Monday, September 16, 2013

Parabolic Industrial Production

This is an update to Friday's industrial production post.


Click to enlarge.

The correlation is the same 0.985 it was on Friday. If you squint, you can see that August was a good month. It did come in slightly above trend, but not by all that much in the grand scheme of things.

Since all I really care about is the underlying long-term trend, let's eliminate much of this monthly noise by using 12-month moving averages instead.


Click to enlarge.

I have rarely seen a more perfect parabola in all of economics; and we are currently riding right on top of it.

Source Data:
St. Louis Fed: Industrial Production Index

3 comments:

Stagflationary Mark said...

No sarcasm in this post! Yay!

If you are as concerned about the future as I am, then you probably wish I had stuck with the sarcasm and offered a little less cold hard reality, lol. Sigh.

Gallows humor.

Joseph Constable said...

Thanks for the clarification. I am a short term trader whose biggest weakness is impatience.

I am guessing that your prediction of a recession by Oct '14 is the extension of these chart curves. I think those with enough power will manage to extend this time frame until after November 4th, the election. That is why I think Janet Yellen will be the next Fed chair. She will be compliant to Obama and her job will be to help her party in the mid-term elections.

Stagflationary Mark said...

Joseph Constable,

I understand where you are coming from now. Most of my charts concern the long-term, which probably doesn't help you all that much as a short-term trader. I should probably mention that more often.

I was not attempting to make a prediction for today's report, but I can understand why it might have seemed that way.

I would generally have waited to see today's data before posting the chart but it was actually in response to MaxedOutMama's post on Friday. Since I only cared about the long-term, one month didn't matter all that much to me. Still doesn't.

That said, I can totally understand why one month's data would matter to you though, as a short-term trader.