Thursday, September 17, 2009

Philadelphia Feeling: Federal Reserve Bank of Philadelphia Business Outlook Survey September 2009

Today, the Federal Reserve Bank of Philadelphia released the results of their Business Outlook Survey for September showing a jump in manufacturing activity with the current activity index indicating expansion at 14.1.

Also, today’s results show that any recent parallel to the stagflationary eras of the 70s and early 80 which had given way to a stronger stag-deflationary force now appear to be, at least temporarily, looking marginally inflationary as latest release shows predictions on future employment as well as current employment and prices paid all appear to have taken a turn up.

The following chart shows the latest results of the “current new orders” “current prices paid” and “future employment” components (click for larger versions).

The following chart (click for larger) shows these measures during the last stagflationary era seen between 1976 – 1980. Notice the clear divergence of rising prices and falling growth.