I have recently become fascinated by the mysterious blue tent on the sidelines of NFL games. If you watch football, you probably know this newfangled tent is where players who are suspected of having a concussion are taken to have the NFL's concussion protocol administered. For those of you not familiar with this process, I will offer an oversimplified explanation.
The player goes into a dark room (or tent) and is given a test on a computer designed to measure his cognitive abilities at that moment. Concussions measurably impair one's cognitive abilities in the short term, so a player cannot return to action until the speed and accuracy of his answers on this test return to "baseline" status. In order to establish a baseline, every player has to take a similar test before the season starts.
The reason for my fascination with the concussion protocol is that this process is starting to remind me of the way I have started to analyze and forecast the performance of the U.S. economy and the plastics industry. During the past decade, we have certainly established a baseline for the vital economic and manufacturing sector indicators. And now when something happens that might cause either a slowdown or an acceleration in the economy, I have started to look to see how much the indicators are deviating from this baseline.
For the past few months, I have touted the notion that the overall performances of both the U.S. economy and the plastics industry in 2020 will mainly depend on the behavior of the American consumer. This is not a revolutionary idea. Consumers account for roughly 70 percent of total U.S. GDP, and they also purchase most of the plastics products manufactured in this country.
Two of the most important trends that illuminate and anticipate U.S. consumer behavior are the rates of growth in the monthly data series measuring consumer spending and personal income. At the present time, both of these series are performing absolutely, incredibly, magnificently … steady. For the past year, they have been pinned right on their long-term baselines.
On the chart, I show the three-month rate of change graphs derived from these data series since the end of the Great Recession in 2009. Keep in mind this chart measures the rate of growth in these data, not the actual levels. So if the curve is above the zero-line, then the three-month growth rate in the data is positive when compared with the same three-month period of the previous year.