Following the election we saw a sharp improvement in “soft” economic data. Most of this data was centered around surveys about how consumers, business owners, and manufacturers “felt” about the economic prospects of the economy. At the time I warned the key would be how quickly the “soft” data turned into actual tangible economic growth. Unfortunately, the “hard” data has not turned around, which has caused our economic model to turn negative.
Curiously, the preliminary data for August, all of it “soft” survey type data shows a sharp pick-up in activity. We will be watching closely the data the rest of the month (the hard data) to see how it impacts our model. For now, it has cemented our Dynamic models in a “bearish” position.