Tuesday, 24 January 2017

The Non-Cyclical Cycle Repeats

By Jeffrey P. Snider of Alhambra Investment Partners,

Industrial production rose year-over-year in December 2016, the first plus sign in more than a year. For the month, IP was up 0.5% from the same month in 2015, following declines of 0.7% in each of the prior two months. In seasonally-adjusted, month-over-month terms, IP increased by 0.8% in December after being essentially flat for four months before.

Under normal circumstances that would be cause for celebration, because in a cyclical paradigm when the whole economy or even part of it stops contracting it returns to growth. Though that still remains the widespread, mainstream expectation, it hasn’t been the case at all during the Great “Recession’s” aftermath. What we almost always find instead is contraction followed by slightly positive numbers, or, as has so far been the case in several economic accounts in late 2016, sideways.

It is the damnedest thing to see of economic considerations, as it really doesn’t make much sense unless you step outside normal parameters. Industrial production displays these odd tendencies more than perhaps other statistics, whether that relates to just the contraction of the “rising dollar” 2014-15, or, as in IP of consumer goods, 2009 forward as a whole.

Continue reading the article on TalkMarkets here.




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