Calling a turning point is tricky, and offers ample room to make oneself look silly.
But I reckon a good indicator is surprise. If pundits expect the continuation of a trend, and are surprised, that suggests either a temporary blip or a reversal. And if there are many such related surprises, evidence strengthens for the reversal.
Well, there is a lot of surprise in this office at the moment. Every day there seems to be a new (negative) data release for the UK or US – and every day I see colleagues raising eyebrows at the size of that surprise. An eyebrow raise, in Britain, is a powerful indicator.
So I’m keeping a list, below, of the latest data releases. All the ones I’ve listed have been surprises, either because of a change of direction, or an acceleration. Do counter this list with positive economic indicators, if you can think of any. I’m concerned I’m filtering unconsciously:
These are all latest data.
US
- Unemployment: initial weekly claims rise; fall expected (FT, DOL data)
- Mortgage applications: Jan lowest since May 1997 (Calc Risk, MBA release)
- New house sales: Jan sharply down on December (FT, Census)
- Consumer confidence: down sharply from 56.5 to 46 (FT, Conference Board)
- Underwater homeowners: up 600,000 in one quarter (Felix Salmon)
Europe
- Business lending: contraction accelerates, 2.7% Jan from 2.2% Dec (FT)
UK
- Business investment: +0.1% expected; -5.8% recorded (FT, ONS)
- Gross mortgage lending*: sharp and unexpected reduction in loans (FT, BBA)
- Government borrowing: poor tax income pushes borrowing up in January – first time since 1993 (Money Supply, ONS)
*Net lending was also down. This is partly explained by the end of a house purchase tax relief (‘stamp duty holiday’) at the end of December.
