• 2 hours Big Banks Are Cashing In On Recession Fears
  • 4 hours Unpacking Biden's $2 Trillion Green Energy Plan
  • 18 hours The Investment Sector Defying A Global Pandemic
  • 20 hours Face Masks Become The Key To Economic Recovery
  • 24 hours Impact Investing Remains Strong Despite COVID-19 Market Downturn
  • 1 day Global Stocks Are Soaring On Fresh Vaccine Hopes
  • 1 day Rethinking Mining: A $10 Trillion Opportunity
  • 2 days Smart Investors Are Betting On This COVID-Proof Industry
  • 2 days Disney’s Digital Pivot Could Be Its Saving Grace
  • 2 days What Does Tesla's Million-Mile Battery Mean For Green Energy?
  • 2 days U.S.-China Tensions Are Reaching A Boiling Point
  • 2 days Gold Remains Strong Amid Increasing Economic Uncertainty
  • 3 days Morgan Stanley And Goldman Sachs Are Betting Big On This Budding Industry
  • 3 days Global Corporate Debt Soars To $9 Trillion
  • 3 days The Fed’s Slippery Slope
  • 3 days Precious Metals Pulled Ahead Of The Pack In The First Half Of 2020
  • 3 days Tesla Faces $20 Billion In Short Interest
  • 3 days China's Economic Recovery Remains Tepid
  • 3 days Silver Inches Closer To $20
  • 3 days The Secret Life Of Lithium
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

Future Expectations Made Six Months Ago vs. Today's Reality

On Thursday, I noted Bloomberg's comment "Something Very Wrong" with the manufacturing sector.

More completely, Bloomberg stated "There may very well be something wrong with the manufacturing sector, at least in the Northeast where the Empire State index has been in deep negative ground for the last two months followed now by a minus 6.0 headline for the Philly Fed index."

With that comment, let's dig deeper into the latest Philadelphia Fed Business Outlook Survey.

Here is a chart that shows current conditions compared to manufacturer's expectations six month's from now.


Current vs. Future Activity

Current and Future General Activity Indexes


Future is Bright!

The Philadelphia Fed reported ...

Future Indexes Remained Generally Optimistic

The survey's broadest indicator of future growth edged slightly higher this month. The future general activity index increased 1 point, to 44.0, its highest reading since January. The future index for new orders, at 44.4, decreased 2 points, while the future shipments index, at 41.4, increased 4 points. Furthermore, 28 percent of the firms expect expansion in their workforce over the next six months, while 10 percent expect a reduction.


Future Expectations vs. Reality

To check the usefulness of these future projections, I downloaded the data, then shifted the look-ahead projections by six months and plotted those forecasts vs. current conditions.

Philadelphia Fed Manufacturing Region

The above chart shows what manufacturers expected six months ago vs. what actually happened.

A major portion of the time, look-ahead sentiment vs. reality are inversely correlated. Note in particular, the sharp rise in expectations vs. the actual sharp decline (third purple box) that started in November or December of 2014.


Northeast?

As for Bloomberg's comment "There may very well be something wrong with the manufacturing sector, at least in the Northeast" here are some thoughts also posted earlier.

 

Back to homepage

Leave a comment

Leave a comment