| Is The US Economy Improving? |
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| Written by Barney Summers |
| Wednesday, 13 January 2010 18:31 |
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The possibility of a "W" shaped recovery rears its head if the efforts to boost the economy are effective, but unsustainable once support such as cash-for-clunkers disappears. One scenario was that manufacturing picks up in 2009 to support incentive-driven demand, and the economy then slumps again in the first quarter of 2010 when the incentives and government boosting falls away to leave a consumer still reticent to spend.
The possibility of a "W" shaped recovery rears its head if the efforts to boost the economy are effective, but unsustainable once support such as cash-for-clunkers disappears. One scenario was that manufacturing picks up in 2009 to support incentive-driven demand, and the economy then slumps again in the first quarter of 2010 when the incentives and government boosting falls away to leave a consumer still reticent to spend. - Factory Orders (July 2nd): Total factory orders rose +1.2% in May after +0.5% in April. Nondefence capital goods orders were signifi cantly stronger, rising +4.7%. Shipments, meanwhile, fell -0.9%, inventories -0.6%and unfilled orders -0.2%. Orders less-transportation were +0.8% higher after -0.2%. This tells us the real estate cycle will remain on the down swing. - Trade Defi cit (July 10th): The trade defi cit in may fell to -$26.0bn from -$28.8bn. This was the result of a +1.6% rise in exports against a -0.6% fall in imports. The non-petroleum defi cit decreased to -$22.7bn from -$23.8bn. S&P500 -0.40%. - Industrial Production (July 15th): Industrial production has so far refused to follow the upwards burst in the ISM production index. It fell -0.4% in June, after -1.2% in May. It is also -13.6% lower than a year ago. Capacity utilisation, meanwhile, fell to 68.0% (another record low), from 68.2%. - Consumer Confidence (July 28th): Confidence took another step-back in July, falling from 49.3 to 46.6. The present situation assessment fell to 23.4 from 25.0, while the expectations component fell to 62.0 from 65.5. Inflationary expectations were also softer at 5.5%, down from 5.9%. S&P500 -0.26%. - New Home Sales (July 27th): New home sales were surprisingly strong in the month, rising +11.0% after +2.4%. An increase of +3.0% was anticipated. Sales are now -21.3% lower than a year ago. The inventory of unsold homes fell to 8.8 months' supply from 10.2 months. S&P500 +0.30%. - Employment Cost Index (July 31st): Q2's ECI increased +0.4%, where +0.3% was expected. This was the result of a +0.3% increase in the benefi ts component and a +0.4% rise in wages & salaries. The ECI is now +1.8% higher than a year ago. While private sector wages and salaries are +1.8% higher annually. Judging by the lack of progress since July it's going to be a long road to recovery. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Worried about the real estate cycle, then http://hubpages.com/hub/The-Real-Estate-Cycle is for you. |