The negative economic data is not surprising given the overall economic weakness combined with low oil prices hitting Texas especially hard. But the data is in odds with the leading index for Texas from FRED:
The leading indicator is showing upward sloping curve with no hint of weakness. One explanation for the divergence is that leading indicators use monetary signals such as credit spread and yield curve as their components and these monetary signals are now heavily manipulated by FED. It is possible the leading indicators will not be as useful as in the past in predicting the next recession. Proceed with caution.
No comments:
Post a Comment