The good news diffusion index (GDI)—a proprietary measure of the qualitative nature of the month’s big reports from the Principal Federal Economic Indicators—rose to 62.5 in August. This indicates that good reports outnumbered bad by about three to two.
At the end of August, releases from BEA, BLS, and Census indicated that GDP fell 1.0 percent in the second quarter (bad), personal income was virtually unchanged (neutral), producer prices were down 0.9 percent overall and 0.1 percent for goods other than food and energy (neutral), durable goods orders were up 4.9 percent (good), and new home sales were up 9.6 percent (good).
Thus far in September, construction spending edged down (bad), while the full report on manufacturing was mixed or neutral. Orders were up and inventories down (good), but shipments and unfilled orders were both down (bad).
NOTE: My policy on evaluating price reports has changed to put more weight on “core” indexes, such as the PPI excluding food and energy. This is to allow for the often non-economic volatility of food, energy, and agricultural prices.
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