Investment bankers and analysts continue to worry about the U.S. economy.
That said, our favourite economic surprise indicator suggests that this concern could be overblown.
The Citi Economic Surprise Indicator measures the ratio of economic data that beats analyst estimates to the ratio that doesn’t; a negative number for the index reflects data that have missed expectations.
In the last few years, this has served as an important leading indicator for the economy. Minimums and maximums in the graph tend to precede changes in investor sentiment towards financial markets.
And it looks right now like we’re nearing another optimistic moment—something that’s far less obvious for the rest of the world. The US index is rapidly moving from negative territory toward 0 (where expectations match results), whereas the G10 index (not to mention specific indices for China and Europe) suggest that the economy is still disappointing investors.
Photo: Bloomberg Data
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