I don't pay much attention to the "Leading Indicators" because they never tend to lead by much and can sometimes be mis-leading. But as this chart of the year over year change in the Leading Indicator index shows, it's pretty clear that we have come out of a recession. It also suggests that this latest recession was nowhere near as bad as the recessions of '70, '74, '80-82. Reasonable men can disagree on that, on course, but the economy has for quite some time been showing signs of recovery, and this news just makes it official.
I agree on this Leading Indicator --we called it the "leading mis-indicator." What do you think of the Weekly Leading Index from the Economic Cycle Research Institute? This supposedly forecasts economic growth 6-to-7 months out. The WLI started down in mid-2007, bottomed in December, 2008 or January 2009, and has been has been increasing since. It's forecasting a growing economy through April of 2010.
ReplyDeleteThe ECRI people do good work. I don't follow their stuff very closely, but I do respect their work. This time we've been pretty much in agreement on the recovery.
ReplyDeleteFedEx and Fred Smith put out a positive corporate economic outlook today:
ReplyDeleteFedEx sees an economic recovery steaming ahead, and with it an opportunity to ramp up a global network of planes, trucks and people toward pre-recession levels.
Reporting first-quarter earnings Thursday, FedEx Chairman, President and CEO Frederick W. Smith said the company expects gains in U.S. gross domestic product, a key economic indicator, over the next 15 months.
The forecast calls for 2.9 percent growth in the third quarter, 4.9 percent in the fourth and 3 percent next year. Industrial production is expected to grow 4 percent in 2010, compared with a 10 percent decline this year.
His forecast sounds pretty close to what I'm expecting.
ReplyDeleteScott,
ReplyDeleteSo I am guessing that you are not in the camp that there will be a significant market correction anytime soon, black swan events notwithstanding. And if you do, what are your thoughts on its depth and severity? Thanks.
Bob