{"id":409413,"date":"2010-03-09T17:18:00","date_gmt":"2010-03-09T22:18:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/another-real-time-economic-indicator-is-rolling-over-and-showing-contraction-2010-3"},"modified":"2010-03-09T17:18:00","modified_gmt":"2010-03-09T22:18:00","slug":"another-real-time-economic-indicator-is-rolling-over-and-showing-contraction","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/409413","title":{"rendered":"Another Real-Time Economic Indicator Is Rolling Over And Showing Contraction"},"content":{"rendered":"

(This guest post previously appeared at the author’s blog<\/a>)<\/em><\/p>\n

The new indicators<\/a> just keep popping up all over the place.  In a great interview<\/a> with James Montier at Simoleon Sense we discover Montier’s favorite indicator, the ADS Business Conditions Index:<\/p>\n

“1. Tell us how you look at cycles. Are there any indicators or measurements you rely on?<\/strong><\/p>\n

James Montier: <\/strong>Personally I’ve never really found it that tricky to know where we are in a cycle. There are a lot of indicators that gauge exactly that sort of thing from the ISM to the ECRI measures. The Philly Fed have a good (by which I mean timely) index called the ADS measure which tracks where we are in real time.”<\/p>\n

I had never heard of this indicator so I tracked it down at the Philly Fed’s website<\/a> to see what it was telling us.  Apparently, business conditions have started to contract again after a sharp rebound in 2009 and leveling off in recent months.  This one might be worth bookmarking.  An explanation of the index methodology follows:<\/p>\n

\"chart\"<\/p>\n

“The Aruoba-Diebold-Scotti business conditions index is designed to track real business conditions at high frequency. Its underlying economic indicators (weekly initial jobless claims; monthly payroll employment, industrial production, personal income less transfer payments, manufacturing and trade sales; and quarterly real GDP) blend high- and low-frequency information and stock and flow data. Both the ADS index and this web page are updated as data on the index’s underlying components are released.<\/p>\n

The average value of the ADS index is zero. Progressively bigger positive values indicate progressively better-than-average conditions, whereas progressively more negative values indicate progressively worse-than-average conditions. The ADS index may be used to compare business conditions at different times. A value of -3.0, for example, would indicate business conditions significantly worse than at any time in either the 1990-91 or the 2001 recession, during which the ADS index never dropped below -2.0.”<\/p>\n

Read more market commentary at The Pragmatic Capitalist ><\/strong><\/a><\/p>\n

Join the conversation about this story »<\/a><\/p>\n

See Also:<\/b><\/p>\n