ISM

On this date of February 15, 2004, at 9:17 pm, I just finished my long-distance conversation with my father. As you already know, he is an economist. He knew nothing of my website. I had two questions for him: What is the leading economic indicator, and what is the best indicator for predicting economic activity more than six months from now?

As to the latter, he told me that if I found the answer, I should keep it to myself and get rich on it. As to the former, he could not remember the name of it, but he remembered it may have been called the Institute of Supply Management Index which surveys firms at the end of the month and asks about new orders, production and employment. I told him I will have my students research its name.

We also discussed his dissertation which he explained to me from a perspective my mother never did. In this, he addressed the economy from two perspectives: those saving for retirement, and those retired.

He also explained what our employment objective should be; creation of 150,000 - 175,000 jobs-per-month. I have decided to modify this to only include jobs which pay-per-year after tax 20,000-times the maximum national average price for gas-per-gallon reached on June 04, 2004, and to only include jobs which people do not have to grotesquely genuflect for. Employers should recognize that the lower they bow their heads now, the more they subvert later.

As I have explained, for retailers, Christmas is on the way. Clothing designers are preparing their final drafts for the runway, and orders for ornaments are being made, or are already in production. I would like to ask of banks to offer by May of this year certificate-of-deposits which will mature in November and December. I would like this availed to individuals, as well as corporations which will serve as their Christmas bonus fund for non-trustees. And I would like these banks to find a way to offer a generous interest rate while making a profit.

And, as per your demand, we will add a recipe to this website with which we will measure our progress. I am looking for a favorite from my childhood. You will have to ask your adopted companies what to do next.

On this date of April 04, 2004, my father is researching which economic indicator we can use for assessing salary development.

July 22, 2004	The Redbook economic indicator characterizes itself as "less consistent indicator of retail sales than the ICSC-UBS index. Do you agree?	Not if less consistent means worse. The last I heard the UBS index related to just a few large retail firms and that still seems to be true since they say there are: "A weekly measure of comparable store sales at major retail chains. This series is related to the general merchandise portion of retail sales which is about 10 percent of total retail sales". In other words, their index is a small fraction of 10% of total retail sales whereas the Redbook index has several thousand retail firms in its index.
	According to Redbook, retail sales rose 2.6% compared to the year-ago week. Is this good?	No, rather poor since the increase is usually in excess of 4% and so this is another indication that things slowed up fairly substantially in June. This may, or may not, be a short term aberration.
	How do you interpret recent activity of PPI indices?	Very small increases in both the core and total finished goods index imply slow sales and so a limited ability to raise prices.
	Is deflation good?	No if prices fall each year then a positive rate of return (in terms of what you can buy with the money) can be had by simply holding cash (which appreciates in real value with deflation). If prices were falling 5% per year your (real) return on holding currency would be higher than the usual real return on investment (e.g., on machinery, or stocks) and this should bring investment, and therefore most progress, to a screeching halt.
	Is deflation good?
	What does seasonally adjusted mean?	Suppose in the last ten years, on average, sales of toys in December were (say) 100% higher than in November. Then a simple version of "seasonal" adjustment would say that if toy sales this December were only 50% higher than in November then, seasonally adjusted, sales fell by 1/3 i.e. they did not rise by as much as expected.

Lechon Asado--Roast Pork

"is the "pièce de résistance" of a traditional holiday meal."

Laura Milera

Pursuant to my father's May of 2004 e-mail, I have decided that the Christmas Economic Indicator must remain at a continual 61.2 (plus or minus 2.5), and the non-farm payroll must expand by at least 250,000/month. The 6 will represent the next Greatest Story to be released into the public domain (i.e., after Matthew, Mark, John, Luke and Thomas). Maybe it will be Mary's?

ingredient

Supply Management Index (ISM) napm.org

application

employment for Christmas

Non-Farm Payroll

seasonally adjusted

interviews with employers

Non-Farm payroll growth compared to 2003

Household Employment Survey

interviews with households*

non-revised

revised

February 01 - May 01--Christmas orders are placed

4-5 pounds fresh pork shoulder, whole

63.6%*--"Growth of the Global Manufacturing Economy Reaches Four Year High in January..."*

61.4%--Feb

"will need to marinate for 1-2 days. Then rinse well and set aside."

March non-farm payroll experienced triple digit growth--308k--well beyond the most optimistic prediction of 200K.

revised; up 337,000

March 2003 revised Non-Farm Payroll down 108,000

March household surveys--employment up 182,000

Garlic head and cloves

62.5%--March

separate former into latter. "Crush the cloves with a kitchen mallet or knife handle and then peel them.

April non-farm payroll up 288,000.

revised; up 346,000

April 2003 revised Non-Farm Payroll down 48,000

April household surveys--employment up 278,000

cumin, oregano, salt and black pepper

62.4%--April, 2004

I have been told to receive this as good news because it "has now been above 60 for six consecutive months."

"Add the crushed cloves to a mortar and pestle, along with these ingredients (i.e., cumin, etc.) and mash until you have a coarse paste.

May non-farm payroll up 248,000.

revised; up 235,000

May 2003 revised Non-Farm Payroll down 70,000

May household surveys--employment up 233,000

Economists' goal; 3 months x 175,000=525,000

Christmas goal; 3 months x 250,000 = 750,000

total revised Non-Farm Payroll figure for 3 months; 918,000

compared to 2003 Non-Farm Payroll, 2004 Non-Farm Payroll is ahead 1,144,000

total employment figure as per household surveys; up 693,000

May 01 - August 01; Summer season--manufacturing activity overseas

62.8--May, 2004

"If you do not have a mortar and pestle, process these in food processor until you have a coarse paste.

June non-farm payroll up 112,000.

revised; up

96,000

June 2003 revised Non-Farm Payroll down 72,000

no information for June employment as to the household surveys

Economists' goal; 4 months x 175,000=700,000

Christmas goal; 4 months x 250,000=1,000,000

total revised Non-Farm Payroll figure for 4 months; 1,014,000--close enough

ahead 1,312,000

household surveys; up 693,000

pork

61.1--June, 2004

"Set the pork into a deep bowl

up 32,000 for July

revised; up 73,000

July 2003 revised Non-Farm Payroll down 49,000

July household surveys--employment up 629,000

Economists' goal; 5 months x 175,000=875,000

Christmas goal; 5 months x 250,000=1,250,000

total revised Non-Farm Payroll figure for 5 months;1,087,000

ahead 1,434,000

household surveys; up 1,322,000*

pork

62.0--July, 2004

"pierce with knife several times."

up 144,000 for August

revised; up 128,000

August 2003 revised Non-Farm payroll down 41,000

August household surveys--zero change

Economists' goal; 6 months x 175,000=1,050,000

Christmas goal; 6 months x 250,000=1,500,000

total revised Non-Farm Payroll figure for 6 months; 1,215,000

ahead 1,603,000

household surveys; up 1,322,000

August 01 -November 01--early Christmas Season

pork

59.0--August, 2004

up 96,000 for September

revised; up 139,000

September 2003 revised Non-Farm Payroll up 125,000

September household surveys--zero change

Economists' goal; 7 months x 175,000=1,225,000

Christmas goal; 7 months x 250,000=1,750,000

total revised Non-Farm Payroll figure for 7 months; 1,354,000

ahead 1,617,000

household surveys; up 1,322,000

58.5--September, 2004

"over the entire pork shoulder"

up 337,000 for October

revised; up 303,000

October 2003 Non-Farm Payroll up 137,000

October household surveys--up 367,000

Economists' goal; 8 months x 175,000=1,400,000

Christmas goal; 8 months x 250,000=2,000,000

total revised Non-Farm Payroll figure for 8 months; 1,691,000

ahead 1,783,000

household surveys; up 1,689,000

56.8--October, 2004

up 112,000 for November

revised, up 137,000

November 2003 Non Farm Payroll up 43,000

November household surveys--up 483,000

Economists' goal; 9 months x 175,000=1,575,000

Christmas goal; 9 x 250,000=2,250,000

total revised Non-Farm Payroll figure for 9 months; 1,828,000

ahead 1,877,000

household surveys; up 2,172,000

November 01 - February 01--Christmas & Return/Exchange Season

57.8--November, 2004

up 157,000 for December

revised, up 133,000

December 2003 Non Farm Payroll up 16,000

December household surveys--minus 137,000

Economists' goal; 10 months x 175,000=1,750,000

Christmas goal; 10 x 250,000=2,500,000

total revised Non-Farm Payroll figure for 10 months; 1,961,000

ahead 1,994,000

household surveys; up 2,035,000

57.3--December, 2004

up 146,000 for January

January 2004 Non Farm Payroll up 97,000

January household surveys--up 85,000

Economists' goal; 11 months x 175,000 = 1,925,000

Christmas goal; 11 x 250,000 = 2,750,000

household surveys; up 2,120,000

56.4--January, 2005

*considered a less reliable survey than Non-Farm Payroll because companies typically give more reliable information then members of households who answer the telephone surveys. Henceforth, these two figures tend to vary strongly in relation to each other.

*What this suggests to me is that an economic sector is growing which is somehow not included in Non-Farm Payroll.

After one million people blew the whistle on National Whistleblowers' Day on Holy Thursday, 2004, and in anticipation of those who will whistle-blow on the secular National Whistleblowers on September 11th, I would like to ask that all recovered monies be distributed as follows as per the following time-table and minimum standards. Please contact your representatives and ask him if they intend to accomplish this.

The revised figure for December of 2003 is 16,000--ahead 172,000 from last year.

Feb. 29, 2004	$1.75/gallon	$35,000/year
Mar. 23, 2004	$1.738/gallon	$34,760/year
Apr. 01, 2004	$1.740/gallon	$34,800/year
April 08, 2004	$1.80/gallon*	$36,000/year
April 24, 2004	$1.850/gallon	$37,000/year
April 29, 2004	$1.83/gallon	$36,600/year
May 14, 2004	$2.01/gallon	$40,200/year
June 04, 2004	$2.06/gallon	$41,200/year
July 02, 2004	$1.90/gallon	$34,580/year
August 01, 2004


April 14, 2004	Should we watch the Manufacturing or Non-Manufacturing Report on Business (ROB) by ISM/NAPM? Why?	While non-manufacturing is by far the largest part of the economy, manufacturing has most of the volatility and so is the more interesting one to watch to anticipate changes of business conditions. Further it comes out on the first of the month whereas the non manufacturing index comes out a few days later but measures things for the same time, i.e., it is slightly delayed and so is less useful for forecasting.
	What indices should we watch to monitor salary activity? Do these exist? What should exist?	There is no index I know of salary activity because salary data in the past were not usually very volatile (now with so many salaried jobs moving to India, I wonder whether this is still appropriate--Government agencies may be fighting the last war-as usual) and so the interest has been in hourly wages. The latter index of course comes out at the same time as the unemployment data--on the first Friday of the month. If you are interested in salaries you might be interested in the personnel income index that comes out (I think) toward the end of the month.
	What is the difference between the non-farm and farm reports on payroll? How do these differ from ISM/NAPM?	With respect to your third question, I am not aware of any report on farm payrolls. However, the government statistics (BLS) on non farm payrolls differs from the ISM because the latter is a private index and furthermore measures only the percentage of businesses reporting an increase (50 indicating equality between ups and downs)* whereas the government index measures the actual change of non farm employment. However government indices come out several days after the ISM index.

*Up or down, not how much. That is, if one company is up by $1, and another is down by $1,000,000, ISM/NAPM will declare these even--50%.

May 04, 2004	I have decided to ask each of my kids to find and adopt an economic indicator as I am very discouraged by the fact that ISM/NAPM is hovering around 62, and won't move.*
	Why discouraged? All that the constant indicator means is that manufacturing activity is expected to continue to rise fairly briskly (about 5 out of 8 of those polled continue to see things going well). Why would variation be good?**
	early in the month release	ISM/NAPM	service industries
	every Tuesday	Redbook	retail sales
	later in the month	Manufacturing New Orders Series	Department of Commerce
	later in the month	Building Permits series
	?	Leading Indicators
	this Friday, and 1st Friday of every month	BLS Employment Index	Bureau of Labor Statistics

	Please don't feel you are confined to this list. If I understand this concept correctly, what goes up must come down. If we establish the Christmas standard of 61.225 as normal (plus or minus 2.5), this would be more nourishing to the economy in the long run. And if this level is maintained for several months in a row (e.g., November, 2003 thru July of 2004), then these companies are successively doing better in each of these months. (July was more prosperous than June, and much* more prosperous than May, etc).