Political  Calculations

If you wanted one word to describe the U.S. economy in the first quarter of 2014, the word 'tractionless' comes immediately to mind.

The latest real evidence for that assessment comes not from the latest jobs report, which many found disappointing but instead from the U.S. stock market, where once again, the number of publicly-traded U.S. companies who announced they would be cutting their dividends during the month of March remained at elevated levels. Levels that are consistent with recessionary forces at work in the U.S. economy:

Monthly Number of Public U.S. Companies Announcing Dividend Cuts, January 2004 through March 2014

Unlike the unemployment rate, which is usually a lagging indicator of the health of the economy, the number of companies announcing dividend cuts each month is a coincident indicator - something that tells us about the state of the economy today, in real time.

And what the elevated number of companies acting to cut their dividends in March 2014 tells us is that at least some parts of the U.S. economy are contracting rather than expanding.

Just for fun, we turned to the Institute of Supply Management's reports for March 2014 to see which sectors of the economy are producing the least traction. Here's the quick summary for both manufacturing and non-manufacturing industries. First, for manufacturing industries, where the reports were generally positive:

The four industries reporting contraction in March are: Apparel, Leather & Allied Products; Wood Products; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing.

Political Calculations

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