Aloha! One flaw in the series is it only measures supply not demand. For instance one of the components is “pipeline movements”. Oil and gas in pipelines …
“Monthly petroleum supply data include the measurement of supply and the disposition of crude oil and petroleum products at both national and regional levels. The data series describe production, imports and exports, movements, and inventories of petroleum products in thousands of barrels.”
In other words it includes “production” and “inventories”. How can you get an accurate reflection of a robust economy by just looking at supply and not demand?
Okay here is another component of the Index, truck tonnage, as provided by the American Trucking Assoc …
“ATA indicated that its promises of confidentiality to the companies providing the data prevent them from providing any details that would permit an independent assessment of this data. No information is available regarding which companies respond or how often, what type of freight that they carry, or what proportion of the total truck tonnage they represent. In any case, voluntary response surveys can never be treated as probability based statistical samples. The ATA sample is based on a relatively small proportion of the trucking industry. The data series itself is an index for which the raw data are unavailable making it difficult to corroborate against other data.”
Another component, rail freight” includes rail traffic to and from Canada, so technically the Index is not just US based.
Another component Inland Waterborne Traffic includes US territories and combines military cargo. For some reason it does not include coal transportation via waterways.
The final component is Aviation Revenue Freight Ton Miles. This adds in passengers so your niece visiting Grandma really isn’t a great measure of economics. Also look what the DOT says about the accuracy of the data …
“U.S. DOT Office of the Secretary of Transportation for Policy (OST-X) analysis of the data submitted by small certificated Alaskan air carriers identified significant reporting problems when these carriers first began reporting in 2002. OAI has since taken steps to improve the accuracy of the data submissions and OST-X no longer considers this an active area of concern. The biggest source of inaccuracy is due to carriers that fail to report. The problem is mitigated, however, by the consistent reporting by the largest carriers that have provided over 80% of air transportation services in recent years. The t-statistic again indicates the forecasts are an unbiased predictor of future growth rates . However, the forecast error is large enough to be of concern and improving these forecasts remains an active research.”
All in all this Index is comprised of poor data and flawed methodology. If you are a central bank and want to pretend the economy is doing great then this Index is for you. If you are a trader assuming all other trade on this data then this Index is for you, but if you are a real economist looking for the real solutions and accurate data then I think this Index might not be an accurate and realistic reflection of a robust recovery. I would look more towards the NFIB Index since it is a larger survey and it is a strictly private sector small business survey without undue influence by government departments and all the potential political agendas. According to the NFIB Index the US economic recovery has not been so robust … improved sine 2008 but not robust.
Fedex shows similar gains to the index. I have always found that a useful barometer of economic activity.
Aloha! Why not Walmart? Or Amazon? The stock market no longer is based on economic fundamentals as much as it reflects global capital flows looking for returns! Besides one of the biggest revenue generators for all those bellweathers is what JP Morgan calls Treasury Sector, government welfare. The S&P is heavily subsidized by the US Treasury. Small business is not!
In fact I applied for a SBA loan at the height of the SubPrime mania in 2005 and essentially had to prove I did not need a loan to get a SBA loan. They also wanted my house as collateral! Imagine if SBA would have been SubPrime instead of Fannie Mae! Bundle SBA loans and call it SBS-SBA Backed Securities … small business derivatives!! Where are small business incentives?
Aloha! One flaw in the series is it only measures supply not demand. For instance one of the components is “pipeline movements”. Oil and gas in pipelines …
“Monthly petroleum supply data include the measurement of supply and the disposition of crude oil and petroleum products at both national and regional levels. The data series describe production, imports and exports, movements, and inventories of petroleum products in thousands of barrels.”
In other words it includes “production” and “inventories”. How can you get an accurate reflection of a robust economy by just looking at supply and not demand?
Okay here is another component of the Index, truck tonnage, as provided by the American Trucking Assoc …
“ATA indicated that its promises of confidentiality to the companies providing the data prevent them from providing any details that would permit an independent assessment of this data. No information is available regarding which companies respond or how often, what type of freight that they carry, or what proportion of the total truck tonnage they represent. In any case, voluntary response surveys can never be treated as probability based statistical samples. The ATA sample is based on a relatively small proportion of the trucking industry. The data series itself is an index for which the raw data are unavailable making it difficult to corroborate against other data.”
Another component, rail freight” includes rail traffic to and from Canada, so technically the Index is not just US based.
Another component Inland Waterborne Traffic includes US territories and combines military cargo. For some reason it does not include coal transportation via waterways.
The final component is Aviation Revenue Freight Ton Miles. This adds in passengers so your niece visiting Grandma really isn’t a great measure of economics. Also look what the DOT says about the accuracy of the data …
“U.S. DOT Office of the Secretary of Transportation for Policy (OST-X) analysis of the data submitted by small certificated Alaskan air carriers identified significant reporting problems when these carriers first began reporting in 2002. OAI has since taken steps to improve the accuracy of the data submissions and OST-X no longer considers this an active area of concern. The biggest source of inaccuracy is due to carriers that fail to report. The problem is mitigated, however, by the consistent reporting by the largest carriers that have provided over 80% of air transportation services in recent years. The t-statistic again indicates the forecasts are an unbiased predictor of future growth rates . However, the forecast error is large enough to be of concern and improving these forecasts remains an active research.”
All in all this Index is comprised of poor data and flawed methodology. If you are a central bank and want to pretend the economy is doing great then this Index is for you. If you are a trader assuming all other trade on this data then this Index is for you, but if you are a real economist looking for the real solutions and accurate data then I think this Index might not be an accurate and realistic reflection of a robust recovery. I would look more towards the NFIB Index since it is a larger survey and it is a strictly private sector small business survey without undue influence by government departments and all the potential political agendas. According to the NFIB Index the US economic recovery has not been so robust … improved sine 2008 but not robust.
Fedex shows similar gains to the index. I have always found that a useful barometer of economic activity.
Aloha! Why not Walmart? Or Amazon? The stock market no longer is based on economic fundamentals as much as it reflects global capital flows looking for returns! Besides one of the biggest revenue generators for all those bellweathers is what JP Morgan calls Treasury Sector, government welfare. The S&P is heavily subsidized by the US Treasury. Small business is not!
In fact I applied for a SBA loan at the height of the SubPrime mania in 2005 and essentially had to prove I did not need a loan to get a SBA loan. They also wanted my house as collateral! Imagine if SBA would have been SubPrime instead of Fannie Mae! Bundle SBA loans and call it SBS-SBA Backed Securities … small business derivatives!! Where are small business incentives?