Commercial Paper Issuance Continues to Indicate no Real Economic Recovery

by John Galt
February 5, 2015 22:25 ET

Before my readers ask why this is an important indicator of the economic health of the American economy, this explanation from the Federal Reserve about this particular statistic explains what it is and what it means:

About Commercial Paper

Commercial paper (CP) consists of short-term, promissory notes issued primarily by corporations. Maturities range up to 270 days but average about 30 days. Many companies use CP to raise cash needed for current transactions, and many find it to be a lower-cost alternative to bank loans.

The Federal Reserve Board disseminates information on CP primarily through its World Wide Web site. In addition, the Board publishes one-, two-, and three-month rates on AA nonfinancial and AA financial CP weekly in its H.15 Statistical Release.

The Federal Reserve Board’s CP release is derived from data supplied by The Depository Trust & Clearing Corporation (DTCC), a national clearinghouse for the settlement of securities trades and a custodian for securities. DTCC performs these functions for almost all activity in the domestic CP market. The Federal Reserve Board only considers maturities of 270 days or less. CP is exempt from SEC registration if its maturity does not exceed 270 days.

Data on CP issuance rates and volumes typically are updated daily and typically posted with a one-day lag. Data on CP outstanding usually are available as of the close of business each Wednesday and as of the last business day of the month; these data are also posted with a one-day lag. The daily CP release will usually be available at 9:45 a.m. EST. However, the Federal Reserve Board makes no guarantee regarding the timing of the daily CP release. This policy is subject to change at any time without notice.

Thus if Commercial Paper issuance is “up” it usually means that credit is flowing to small and medium sized businesses along with major US corporations to keep enough liquidity in the economy expanding, or to indicate a healthy economy with average to above average growth. However, recent indicators about the fallacious data points created by the political arms of the US Government such as the Commerce Department and Bureau of Labor Statistics contradict reality with stats which indicate a rapid expansion. Reality meets the Fed as this data point might tell us a story of an economy that never has really recovered, and the data about easy credit was fiction at best:


Last week the CP outstanding dropped over $18 billion dollars to below $1 trillion at $988.8 billion outstanding. This is among the lowest readings since the collapse in 2007-2009 and an indicator that there will be no real uptick in full time employment expansion despite the fictitious figures issued by the B(L)S tomorrow morning.

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