streettalklive.com / By Lance Roberts / December 17, 2012
The New York Fed released its monthly manufacturing survey for December which showed a decrease in activity in the region to -8.1 from -5.22 in November. The current reading has kept the survey in negative territory for five consecutive months which is the longest streak since the debt ceiling debate raged in the summer of 2011. The only other two occasions where the index posted five, or more, consecutive months of negative readings were during the previous two recessions.
The chart of the day is the Empire State Manufacturing Composite Index which is the average of the current and future expectation surveys. While this particular survey has a very limited history the summer of 2011, which was caused by the debt ceiling debate and the economic slowdown due to the Japanese earthquake/tsunami, was a very similar decline to what is currently occurring.
As noted in the chart above the plunge in the region’s economic confidence was offset by Federal Reserve intervention, the warmest winter in 65 years and plunging oil and energy prices which provided an effective tax-credit to consumers. With the economy again under pressure as activity slows, and the New York region further impacted by Hurricane Sandy, the question is becoming whether a warm winter, a boost from Hurricane Sandy as rebuilding and restocking takes place, and the Fed’s QE4 will be enough to once again boost the region back into growth territory?