"It Fell Off A Cliff": Morgan Stanley's Macro Indicator Just Crashed The Most Since Dec. 2008

Step aside Citi US Economic Surprise Index, which after a "surprising" streak of negative economic data, recently crashed to the lowest level since October 2016...

... and make way for Morgan Stanley's ARIA, a monthly US macro indicator based on data collected through primary research on key US sectors (consumer, autos, housing, employment, and business investment).

The reason why this particular index will likely feature prominently in financial commentary in the coming days and weeks, is that as Morgan Stanley's chief economist Ellen Zentner writes, "ARIA appears to have fallen off a cliff in April, with a 0.72% decline, the largest since December 2008."

As Zentner expains, weakness was led by sharp declines in the investment and housing components, although even as the bank's data on business and residential investment was weaker, the consumer, employment, and autos components posted modest to moderate gains in April.

What was the main driver for the collapse: "Business formations were this month's biggest drag, as they looked to have reversed an earlier post-election surge. If not for that, ARIA would have come in slightly positive in April at +0.13%."

Some more observations from MS:

Read the entire article