Here’s What the “Doom Index” Is Telling Us Now…

Here’s What the “Doom Index” Is Telling Us Now… from Bonner and Partners

Note From Bill: Dear readers will be familiar with our “Doom Index.” It’s an early warning system designed to track the health of the Main Street and Wall Street economies… and raise the alarm when cracks are forming.

The index is monitored by the able Joe Withrow. As Joe will show you below, after reaching our “extreme warning” level earlier this year, the Doom Index has cooled off. But that’s only half of the story. Read on…


Today, we check in on our Doom Index reading for the second quarter of 2018.

Regular Diary readers will remember that the Doom Index is made up of 11 key indicators. These indicators track the health of both the Main Street and Wall Street economies. [For a full review of the Doom Index, go here.]

After reviewing all the data from Q2, here are the results…

The Good News

For the second quarter of this year – from the start of April through the end of June – the Doom Index level is at 6. That’s down from 7, where the Doom Index ranked for Q1.

The cooling off of the Doom Index was fueled mostly by positive results from the Main Street economy.

For instance, we pay close attention to the ISM Manufacturing Index. This is a survey of more than 300 U.S. manufacturing firms that gives us a snapshot of the overall health of the manufacturing sector. It monitors employment, production, and inventory levels, among other things.

The ISM Manufacturing Index rose 5% in the second quarter over the first quarter. Manufacturing is picking up, in other words. Plants are humming. America is producing more stuff.

Chart

Then we have railcar traffic.

That may seem like a strange thing to monitor. But super investor Warren Buffett says that if he were stuck on a desert island and was allowed only one indicator to tell him how the U.S. economy was doing, he’d pick railcar traffic.

Trains move about one-third of all U.S. exports. And they move about one-quarter of all U.S. freight. So when railcar traffic is picking up, we know that American businesses are shipping more goods. That’s a positive sign for the economy.

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Bill Bonner founded Agora Inc. in 1978. Since then, it has grown into one of the largest independent newsletter publishing companies in the world. Bill also co-wrote two New York Times bestselling books, Financial Reckoning Day and Empire of Debt, In his latest book, Hormegeddon, Bill describes what happens when you get too much of a good thing in the sphere of public policy, economics and business. This new newsletter is unlike anything else published in America today. Now in this industry, Bill Bonner has agreed to share his secrets and insights every month. It’s like having a super-wealthy uncle share his best ideas, insights and wisdom about business, relationships, investments, trends, developments, ideas and more.