Economic data has been deteriorating in the past few months. Indicators of final demand have been deteriorating more quickly such as mortgage applications, car sales and same store sales. At the same time employment and manufacturing have only slightly deteriorated. The question is which is the carriage and which is the horse?
Today unemployment data came in weak and same store sales came in fine, which is the opposite of what we have seen in the past few months. I am in the camp that believes that the economy is slowing and when the economy is slow the chance of some sort of accident becomes higher. The data has given hopes to both the bulls and bears but by the end of September we should know who is correct.