (=23.6) NY, Philly, Richmond, KC, Dallas, and Chicago (=23.6) - - - - - - - - - - Employment NY and Philly (=17.) NY, Philly, and Dallas (=24.4) NY, Philly, Richmond, and Dallas (=23.8) NY, Philly, Richmond, Richmond, and Dallas ( (=23.9) NY, Philly, Richmond, KC, Dallas, and Chicago (=22.2) - - - 11 12 13 14 16 17 18 19 * Chicago contains both manufacturing and non-manufacturing firms with global operations. Source: Federal Reserve Banks of Kansas City, New York, Philadelphia, Richmond, Dallas, and Deutsche Borse Group. - Page 9 / y 19, 18 / Animal Spirits www.
Home Builders 9 8 Figure 16. NAHB HOUSING MARKET INDEX & SINGLE-FAMILY HOUSING STARTS 17 7 12 Housing Market Index Single-Family Housing Starts (thousand units, saar) 7 9 8 7 7 9 96 97 98 99 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 NAHB HOUSING MARKET INDEX COMPONENTS Current Single-Family Sales Index Future Single-Family Sales Index 9 91 92 93 94 9 96 97 98 99 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 NAHB HOUSING MARKET INDEX COMPONENTS 2 9 8 7 7 Traffic of Prospective Home Buyers 9 91 92 93 94 9 96 97 98 99 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 Source: National Association of Home Builders and Commerce Department. Page / y 19, 18 / Animal Spirits www.
19 17 1 1 S&P Forward Earnings Figure 17. S&P OPERATING EARNINGS PER SHARE: FORWARD & ACTUAL (Thomson Reuters data) (dollars per share) 7/12 Earnings Per Share Forward* (169.79) Operating** (4Q sum) (1.12) Q1 19 17 1 1 1 1 9 9 7 7 86 87 88 89 9 91 92 93 94 9 96 97 98 99 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 * Time-weighted average of consensus operating earnings estimates for current and next year. Monthly through March 1994, then weekly. ** From S&P until Q4-1993, then from Thomson Reuters I/B/E/S. Source: Thomson Reuters I/B/E/S. 17 1 Figure 18. S&P OPERATING EARNINGS PER SHARE (analysts consensus estimates, dollars, weekly, ratio scale) Consensus Forecasts Annual Forward* 17 18 19 7/12 17 1 1 1 7 7 18 19 Frwd 161.22 177.4 169.43 12 161. 177.16 169.79 3 4 6 7 8 9 11 12 13 14 16 17 18 19 * Time-weighted average of consensus estimates for current year and next year. Source: Thomson Reuters I/B/E/S. Page 11 / y 19, 18 / Animal Spirits www.
2 2 2 2 2 19 18 17 1 1 1 1 1 1 9 8 7 Figure 19. Boom-Bust Barometer & S&P S&P FORWARD EARNINGS & BOOM-BUST BAROMETER (weekly) S&P Forward Earnings* Boom-Bust Barometer** 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 7/14 17 1 1 1 1 1 1 9 8 7 * Time-weighted average of consensus estimates for the current year and next year. ** CRB raw industrials spot price index (weekly average) divided by weekly initial unemployment claims, showing four-week moving average. Source: Commodity Research Bureau, Bureau of Labor Statistics, and Thomson Reuters I/B/E/S. 2 2 2 2 2 2 19 18 17 1 1 1 1 1 1 9 8 7 Figure. S&P INDEX & BOOM-BUST BAROMETER* 7/19 S&P Index Boom-Bust Barometer 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 28 2 2 18 1 8 * CRB raw industrials spot price index (weekly average) divided by weekly initial unemployment claims, showing four-week moving average. Source: Bloomberg, Commodity Research Bureau, Bureau of Labor Statistics, and Standard & Poor s. Page 12 / y 19, 18 / Animal Spirits www.
Employment 3.6 3.4 Figure 21. LAYOFFS & QUITS (millions, sa) May 3.6 3.4 3.2 3.2 3. 2.8 Quits (3.6) Layoffs (1.6) 3. 2.8 2.6 2.6 2.4 2.4 2.2 2.2 2. 2. 1.8 1.8 1.6 May 1.6 1.4 1.2 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 Source: Bureau of Labor Statistics. 1.4 1.2 1 Figure 22. QUITS vs. CONSUMER CONFIDENCE INDEX May 3.6 3.4 1 1 Consumer Confidence Index (198=) 3.2 3. Quits (millions, sa) 2.8 2.6 8 2.4 2.2 2. 1.8 1.6 1 2 3 4 6 7 8 9 11 12 13 14 16 17 18 19 Source: Bureau of Labor Statistics and The Conference Board. 1.4 Page 13 / y 19, 18 / Animal Spirits www.
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