Economic Indicators Dashboard – August 2015 Update

Let’s take a closer look at a few of the indicators on the current Economic Indicators Dashboard and decipher what they may mean to the macro environment. Accessed on September 11, 2015. Accessed on September 11, 2015. How do I read this chart? This dashboard is intended as a tool to set context and perspective when evaluating the current state of the economy. For each indicator, the horizontal bar shows four things.
  • A blue color band represents the typical range for this indicator. +/- 1 standard deviation of historical values for the indicator fall in this range.
  • An orange marker shows the most recent value – the closer the marker is to the blue bar, the closer it is to historically typical conditions.
  • A grey area outside of the blue band which shows the range actual conditions.
  • An arrow shows the most recent three-month trend indicating if it is moving toward or away from the typical range

Market Indicators

Month-end market volatility (measured by CBOE VIX) rose in August to 19.43%, the highest since mid-2012. High as it may sound, that month-end number is muted compared to the intra-month (and intra-day) volatility, which hit 40.74 on August 24th, a level reminiscent of volatility in August/September 2011. Fortunately, daily volatility through the first days of September has been less extreme. Of course, periods of volatility can be rewarding for long-term investors:  staying invested and enduring the dips can be the best decision.           The August reading of the 10-Year U.S. Treasury Yield remained below the typical historical range at 2.22%. Following the Federal Reserve’s decision to hold rates steady on September 17, all eyes will remain on the Fed for clues about whether they will raise rates before the end of the calendar year or not.

Economic Indicators

Unemployment continued to decline, reaching 5.1% by the end of August. Although total nonfarm payroll employment rose by 173,000 in August, it fell short of market expectations. The U.S. economy, measured by GDP, expanded at a revised seasonally adjusted annual rate of 3.7% in the second quarter, an improvement on the first estimate of 2.3%. This increase reflected rises in nonresidential fixed investment and private inventory investment.

The bottom line

In our view, the market volatility experienced in August and global political risks – among other factors – will likely cause the Fed to hold off on raising interest rates at their meeting in September.
Standard Deviation is a statistical measure that reflects the degree to which an individual value in distribution tends to vary from the mean of the distribution. Standard Deviation is a useful tool in measuring the historical typical range as 1 Standard Deviation includes approximately 68% of the historical values in a normal distribution. Using this measurement allows us to exclude the more extreme values which would not be as probable to see from the indicator.Data stated is historical and not a guarantee of future results. Data displayed in the Economic Indicators Dashboard are reflective of current data as provided by the data sources including any revisions to previous data. These revisions may change historic data points and historic ranges for some or all indicators. These changes are usually due to seasonal adjustments to previously supplied data. The information, analyses and opinions set forth herein are intended to serve as general information only and should not be relied upon by any individual or entity as advice or recommendations specific to that individual entity. It is not intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Anyone using this material should consult with their own attorney, accountant, financial or tax or consultants on whom they rely for investment advice specific to their own circumstances. Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.

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