The Trendpointers Report: Advance Signals For Economic Expectations and Consumption

Vol.
1 Issue 4 April, 2010
The TrendPointers Report

Advance Signals For Economic Expectations And Consumption
Current Signals: Show us the money. Recent economic numbers, e.g. retail sales and consumer confidence,
have improved recently but we do not see from where the diminished buying capacity of the consumer will be
readily replaced. There is still weakness in the three C’s necessary to the start of a recovery: confidence,
consumption, and capability.
 Yes - there is an upward trend in consumer confidence, but still at relatively low levels.
 Yes - retail sales recently increased, but there is a long way to go, and allowances to be made for
temporary restocking and possible eagerness to resume spending.
 No - we do not yet see sufficient consumer buying power to reestablish pre-recession spending levels.
Too much real and leveraged spending power has been taken out of the economy; it may be 3 to 5
years before it's firmly reestablished. After the May TrendPointers data is available we will issue a full
commentary on recovery expectations.
 Uncertainty has peaked and started a downward slope in favor of a tug-of-war between Positive and
Negative views, with Positive showing what could be the start of a breakout. However, Expectations
Signals are still short of meeting recovery targets we have set to indicate a genuine shift forward.
 The Recession, as defined by economists, is believed to have ended around June 2009; this is exactly
the period when Negative and Uncertain Expectations crossed for the first time in nearly 2 years.
Economic Expectation Signals - Overall Economy--Business Media

Positive Uncertain/Mixed Negative
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
Recession ended?
Pre-recession crossover Pre-recovery -Crossover ?
0.00%
8/31/07
9/28/07
1/16/09
2/13/09
3/13/09
4/10/09
9/29/06
1/19/07
2/16/07
3/16/07
4/13/07
5/11/07
1/18/08
2/15/08
3/14/08
4/11/08
8/29/08
9/26/08
7/31/09
8/28/09
9/25/09
1/15/10
2/12/10
3/12/10
10/27/06
11/24/06
12/22/06
10/26/07
11/23/07
12/21/07
10/24/08
11/21/08
12/19/08
10/23/09
11/20/09
12/18/09
6/8/07
7/6/07
8/3/07
5/9/08
6/6/08
7/4/08
8/1/08
5/8/09
6/5/09
7/3/09
4/9/10
www.trendpointers.com / TrendPointers LLC / PO Box 2159 Northbrook, IL. 60065

Ph: 877-550-1907 / trendinfo@trendpointers.com
The TrendPointers Report Vol. 1 Issue 4 April , 2010
TrendPointers Economic Expectations Scorecard
 Negative expectations about the overall economy reached and maintained their target levels for the past
five TrendPointers cycles. However, the necessary corresponding increase in Positive expectations has
not achieved a corresponding sustained level. The extreme fear is largely gone, however; a sizable but
possibly shrinking contingent is waiting in the Uncertainty box.
 Expectations about recession/recovery have started to moderate in the last two TrendPointers periods.
Official reports now estimate that the recession ended about June 2009, but it will take time to be
assimilated and accepted as long as the personal household recession remains in the daily news.
 Expectations for recovery in the housing market are still dominated by Negative and Uncertain outlooks.
The typical forecasts are for prices to begin to recover and inventory to shrink substantially several
years out. Moreover, the impact of foreclosures and government support for this issue is far from
resolved.
Targets: Economic Expectations Signals are not a single number but a continuum of shifting moods of
consumers and businesses. Expectations Signals are captured on a multi-point scale. Our target indicator for
Expectations recovery is that Positive and Negative Media Business Expectations must concurrently achieve
and sustain levels of: Positive >35%; Negative Expectations <35% for 4 consecutive bi-weekly periods.
Economic Expectations Signals - Business Media

Recovery Targets:
65%
4 Consecutive Periods - Positive>35% + Negative < 35%
60%
55%
50%
45%
40%
35%
Recovery Target Levels
30%
25%
20%
15%
10%
5%
0%
Recess./ Recovery Recess./ Recovery
Economy Positive Economy Negative Housing Positive Housing Negative
Positive Negative
1/15 23% 22% 32% 53% 27% 49%
1/29 10% 34% 30% 47% 17% 52%
2/12 24% 23% 27% 47% 39% 29%
2/26 19% 30% 29% 42% 31% 36%
3/12 35% 18% 35% 35% 14% 50%
3/26 24% 25% 32% 51% 17% 62%
4/9 36% 19% 48% 21% 24% 41%
TrendPointers LLC / PO Box 2159 Northbrook, IL. 60065 / Ph: 877-550-1907 / trendinfo@trendpointers.com
Precast Signal Dashboard - Key Economic Indicators
 There is a potential flaw in the recent resurgence in consumer spending.

Only 18 months ago, we were on the “verge of the greatest depression since 1929”, and now we read
reports of consumers opening their wallets. This may be analogous to the familiar problem when people
get a prescription for an antibiotic- take it 2 times a day for 14 days. After a few days, you are feeling
great so you stop taking the medicine- 2 days later you are sick again. You only thought you were
better. Similarly, consumers are spenders, not economists, and their resurgence in spending may be
more a short-lived temporary feeling of “wellness” . While we are not suggesting a “double dip” in
the economy, we are seeing the early signs of some turn back in spending later this summer.
 The very real burdens of high unemployment and a weak housing market should realistically constrain
any reversal to consumption exuberance. Consumers eventually respond to what they personally
experience and the impact on them of the daily flow of information…eventually.
Current PreCasts** (See specific indicator pages for extended PreCasts)

 Unemployment: Slow, slight decline, projecting low 9% range through the third quarter of 2010.
 Retail sales: Modest increases through June as long as current expectations conditions do not
encounter seriously negative headline news.
 Consumer confidence: Conventional measures are lagging indicators of the immediate economic
conditions. They should fluctuate at current levels and will likely increase as consumer perceptions
catch up to business media outlooks in the next two to three months. Mid-term election rhetoric will start
late summer and affect perceptions, which may not reflect legitimate economic activity.
**( PreCast estimates are updated each month prior to official release)
UNEMPLOYMENT – PreCast Signal Outlook
 PreCasts signal that April unemployment will hold near 9.7%, and then likely begin a modest decline
from May, falling to the 9.4-9.5 range by late summer and into the fall. The one caveat for improved
unemployment: any new government actions that either temporarily support hiring or a new tax or other
financial incentive that encourages hiring during a limited period.
 The 3-month moving average shows the leveling of Unemployment that now meets the PreCast outlook
trend.
 There is increasing discussion of underemployment as well as unemployment that will have serious
consumption implications.
 Alternative view: There are some views that unemployment was overdone and went higher than
necessary. Although the resulting productivity gains are desirable, they may not be sustainable. There
could be a short-term improvement in hiring for a couple of months that would reduce the
unemployment rate by 1.0 to 1.5 points, and then stabilize at above average levels for an extended
period.
Unemployment - PreCast Signals vs. Reported

Unemploy. PreCast Unemploy. Reported 3 per. Mov. Avg. (Unemploy. Reported)
11
10
7
Dec. Jan.
Apr. May June July Aug. Sept Oct. Nov. Feb. Mar. Apr. May June July Aug. Sept Oct.
2009 2010
Unemploy. PreCast 9.9 9.9 9.64 9.66 9.78 9.67 9.46 9.42 9.41 9.53 9.38
Unemploy. Reported 8.9 9.4 9.5 9.4 9.7 9.8 10.1 10.0 10.0 9.7 9.70 9.70
Note: PreCasts advance estimates for each future month are recalibrated in each new monthly report.
CONSUMER CONFIDENCE
PreCast Signals Outlook: University of Michigan Survey of Consumers
Consumer confidence is considered a key indicator of the economic mood of consumers at the time of
measurement. TrendPointers provides advance estimates of the trajectory of the conventional consumer
confidence indices to provide greater economic planning headroom.
 The March Michigan Consumer Sentiment Index was unchanged at 73.6 from the prior month. Michigan
is likely to decline slightly until the more recent, and more upbeat, news catches up with consumers
covered by survey methods. PreCasts for the Michigan report are expected to hover in the same range
or decline marginally through the summer.
U. of Michigan Consumer Confidence - PreCast Signals

U. Mich CC PreCast U. Mich CC Reported 3 per. Mov. Avg. (U. Mich CC Reported)
90
*All Consumer Confidence PreCast estimates are =/- 1.0
85
80
75
70
65
60
55
50
45
40
Dec. Jan.
Apr. May June July Aug. Sept Oct. Nov. Feb. Mar. Apr. May June July
2009 2010
U. Mich CC PreCast 72.6 74.0 73.3 72.3 71.2 74.8 71.8 na
U. Mich CC Reported 65.1 68.7 70.8 66 65.7 73.5 70.6 67.4 72.5 74.4 73.6 73.6
Note: Consumer attitudes typically lag behind media Expectations by several weeks, and
reflected in conventional consumer confidence surveys within two to three months following.
Therefore, PreCasts for consumer confidence data are provided with a +/- range of 1.0
CONSUMER CONFIDENCE
PreCast Signal Outlook: Conference Board Consumer Confidence Index
 As with the Michigan consumer sentiment reports, we expect the numbers from the Conference Board
to fluctuate within a narrow current range due to the continuing volatility and uncertainty in numerous
economic factors: unemployment, housing, and discussions of increasing interest rates.
Conference Board Consumer Confidence - PreCast Signals

CB Cons. Conf. PreCast CB Cons. Conf. Reported 3 per. Mov. Avg. (CB Cons. Conf. Reported)
80
*All Consumer Confidence PreCast estimates are =/- 1.0
70
60
50
40
30
20
10
0
Dec. Jan.
2009 2010
CB Cons. Conf. PreCast 56.1 51.9 49.7 46.8 53.9 50.8 53.8
CB Cons. Conf. Reported 40.8 54.8 49.3 47.4 54.5 53.4 48.7 50.6 53.6 55.9 46.0 52.5
RETAIL SALES – PreCast Signals
Retail sales: Real growth or a mini-euphoria bubble?
 Retail sales increased again in March as consumers’ discretionary spending may be increasing due to
restocking their own inventories, stabilizing of unemployment, improving 401k balances and a slightly
better mood due to the reduced extreme negativity in the news.
 The 3-month moving average is steadily up, but PreCasts see a likely leveling off soon.
If retail sales hit the $370 billion monthly level this summer, we may see a flattening or falling pattern in
futrure sales levels. Consumer spending is based on “perceived” expectations, and the current
expectations are fragile as the latent issues of credit availability, real estate values and other factors
could cause a return to a negative outlook. In our May report, we will present a full review of all the
components of economic expectations and behavioral recovery.
 During 2007 and 2008 retail sales continued to hold up despite the imminent, but often disregarded,
economic problems for one reason only – consumers were Uncertain about the true economic
conditions. Thus, the basics of human nature prevailed, and will again if there is any notable shift to
Negative Expectations for even a few weeks.
375
Retail Sales - PreCast Signals vs. Reported
Ret. Sales PreCast
Ret. Sales Reported
370 3 per. Mov. Avg. (Ret. Sales Reported)
365
360
355
350
345
340
335
330
325
320
Dec. Jan.
2009 2010
Ret. Sales PreCast 351.8 355.9 362.4 365.5 363.2 364.1 367.8 363.7
Ret. Sales Reported 338.3 339.9 342.9 342.5 350.8 343.7 347.6 352.1 354.1 355.8 355.6 363.2
Consumer Personal Consumption Expenditures – PreCast Signals
Consumer spending is approximately 70% of the total US economy, with retail sales the single largest
component. Thus, we see a corresponding increase in consumer spending, and the current moving
average coincides with our PreCast of a leveling off through the summer.
11500
Consumer PCE - PreCast Signals vs. Reported
Cons. PCE PreCast Cons. PCE Reported 3 per. Mov. Avg. (Cons. PCE Reported)
PCE=Personal Consumption Expenditures

11000
10500
Billions Dollars
10000
9500
9000
Dec. Jan.
Apr. May June July Aug. Sept Oct. Nov. Feb. Mar. Apr. May June July Aug.
2009 2010
Cons. PCE PreCast 10211 10287 10322 10333 10290 10239 10263 10200 10167
Cons. PCE Reported 9968 9979 10051 10068 10197 10133 10188 10242 10279 10317 10352
Retail Sales: Historical Trends vs. Expectations Signals
 As uncertainty goes, so goes consumer spending. Retail sales are a critical benchmark measure of
the consumer mood and future economic behavior. We believe it is important to look at the long-term
trends to determine progress toward recovery in consumer spending as well as look for new patterns in
consumption behavior.
 Now that the extremes of low positive and high negative expectations have moderated, retail sales have
started to increase via the concurrent shifts from Negative and Uncertainty to expectations that are more
Positive. However, Uncertainty can be the tiebreaker; and any blips in economic news can push them
back to Negative; it will take several TrendPointers reporting cycles to determine the strength of
sustained spending patterns.
Historical Business Media Expectations vs. Retail Sales

Positive Uncertain/Mixed Negative Retail Sales
70.0% 390
380
60.0%
370
50.0%
360
40.0%
350
30.0%
340
20.0%
330
10.0% Pre-recession 320

Expectations Crossover
Pre-recovery crossover?
0.0% 310
5/11/2007
9/29/2006
8/31/2007
10/27/2006
11/24/2006
2/16/07
9/26/08
3/13/09
8/28/09
2/12/10
1/19/07
3/16/07
4/13/07
8/29/08
1/16/09
2/13/09
4/10/09
7/31/09
9/25/09
1/15/10
3/12/10
8/3/2007
10/26/07
01/18/08
04/11/08
12/19/08
11/20/09
12/22/06
09/28/07
11/23/07
12/21/07
02/15/08
03/14/08
05/09/08
6/6/2008
10/24/08
11/21/08
10/23/09
12/18/09
7/4/08
6/5/09
6/8/07
7/6/07
8/1/08
5/8/09
7/3/09
4/9/10
TrendPointers Expectations Signals - Current Economic Issue Trends
Expectations Signals from both the business media and mass media are a way to gauge the speed of
Expectations shifts. Mass Media tend to lag the Business Media in coverage of both the immediate and daily
issues vs. the longer-term discussion of economic actions and consequences. TrendPointers currently monitors:
 Overall Economic Outlook

 Housing/Construction Outlook
 Recession/Recovery Outlook
 Unemployment Outlook
 New indicators will be added in the future.
TrendPointers Expectations Signals are created by applying our proprietary methodology for capturing the
expectations expressed in both business and mass media for today’s core economic issues.
The TrendPointers methods provide a new set of contemporary leading indicators that have consistently and
accurately signaled the shifts in critical economic indicators months in advance of the official releases.
Expectations Signals are measured on a multi-point scale of Positive-Uncertain-Negative.
TrendPointers Expectations Signals: Historical Expectations Signal Trends
TrendPointers subscribers may have access to the complete historical trends for all Expectations Signals and
the raw data can be made available for clients who choose to use the data in their own economic models.
10
Expectations Signals – Overall Economic Outlook

Business media Expectations have started a very slow, cautious shift to an improved economic outlook. The
business media tend to be ahead of mass media by several weeks to months. The business media shifted their
expectations in January of this year, with Positive increasing and Uncertainty decreasing. In contrast, the mass
media are still far more divided, with Uncertainty still dominating expectations as mass media continue to report
the daily personal impact of current economic conditions.
11
Expectations Signals – Recession/Recovery Outlook
Business media Expectations are now more focused on economic actions, both governmental and business,
over the next 2 to 3 years, as Negative expectations have nearly disappeared from consideration. Expectations
for a near-term recovery are evident by the continuous decline in negative expectations, replaced by the equally
critical “Uncertainty”. It is too early to cite sustainable positive shifts, but the Uncertainty trend line indicates, as it
is often said, “not as bad as expected is a positive”. The mass media are far more cautious, just beginning to tell
the recession recovery story.
12
Expectations Signals – Housing/Construction Outlook
Housing is weak, and is expected to stay so for several years, and there is a latent concern about what will
happen when government support of mortgage related financials diminishes. The only positive theme is that it
should not get any worse. There is no expectation that housing prices have any rationale for increasing, and of
course, this puts a damper on some level of consumer expectations and consumption.
13
Expectation Signals – Unemployment

In February, we began capturing media expectations regarding unemployment since this issue will be with us for
many years to come. In both business media and mass media, the expectations about improvements in
unemployment are predominantly negative. As with our other recovery targets, we will be watching
Unemployment for sustained turning points that signal an improved outlook.
Employment tracking began February 2010.
Employment tracking began February 2010.
14
Appendix
 About TrendPointers
 Legal Disclaimers
 Contact and Subscription Information
15
ABOUT EXPECTATIONS SIGNALS — NEXT GENERATION OF LEADING INDICATORS
Monitor The Trends, Act On Turning Points

TrendPointers was formed in 2006 by consumer behaviorists. Our prior professional research experience,
across many consumer and business disciplines and sectors, identified the need to update traditional methods
of economic information analyses.
The most significant change in the last 10 years has been the extraordinary expansion of information breadth
and distribution. In particular, the 24/7 impact of all types of media on consumer and business expectations has
become a dominating influence on economic attitudes and subsequent economic behavior.
We saw a need, not to add another econometric model per se, but to look at the influence of information on
behavior that has been studied in multiple social science disciplines for decades. Thus, our focus was to adapt
proven methods of communications, behavioral and market analyses to the specific issue of the contemporary
influence of information flow and economic behavior.
For over three years, TrendPointers has been capturing and measuring business and mass media expectations
from hundreds of media input sources on a daily basis. Expectations Signals are the next generation of leading
indicators formed by reporting and trending the complete expectations composition (positive, negative,
uncertainty) for the following contemporary issues:
• Overall Economic Outlook

• Housing/Construction Outlook
• Recession/Recovery Outlook
Expectations Signals Methodology

TrendPointers captures a diverse and representative flow of media-based information on a daily basis, collecting
thousands of items every month, and analyzed separately for the business media and mass media. All the
information is then assessed using a scalar approach to capture the subtleties and shifts of economic
expectations. TrendPointers developed a proprietary economic issue lexicon and expectations analyses
techniques to more accurately capture the prevailing economic moods.
There is a well-established process of behavioral change, beginning with causal influences that lead to attitude
change and eventual impact on economic behavior.
Expectations Signals data are reported bi-weekly to construct trend reports and models that allow us to see the
overall trajectory and the nature of the shifts in changing economic mood.
Simple indices or rolling averages do not capture the components of expectations nor their systematic shifts to
new positions. TrendPointers PreCast Signals consistently provide more accurate estimates of key economic
indicators well in advance of official data releases. Earlier and accurate indicators provide businesses,
institutional investors and short-term traders with a powerful new resource for more confident business planning
and investment decisions that produce consistent, sustainable, successful results.
16
ABOUT PRECAST SIGNALS — EARLIEST ESTIMATES OF KEY ECONOMIC INDICATORS
Expectations Signals have been shown to identify significant shifts in a number of economic indicators months
before being fully realized in conventional methods. PreCast Signals models are built using Expectations
Signals as input data to provide accurate estimates that preempt or “PreCast” consensus estimates and official
data releases of the following economic indicators:
• US Unemployment
• Consumer Confidence (Reuters/University of Michigan)
• US Retail Sales
• Consumer Spending
Simple indices or rolling averages do not capture the components of expectations nor their systematic shifts to
new positions. TrendPointers PreCast Signals consistently provide more accurate estimates of key economic
indicators well in advance of official data releases. Earlier and accurate indicators provides businesses,
institutional investors and short-term traders with a powerful new resource for more confidence-based decision
making.
TrendPointers Expectations Signals: Complete Historical File Access
TrendPointers subscribers may have access to the complete historical trends for all Expectations Signals and
the raw data can be made available for clients who choose to use the data in their own economic models.
• Overall Economic Outlook

• Housing/Construction Outlook
• Recession/Recovery Outlook
17
TrendPointers Legal Disclaimer
TrendPointers obtains information from sources deemed reliable; however, TrendPointers does not guarantee
the accuracy of forecasts provided. TrendPointers makes no warranties, expressed or implied, as to the validity
of the information for any purpose, or to results obtained by individuals using the information. TrendPointers
assumes no liability regarding damage caused by the use of any information provided, including any kind of
information that is incomplete or incorrect.
TrendPointers is an information service and is not intended to provide tax, legal or investment advice.
Nothing in the service constitutes a solicitation or recommendation by TrendPointers or its affiliates or third
parties for the purchase or sale of any investments. TrendPointers and its affiliates do not guarantee the
accuracy, completeness, or timeliness of, or otherwise endorse the facts, views, opinions, or recommendations
contained on the service. The subscriber uses and applies the information provided by the service at its own
risk. Users should always keep in mind that past performance is no guarantee of future results, and any
predictions or forecasts based on historical factors are speculative. All information provided is only as
consolidated opinions and Market Information to be used as an information service only.
Client is responsible for determining the specific and general applications of the TrendPointers data
and holds harmless TPLLC and its employees and representatives for any decisions, actions or results incurred
as a result of using the TPLLC data.
18
Contact & Subscription Info
Glenn Meyers, Vice President of Marketing

630.248.5759
glennmeyers@trendpointers.com
Mike Shutty, Managing Partner

630.363.9646
mikeshutty@trendpointers.com
Rich Spitzer, President

877.550.1907
rspitzer@trendpointers.com
TrendPointers Expectations Signals and PreCast Signals are available by subscription only. TrendPointers
PreCast subscriptions are available in several plans including trial subscriptions. Custom client variables and
models can be developed. Please contact TrendPointers for a discussion of your needs and to request a
proposal.
All information provided in this report is copyright TrendPointers LLC, 2006, 2007, 2008, 2009, and 2010. Reuse
or publication of the information in this report is not permitted without prior consent or the written permission of
TrendPointers LLC.
19

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Vol.

1 Issue 4 April, 2010

The TrendPointers Report

Economic Expectation Signals - Overall Economy--Business Media

www.trendpointers.com / TrendPointers LLC / PO Box 2159 Northbrook, IL. 60065

TrendPointers Economic Expectations Scorecard

Economic Expectations Signals - Business Media

Precast Signal Dashboard - Key Economic Indicators

 There is a potential flaw in the recent resurgence in consumer spending.

Current PreCasts** (See specific indicator pages for extended PreCasts)

UNEMPLOYMENT – PreCast Signal Outlook

Unemployment - PreCast Signals vs. Reported

U. of Michigan Consumer Confidence - PreCast Signals

Conference Board Consumer Confidence - PreCast Signals

RETAIL SALES – PreCast Signals

Retail sales: Real growth or a mini-euphoria bubble?

Consumer Personal Consumption Expenditures – PreCast Signals

PCE=Personal Consumption Expenditures

Retail Sales: Historical Trends vs. Expectations Signals

Historical Business Media Expectations vs. Retail Sales

10.0% Pre-recession 320

TrendPointers Expectations Signals - Current Economic Issue Trends

 Overall Economic Outlook

TrendPointers Expectations Signals: Historical Expectations Signal Trends

Expectations Signals – Overall Economic Outlook

Expectations Signals – Recession/Recovery Outlook

Expectations Signals – Housing/Construction Outlook

Expectation Signals – Unemployment

Employment tracking began February 2010.

Employment tracking began February 2010.

 Contact and Subscription Information

ABOUT EXPECTATIONS SIGNALS — NEXT GENERATION OF LEADING INDICATORS

Monitor The Trends, Act On Turning Points

• Overall Economic Outlook

Expectations Signals Methodology

ABOUT PRECAST SIGNALS — EARLIEST ESTIMATES OF KEY ECONOMIC INDICATORS

TrendPointers Expectations Signals: Complete Historical File Access

• Overall Economic Outlook

TrendPointers Legal Disclaimer

Contact & Subscription Info

Glenn Meyers, Vice President of Marketing

Mike Shutty, Managing Partner

Rich Spitzer, President

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