Monday, February 2, 2009
The January ISM indices released today showed some modest improvement, but they are still consistent with declining economic activity. Note that the 3.8% decline in GDP in the fourth quarter is an annualized pace of decline; in actuality economic activity declined by only about 1%. That's not exactly a disaster, but as the chart suggests, we are likely to see a similar GDP decline in the current quarter. I've been saying we've seen the worst of the economic news, and today's ISM release is consistent with that. We've probably passed through an important inflection point, where the rate of decline in economic activity starts to become slower rather than faster.
Posted by Scott Grannis at 10:46 AM