Econ News, Jan. 20

Today's reports were middling at best.

First, the Conference Board laid its latest LEI on us, saying it jumped 0.2% in December. That's a hair better than forecast (though I've always been sort of amazed that people can fail to forecast this, since every component in it is known. Then again, who really cares all that much?).

Anyhoo, November's gain was revised upwards, too, helping to ease the painful sting of the five straight months in which the LEI fell, the sort of stumble usually associated with a crappy (if not recessionary) economy.

But should we get all excited? Well, no, says the ubiquitous Ian Shepherdson, who believes January's number will be flat. Meanwhile, the ECRI's weekly index of leading indicators has fallen back below zero.

In the second report, the Philly Fed said its factory index plunged to the lowest level in 18 months, to a 13.2 reading, nearly half the consensus forecast of 25. The Empire State index was down pretty sharply, too. Again, should we care? Well, to the extent it tells us anything about the national factory sector, we should. Lehman Brothers said the number points to a 2-to-3-point drop in the ISM for January. But, I would also ask how much the ISM tells us about the national factory sector. Lately, it seems, not much; ISM has been at levels lately that should be consistent with runaway economic growth, and we sure haven't seen that. Best, in the end, to wait for the actual numbers from the government.

But one more anecdote, from Bob Brusca: "The Fed’s Beige book –- topical up to January 10th, was quite upbeat about manufacturing in general. One exception was the Cleveland Fed. Reports I get from ‘on the ground’ in Michigan suggest that things in that part of the country are not so sweet either."

In a separate e-mail, Brusca also pointed out that Minneapolis Fed President Gary Stern had deviated a bit from the Fed's recent script in a speech today. I can't get a copy of the speech yet, but I'll take Bob's word for it. "Stern says he expects that inflation will remain subdued. He also admits that inflation could pick up but adds that he wouldn’t bet on it," Brusca said.

Interesting, but I don't know if it means much. After all, Mr. Stern is not a voting member of the FOMC.