Thursday, October 15, 2009

More "V" signs

Here's a picture of what a V-shaped recovery looks like. It's the Empire State (i.e., New York) manufacturing survey of general business conditions, and it has rebounded strongly in the past six months to a 5-year high. The gain in the index far exceeded expectations, and was widespread; what's more, the subindices covering employment and the workweek were exceedingly strong.

Earlier this year we saw "green shoots" appearing in various parts of the economy and in the financial markets—things like the declining swap spreads and a downturn in unemployment claims that were foreshadowing the end of the recession. Now we see "V" signs like this which tell us that the recovery is in full swing. Very encouraging. Also in the "V" signs category: equity prices, corporate bond prices, commodity prices, and the ISM index.

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