I really doubt the guy who made this chart knows or remotely cares how the Citi Economic Surprise Index is built. But the chart and related discussion (not shown) are an example of one of the three ways this silly little indicator is abused.
In this case, buddy derives satisfaction from the fact it has “bottomed.” This is a mistake common among innumerate dummies, as I have gone over on several prior occasions. (By construction, the index is fated to rise when deeply negative, even if we know nothing of the future evolution of the economy. And realization of that inevitability tells us nothing about the future of the economy and perhaps nothing even of its recent past.)
Separately, Bush Junior once asked famously, is our children learning? Based on this bit of correspondence from a friend, I would have to say, yes they is.
This sh_t kills me. No one denies the US economy is on solid footing; there might be a debate on whether we are accelerating but there are very few if any at all who think we are on the precipice of recession. The comedy is this Citi Surprise Index, so now it’s turned up but even when it was falling off a cliff earlier in the year stocks went up regardless. So who even cares?