Consumer Earnings and Spending as Leading Market Indicators

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board Consumer Earnings and Spending as Leading Market Indicators

This topic contains 1 reply, has 2 voices, and was last updated by  TS Paul 4 years, 5 months ago.

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  • #13883

    Joey

    Paul,

    I’ve been reading Joseph Ellis’ book, and in it, he gives strong support for average hourly earnings and consumer spending being among the best leading indicators for market forecasting. At the same time, he hits home the idea that utilizing employment data can be a trap in predicting market downturns, as this is traditionally a lagging indicator.

    Given this, and the fact that you recommend his book, I was curious why your own personal philosophy doesn’t lend more weight to these specific concepts. Do you disagree with his assertions?

    Joey

    #13913

    TS Paul
    Keymaster

    My personal philosophy is ever evolving. 🙂

    I need to make more clear in my writing where I am talking about an indicator which I see as important for figuring out the phase of the business cycle vs indicators which point towards recession risk. I will try to clearly delineate those going forward.

    In my case, employment is really something I look at more for deciding if we are, for example, in the recovery or prosperity phase, rather than if a recession is looming.

    I don’t disagree with Ellis with respect to consumer spending and average hourly wages. I do actually follow consumer spending fairly closely. I had to draw the line somewhere with what I was regularly going to provide data on and discuss, or those monthly updates would get impossibly long. I will give some thought to what is making the cut, and if I streamline the format perhaps one or both may start appearing.

    Thanks very much for the great question – this is exactly the sort of discussion I hope to see on the message board.

    The TSP Allocation Guide www.TSPallocation.com

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