Monday, September 21, 2009

Leading Indicators confirm recession end



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.

5 comments:

  1. 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.

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  2. The 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.

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  3. FedEx and Fred Smith put out a positive corporate economic outlook today:
    FedEx 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.

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  4. His forecast sounds pretty close to what I'm expecting.

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  5. Scott,

    So 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

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