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Thursday, July 02, 2015

The Jobs Schizophrenia Continues; It Must Be Close to a Breaking Point

Before we even get to jobs, we need to contemplate rail, which gets worse as the year wears on:
Total U.S. carload traffic for the first six months of 2015 was 6,930,568 carloads, down 3.8 percent or 271,831 carloads, while intermodal containers and trailers were 6,605,029 units, up 2.3 percent or 149,442 containers and trailers when compared to the same period in 2014. For the first six months of 2015, total rail traffic volume in the United States was 13,535,597 carloads and intermodal units, down 0.9 percent or 122,389 carloads and intermodal units from the same point last year.
Total June traffic was down more than 2% YoY. In one place they say -2.3%, in another -2.8%. We don't have June trucking figures; they should be better because they are biased toward intermodal. So no disaster, but the divergence from last year's pattern is pretty strong.

Turning now to the unemployment report, Establishment says we added more than 200K jobs; Household responds with jeering and farting noises and says we lost over 50K jobs.We wish these two would just grow up and start working together.

When numbers get this out of joint, I usually turn to Table A-8. Table A-8 says that, since February and on an SA basis, we have gained about 160K government jobs and lost about 210K private sector jobs, but added self-employed. The net non-ag wage-and-salary is virtually unchanged at +10K, with the balance being made up of private household workers. 

Table A-8 agrees well with rail. 

There must be some things off about the Establishment survey, because it's telling us there hasn't been much life in construction, which just can't be true. Construction and housing reports show strong activity, and those agree with fuel supplied figures from EIA.

Table A-8 also agrees that construction is good, because it shows we've added over 250K self-employed since February, which you would see when construction was strong. And gas, self-employed, construction surveys, and auto sales all agree that construction is strong. The net A-8 non-ag gain for all categories of employment since February is about 310K, which does make sense. 

The official unemployment rate this month is 5.3%, which is sourced to the "exodus" - the total labor force fell sharply, because those not in the labor force rose by over 600K. This may be partly due to the end of the school year, although seasonal adjustments are supposed to deal with that. But as we collectively age, retirements are going to pick up, so perhaps that's the reason for this blip. 

But regardless, net unemployment is reaching lower bounds. 


The establishment report is initially poorly able to pick up some types of structural changes in the US economy. It can both lag upturns and lag downturns, although in revisions sometimes occurring years later it becomes much more accurate. CES generally compensates pretty well for the unavoidable flux with the birth-death adjustments.

The Establishment survey is quite reliable for wage and hour trends, and this month it was pretty static. Therefore my conclusion is that the Establishment survey is over-reporting a bit; wage trends are probably accurate but partly due to retirements and replacements with lower-level employees; a year or two from now Establishment will be revised to report lower trends for employment this spring. Also, never discount the importing-cheaper-workers trend.

NACM CMI is showing more trouble in B2B credit. The June numbers were not good month-over-month and YoY. Thus we will see some issues this summer. In particular, the BK numbers are rapidly degenerating. That is quite surprising because 2008 naturally caused a lot of BKs, and structurally they are now disfavored. So if they are happening, they are happening from acute stress, and the unfavorable indicators show very signficant financial stress.

As long as construction and motor vehicle sales hold out, you won't get the correlations needed to form a recession. MV production plans for the summer quarter are still very strong.

When MV production plans slack off, that's the time to worry.

Friday, June 26, 2015

Got Up Early To Watch Shanghai

That's quite some bloodbath, but there's surely more to come. I don't know what people were expecting, really. Who buys the dips on negative earnings?

Regarding the US, the puzzling thing is that all indications are that housing is just fine. First-time buyers are coming in due to mortgage changes (FHA & agreements to restrain pushbacks) and high rents, which, combined with household formation changes, should place a pretty solid floor under the markets this year. 

Yet, even with the indications on housing and continued strength in motor vehicles, June's data was mixed to poor. It seems as if the manufacturing arm might be stabilizing a bit from some indicators, but if Markit's Services PMI is any decent indicator, the June overall trends are not that great, with Flash PMI coming sharply lower than anticipated. This, btw, was indicated by May NACM CMI, which forecast an uptick in manufacturing and a downtick in services.

Rail sticks at a declining trend, moving inexorably it appears to a significant YoY negative 1%. Intermodal has been slowing a bit recently. 

ATA trucking shows a sharper shift than rail, with May being up monthly, but the YoY trend now falling, apparently trying to converge with rail. 

Durable Goods advance just was not reassuring at all. Five months into the year, YTD shipments are up 2.8% and YTD new orders are down 2.2%, and this does not indicate any life in the sector. Further, while motor vehicles are still the stand-out, they may be topping. You always have to wait for three total months to make that determination, esp. around model year shifts.

The odd placement of Memorial Day can affect multiple lines of data for May, so one can't get too excited right now. In particular, durable goods for June might look much, much better. 

Still, we have softness and not a ton of net momentum build moving into the third quarter. 

Housing, however, is excellent, which leads me to puzzle over trucking. Perhaps it will look stronger by August. 

As things now stand, the US economy is not falling through the rails with gathering negative correlations. It is hard to see how it could with housing showing such strength. Further, crude production in the US is still increasing, albeit quite slowly, and fuel supply indicators confirm that the US economy is NOT declining. However if motor vehicle sales and production top out, the picture may change.

If I have time I will write some more this weekend, because an interesting situation is developing here.

Tuesday, June 09, 2015

Life On The Low End CONFIRMED

Update:  Note that I wrote all of the below BEFORE the JOLTS survey was released. Yes, it's real.

NFIB published its Small Business Report this morning, and it is decidedly non-recessionary and decidedly pro-inflation. Look at the actual report, pages 12 and 13. Look at the split between compensation and prices, and compensation and plans.

There is life on the low end, but it is constrained not by lack of credit, but by lack of spending power and the accumulated forces built up over many years. What businesses can afford and have expected to pay for labor often will not acquire skilled or even competent labor, and thus the business owners are in a bit of a fix. They have to raise compensation, and they have to raise prices to do it, and they are muddling through.

Nonetheless, they are making money - earnings are finally back to growth levels and finally back to expansion levels.

So we see an economy in the stages of adaptation to constraints, that IS adapting. Larger publicly traded firms are all trying to cut costs to maximize reported profits on constrained sales, while not dropping list pricing. So a lot of the growth is moving to the lower end.

The sample for this month's report is a small one. In July we get the next big sample. I always look at the number of respondents for an additional clue, because in bad economic times they go up. There is no sign of bad economic times. 

The "muddle-through" zone has been a feature of steady growth during many episodes of US economic history, but it also sets up the stage for a wage-price spiral. 

Inventories have drawn down, and that means that later in the year sales will pick up and new orders will pick up. Capital investment is low (showing up in larger company surveys as well). 

Short-term borrowing costs were 4.8%. 

If I were the Fed, I would start to raise rates in June. They must raise slowly, and they need to shock the system so that price adjustments can continue smoothly. Forget the effing stock market. Let it pee its pants and get over it. The traders have been warned.

This is a stunningly powerful inflationary engine that the Fed has created, and if they don't start to raise rates soon, they are going to be forced to pull a Volcker all too soon. If they let inflation really start humming, it is going to knock us into a recession in these circs. This economy is growing and is set up for continued growth, but it needs time to reshuffle pricing, which just can't happen overnight.

Note that BEFORE I read this report I thought that an inflationary cycle was starting, and after having read this report, I am certain.

Monday, June 08, 2015

Behind Those Self-Employment Numbers

Freight is now flashing a warning. May was a bad month for rail, which is always the immediate index:

AAR now has a graph widget on their site, updated weekly. I encourage anyone who's interested to play with it  - you can sort bycomponents. Because of the early Memorial Day holiday, the YoY won't be directly comparable until we pass that down spike you see in the graph for previous years. Those downward spikes are Memorial Day, July 4th, Labor Day, Thanksgiving, and the Christmas/New Year holidays.

The bottom line is that you are comparing the last week to the next week in the graph, but it is evident that May traffic was substantially weaker YoY even with that adjustment. 

ATA's truck tonnage index lags a month, but through April it looks worse than rail:
This does not necessarily imply that 2nd quarter GDP will be negative - after all, we are comparing YoY, and last year in March the economy picked up very strongly. But it does imply that if the government publishes a strong Q2 GDP number on the first pass, you should laugh and ignore it. Services trails manufacturing, and services can expand while manufacturing contracts a bit, although eventually they tend to correlate.

As of April, manufacturing was in contraction, with YoY shipments down solidly and New Orders down. Motor vehicles were still strong, which should not surprise anyone who has watched auto sales this year.

As you would expect, Industrial Production through April was showing contraction:
I have a hard time believing that it did very well in May after looking at rail.

Construction spending through April was fine and moving upwards. You don't get recession with motor vehicles holding AND construction spending increasing. However, in my experience construction can easily lag the start of recession - it is not a good forward indicator, and neither is employment. But here it is:

 Services are harder to assess. A lot of the data is imputed; it tends to be substantially revised some months down the line. Growth on the bottom side, such as was clearly seen in the employment report from last week, may not show up very well. Because of this, most tend to inductively figure service trends from retail, because generally consumer spending on services will follow retail:
  
In my experience, freight and retail do work together to forecast recessions at least six months in advance. The distinctive feature is that real retail will flatten for some months, and freight will start falling. Together, you get at least six months of warning. 

Just looking at freight and retail, I would say that we are in the early stages of recession formation, with some chance to get out of it before the whirlpool develops. At this time fiscal stimulus would be indicated if this administration were a little less oblivious. A tax cut or a rebate would be enough to carry us through. 

We are not going to get that, and I don't know whether we can edge out of this or not. Recessions form when the economy can no longer adapt. I am not sure whether we can adapt out of it.

Last year I thought we had a very high probability of being in recession by this spring, because consumer incomes had fallen too much. Then when oil fell, I thought that would be enough to keep us afloat. 

Either of my theories is still credible right now. I don't know what will happen. It takes time for lower costs to hit in the form of more discretionary income in retail. 

What's causing this is more than a bad winter and the oil slowdown. What's causing this are prior developments in household incomes and expenses, as CES has shown:


Take a good long look at that table. A really good look!!! The third and fourth quintile are saving quintiles. They earn more than they spend. They do not intend to move into their retirement and live in a paper box. So they respond by dropping discretionary spending when their financial position has consistently worsened over a year to try to keep stable. Further, high basic costs for needs goods does not inspire them to save LESS. It inspires them to save MORE. 

In particular, the behavior of the middle quintile usually predicts US recessions. It is all very well to read asinine articles all over the financial world about the cheaper gas windfall and the odd behavior of the consumers in not spending it, but get real, you fools.

The average US household may be saving $700 dollars a year on gas, but in the prior year the average middle income household lost $1,300 in income and spent $1,000 more on expenses, and so, from their perspective, built up a deficit that would take three years of that $700 windfall to redress. The fourth quintile, which spends more on discretionary and can more easily save, responded to the drop in income by not increasing spending, i.e., cutting real spending. This wasn't an option for households that spend more on basics. They are in a deep hole.

Then there is the impact of ACA/PPACA/Obamacare. Most consumers are paying more for actual healthcare than they were before, and many financially stable households find themselves forced to allocate significantly more for deductibles. It is very hard to assess the force of this, but it will change consumer behavior and cause higher rates of saving. The reason it is hard to calculate is that your deductible only matters when you have to use a decent amount of healthcare services, and many consumers don't in any particular year. But as this wears on, companies will ratchet up employee cost-sharing to come under the ACA guidelines, and each year more and more households will get the bill and change behavior as a result.

By "change behavior", I mean stuff like this:
These are YoY changes (NSA) for two categories of industrial production that are sensitive to financial strictures on small businesses and households - nondurable consumer goods and electric and gas. When YoY moves down it generally means tightness, usually redressed by downward price changes. They are both choppy series, affected by weather and other factors. If you add the two of them together, the signal becomes a little clearer, because consumers, and to some degree, small businesse, compensate for forced utility spending by cutting spending on nondurables:
Not particularly strong. 

Closeup and add real retail sales:

 Not a recession yet, but getting close. Usually pricing fixes this without a recession - if the situation continues for too long prices and margins are cut and we edge out of it. Especially on the medical, we have built a structural situation in which adaptation is hard, the price signal is muted, and economic responsiveness is likewise limited.

It certainly looks like there is time for this to fix itself. 



Friday, June 05, 2015

Ah, Thar She Blows

You know, even Canada blew out employment in May.

As for the US - the Household and the Establishment agree at 272/280K.

The life, meat, and fascination of this report comes from Table A-8, which breaks down employment by categories. And there, my friends, we see a situation that makes a whole lot of sense. The life in this economy and the big gains are coming from self-employed. Over the last few months we have seen an SA drop in private industry, and a very large gain in self-employed:
It does not leave the IMF much of a leg to stand on with the plea/command to not raise rates until 2016. 

I am very busy, but more about this when I get a chance. 

CONTINUED:
Okay, so far we have Gordon and Teri as thread winners: Teri: But first let's make the minimum wage $15 an hour! Because those folks deserve a living wage! 
Gordon:  I am seeing anecdotal evidence of Obamacare's impact almost daily in the retail world.

Companies that supply labor for store remodels and resets will not let workers work more than three days a week.
...
The assistant manager told me she cannot keep anyone good, because she can't let them work over 29 hours a week. There's no point in training them, as it will be wasted as they will bail out for something full-time elsewhere as soon as they can.


Yes, if you are going to impose payroll costs higher than the return on the labor, you are going to generate a lot of self-employed. It may be illegal for a person to work for a wage of $12 an hour, but there's nothing to prevent that person in many cases from agreeing to do that labor as an independent for a price that is equivalent to $9 an hour. It may be illegal for companies to employ persons for 30-35 hours a week without paying a fine if they don't pay for insurance, but there is nothing to prevent them from contracting with individuals by the job, at which point the possible fines do not enter the equation. 

 There is also evidence of construction picking up, and construction generates large numbers of self-employed. Always.

And then we have Charles: Since Obamacare, my company is looking at contractors first and employees as a last resort. Employees (aka skeleton crew) are now considered stakeholders, the pay may not be commensurate but the job security is there...

Yes, and the tightening financial margins shown in the NACM CMI show up as a reluctance of companies to hire for the longer term. 

So we have a shift in growth:
This is the total employment level - the self-employed, and one can see that since February, the YoY has been dropping. 

As for construction, I'll let your alert minds decide how much of a factor it is, versus regulatory overreach:
The funniest part about this is what it portends politically. Statistically, these independents turn into political Independents, who frown upon too much government meddling. 

If the government creates a situation in which a person who wants to work full time has to go into business, that government should be prepared to pay the price in voting patterns.

Tuesday, May 26, 2015

I Wouldn't Call That Reassuring

I saw a perky headline about April's durable goods release. It didn't quite match the reality.

There are signs of a more structural slowdown in April's report. YoY, shipments are up and new orders are down. Total +3.5%/-1.3%. And so it goes, with autos being about the best category. 

If this continues - which it may well not - we are in for a much slower economy the rest of this year than the Fed expects. You can make a case that the oil slowdown accounts for a lot of this, but it doesn't matter - if it persists, things will be difficult this fall. YoY YTD capital goods new orders are down 5.9% (-5.9%).

On the other hand, it might be that this clears out in May/June, and we pick up some impetus. 

So far rail has not shown improvement - we have gone slightly negative on the YoY YTD in the last rail report, and we will have to wait two more weeks to see if that is real or will redress after the difference in the Memorial Day calendar works its way out of the figures. The weakness is in carloads, which generally does precede the decline in intermodal.

So far this year the economic data is stunningly equivocal, which makes me think that we'll stagger through with the help of construction. But in a month or two I may revise my thinking if there are no signs of life elsewhere. 

The KC manufacturing index for May was frankly disturbing. 

Tuesday, May 19, 2015

But Winter Must End!!!

Okay, not in Ice Ages, but currently we are in one of the balmy interludes, although I can concede that Bostonians may have wondered about that earlier this year.

New Residential Construction takes a really strong pop in April. Very nice. Very strong. In both permits and starts.

The economy may not be that strong, but it is getting its legs under it.   

Friday, May 15, 2015

The Real World Effect Of That Big Flaming Ball Of Gas In The Sky

Secondary to my previous post, here's the joy of it all.

Industrial production was released today. Here's the result:

IP has been working down a bit for months. The blue line is the index, the red line is the YoY. The green line is real retail YoY. We're not QUITE in a recession yet, and hopefully we won't get there, but the reason we are not was the giveback on the gas. That gave consumers enough back to get them through another bad winter with more margin. But we are right on the line. I expect IP to rebound slightly in May - the latest report is

Rail confirms this but may be giving my May rebound theory the raspberry:
 For the first 18 weeks of 2015, U.S. railroads reported cumulative volume of 5,043,559 carloads, down 1.8 percent from the same point last year; and 4,679,513 intermodal units, up 1.7 percent from last year. Total combined U.S. traffic for the first 18 weeks of 2015 was 9,723,072 carloads and intermodal units, a decrease of 0.1 percent compared to last year.
Here's the graph - we've been weakening recently:

That blue line is just failing to green shoot, and this goes through May 9th. Rail was hard to read this year, because of course the port strike slowed things, and then there was a rebound, so one had to just sit and wait for all of that to work itself out of the system to confirm a trend.

Now, I still believe there is the economic space to get out of this without recession. Nor am I surprised, because honestly the direction of CMI does show tightness. But it is not the time to be loading the economy down with ANY more regulatory mandates, and ACA changes have truly had a very adverse effect on many families. Consumer Units. 

This is all quite dire for China, which usually gets a May uplift from the US retail cycle, and may not get that much of one this year. China's economy looks really weak.

A close-up on that mug shot:
The red, graphed on the right scale, is IP YoY. The green real retail YoY.

I was trying to find the reason for the real stresses seen in NACM CMI, and one of the things I came up with is the sharply increased electricity costs for some regions, combined with a bad winter.

In any case, if we want to scrape through this "soft" patch, we are going to have to do it ourselves. The only government policy that is helping at all this year is the drop in FHA premiums.

Thursday, May 14, 2015

Speaking of the Economic Weather Report

There is no question that bad winters are not helping the US economy. Admittedly, there are other problems, such as public debt at the state and local level. You simply cannot integrate a model with growing economies, constrained household incomes, and an ever-growing state and local tax burden. Something's got to give, and it is going to be real growth. 

But as a sideline, and perhaps a gentle hint not to buy farmland too far north, I thought I'd look at a little bit of the climate data. I have remained a spectator in the carbon wars, watching with increasing fascination as the real world situation ameliorated and the human angst-o-sphere heated up to compensate. Now that we have the Pope piling in, I suspect that has reached its natural peak, unless the Chief Rabbi is waiting in the wings. 

In the real world, colder northern winter temps will have an effect, and the angst-o-sphere will not compensate.

First, from the really excellent site WoodForTrees.org, a look at what happened when China dumped a massive amount of carbon into the atmosphere:

We have here the RSS lower troposphere temp data series. The benefit is that it is very, very accurate. The downside is that it is of short duration, though lengthening every year. We have a few trend lines - since 1998 it's obvious that it has been getting colder. Since 1995 (nearly 20 years!) the trend line is about flat, which surely means something.

We also have the monthly sunspots on a 20 year average, which I long ago figured out was the best predictor represented this way. (Note that this program charts means at the center point, so that is why the curve is shifted left on the graph.) And then we have the sharp upward trend of Mauna Loa CO2. One suspects that is not controlling global temperatures much. 

It is evident that something changed in the late 1990s. The CO2 keeps going up and up, but it isn't driving temps up. There is a suspicious hint that solar activity is. That trend shifts, and lo and behold, so does the troposphere trend.

Yes, yes, I have read all that stuff about the heat hiding in the oceans. Really? One day the heat just looked up into the sky and screamed "OMG - Where are the sunspots?",and the heat dove deep into the ocean to hide from the implacable, frowning face of its solar master like Godzilla when the Japanese planes get too close? Nah. Not even a plausible fairy tale.

Solar activity does vary a lot over time, and it does seem to correlate with temps as observed, although it's well to note that in the past land temperature measurements were biased toward the northern hemisphere (and they still are today) and that they will be a lot less accurate than satellite data. So mentally stick in some large error bars:
Here we have HADCRUT3, which is a much longer running temp series, with AMO (the northern oscillation) and sunspots. Normalized and 10 year means. I'm not trying to pull tricks here.

As you can see, the historical record is that solar activity does vary a lot over time. There has seemed to be a correlation with climate. I added AMO, because I suspect part of the northern climate transition is driven by AMO, and that solar activity drives AMO

Note that I don't claim that CO2 has no effect on temperatures - I suspect that it does, but only a very weak one, and in part that effect is offset by changes in the distribution of water vapor in the atmosphere (a negative feedback rather than the theorized positive feedback).

I also suspect that the jagged AMO ridges when AMO is in transition are correlated with US dustbowls, which makes me a bit nervous.

This is pretty much the same thing, but I added in PDO (Pacific oscillation). Why? Just in case you wanted it. I think the ocean current shifts distribute the heat, but I think they may be largely influenced by solar shifts.

A look at my theorized system during the time frame that we have concurrent data:
I think AMO loops within its own bounds, which is a natural regulator of solar changes. But the point is that AMO does seem to influence northern weather, which has several implications. For one, steeper roofs in Boston would be wise. For another, this cycle has only just begun, so I wouldn't expect these last winters to be flukes. I would expect the coming US northern climate to be far more akin to that of the tales told by my parents and grandparents when I was young. Winters used to be colder, they would say, and you know, they were right.

Last, a look at the above with a five year mean, just so you know I am not cheating:

One of the interesting things lost in the angst-o-sphere has been the remarkable similarity in the temperature sequence between the 1900-1940 shift and the late 1970s-2000 shift. I have a LOT of trouble accepting CO2 as a strong driver, especially since these shifts are, historically speaking, piddling. Picayune. Petty. Pipsqueaks:



I crack up when I read or hear stuff about how the melting Arctic is going to hand us Tatooine. Been there, done that. If in the climactic optimum the methane didn't fry us, it is not going to fry us now. 

The Hans Tausen Iskappe in Greenland completely melted during the climactic optimum. It has formed since it started getting colder.

What we have to worry about in the near term are northern climate conditions that may be a little harsh, and will have an effect over the longer term on economic growth.

Wednesday, May 13, 2015

It's All About The Chickens Now

No, really, it is all about the chickens, aka bird flu. If it jumps to pigs, we're done. As it is, it's hard to see how poultry prices won't rise for the consumer, which is going to have a depressing effect August through the end of the year.

CA drought not helping either.

The headlines on the April retail report are rather dour, but the real picture is skewed by the Easter timing.  The March report indeed was revised up, but that makes April look worse, because sales that are usually in April show up in March. These reports aren't adjusted for prices, and I think there is considerable strong-dollar effect in weaker prices, so the real picture is probably considerably better.

The actual report does show some weakness both YoY and in the rolling three-month SA. It's better to use the three-month totals in cases like this. Currently the Feb-Apr YoY is +1.5%, ex autos +0.4%. So that is not good. From the prior three months (Nov-Jan) it's -0.6%, ex autos -0.7%. But it's not like April sales just suddenly flat-lined. 

Retail is weak, and very dependent on autos which are credit-related. 

Groceries are a bit worrisome. That's what I am watching. However restaurants are doing well, which slightly offsets it. Wages are rising more slowly than expenditures on food, which, to be blunt, is never a good sign. Wages are left in the dust by costs for medicine, for example, which somewhat depresses other categories. 

So we still have a price-sensitive consumer with wary spending behaviors on anything not paid for out of credit. 

NFIB's Small Business report was somewhat encouraging yesterday. It rose after the decisive March fall; capital outlays looked encouraging and hiring looked encouraging. Sales are declining only slightly and earnings are up. Prices are constrained by reality. There is no inflationary pressure evident in the NFIB report except for wages/compensation. There is pressure there. In order to get decent employees increases are necessary (this comes through strongly), but the pricing power isn't there to compensate that well for it. 

This month's survey is one of the large-sample months, so it is more reliable. There is no sign that we are losing momentum in it - just that epic expansion is not to be expected. But that is more normal than not.

Atlanta Fed Business Inflation Expectations agree well with NFIB's employment comp crunch -  expected inflation is up to 1.9%, which would be encouraging if you are a Fed Head looking to raise rates. Two-thirds of polled firms are facing higher compensation costs, and the vast majority intend to raise prices to compensate. '

So who wins? If the chickens cooperate, inflation running about 2.3% over the course of the year. If the chickens don't cooperate, the ability to raise prices to consumers isn't there, and the strong dollar constrains export rises, so ...

Businesses are not behaving as if they expect real problems, and some of the inventory builds are just buying cheaply while they can. So I rate it continued expansion for six months.

Now those consumers!!! Those consumers may have to work a little harder, but the dollar shock should be over, the oil crunch should bottom out late second quarter or early third, and so as long as we keep buying motor vehicles, all should be well. 

I do not have a clue as to whether the motor vehicle sales will  hold up. Not a clue. I could argue it either way. The current suggestion is that the overall growth trajectory is slightly lower going into the third quarter, with second quarter being of course lifted by seasonal effects. 

I would be sure we were out of the woods, except that the fourth month freight total isn't looking too fine, and rail has shown a very slight weakening in the last month, which is not what I expected. So I am still where I landed last October - the drop in fuel prices should have enough oomph to carry us over a naturally structurally soft patch. 

And the threat to that is chickens, seriously. Nothing changes consumer behavior like difficulty covering the very basic expenses. 

ACA and higher medical deductibles do show up in economic figures. Consumers facing higher medical costs are slow the first half of the year.

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