06/03/2011
Is Steel Production a Relevant indicator?
Over 15 years ago, when I was at PIMCO Funds, I was doing a series of conference calls with bond guru Bill Gross and asked him if he could pick one economic indicator to use as a barometer of the health of the U.S. economy, what would it be? He said, ‘steel production.’ I got a kick out of that because on handwritten spreadsheets since March 1990, I have been tracking steel, which you can easily find in Barron’s each week. One problem, I don’t look at it enough. [As for Gross, I doubt he would have the same answer today but I don’t know for sure.]
So I thought we’d take a look at similar periods in time, from the expansion, to The Great Recession, to recovery. One thing seems apparent, talk of a current soft patch is warranted if you look at the steel figures.
The following are weekly data, steel production in tons (000s). The gross numbers aren’t as important as the trend. I added the S&P 500 data and the number for the week after Labor Day to smooth out holiday-related production slack.
2007…expansion
3/23/07-6/8/07…and 9/14/07
2001
2006
2031
2017
2087
2043
2032
2062
2068
2085
2076
2090
2092
S&P 500…1436 [3/23] 1507 [6/8] 1484 [9/14]
2008…expansion, but we’re about to hit a wall with financial crisis in September
3/21/08-6/6/08…and 9/12/08
2086
2118
2144
2099
2134
2154
2118
2098
2136
2146
2140
2114
2062
S&P 500…1329 [3/21] 1360 [6/6] 1251 [9/12]
2009…hit bottom in March, recovery begins May/June
3/20/09-6/5/09…and 9/11/09
976
1027
1006
965
1033
999
984
1004
1023
1060
1093
1103
1342
S&P 500…768 [3/20]* 940 [6/5] 1042 [9/11]
*S&P bottomed 3/9/09 at 676
2010…economy still in recovery mode but nothing spectacular
3/19/10-6/4/10…and 9/10/10
1715
1720
1734
1712
1731
1755
1764
1754
1776
1797
1787
1766
1708
S&P 500…1159 [3/19] 1064 [6/4] 1109 [9/10]
2011…recovery petering out? 3.1% GDP Q4…1.8% Q1
3/18/11-6/3/11
1847
1807
1843
1811
1818
1861
1840
1788
1801
1810
1821
1801
S&P 500…1279 [3/18] 1300 [6/3]
Source: StocksandNews.com database, Barron’s
Wall Street History will return in two weeks.
Brian Trumbore
