Economic Recovery

This is an update on the current economic recovery. A recent Wall Street Journal article stated that half of us Americans think the Economic Recovery has not occurred. I am with the half that thinks a recovery has occurred and that conditions continue to improve. The first section is a business confidence Index, ECBI, that shows 6 months out businesses anticipate strong growth. This is followed by information from the Wall Street Journal.

North American Business Conditions Continue to Advance - ECBI

Electroindustry Business Confidence Index (EBCI) for current North American conditions topped 50 points
for the seventh consecutive month in May 2011, signaling continued improvement in the business environment.
The index measured 52.3 in May, down from 57.1 in April 2011, and from a year-to-date high of 69.6 in February
2011.

The six month outlook remains optimistic. EBCI for future North American conditions also dipped in May 2011, declining to 81.8 from 85.7. Still, readings above 80 are exceptionally strong, having been recorded in only 23 months in the decade-long history of the survey. In May, more than 68% of panelists said they expected conditions to improve during the next six months, while less than 5% anticipated deterioration during that time period.

Wall Street Journal Article, June 15, 2011

From the firm Manpower: In the 3rd Quarter, 20% of US businesses expect to add workers while 8% expect to cut them. The 12% difference is the largest since 2008. (This seems like a recovery to me)

Wall Street Journal Article, June 13, 2011

Tracking the Recovery: The article compares the current economic recovery to the economic recovery starting in March 1991, November 2001, and July 1980. The metrics for comparison are Gross Domestic Product(GDP) Growth, Job Growth, and Inflation. Here is the data:

GDP Growth: The current recovery matches the recoveries of March 1991, November 2001, and is better than July 1980.

Jobs: All of the data is similar, not much job growth after 22 months. Only the March 1991 data is slightly better.

Inflation as measured by the Consumer Price Index: The current recovery is consistent with the November 2001 recovery which are below the July 1980 and March 1991 recoveries.

To summarize the data for this economic recovery: GDP growth is normal, job growth is normal (slow), and inflation is less than normal. This sounds like a normal recovery rather than the doom and gloom in the news media.

Based upon this data some predictions can be made:

1) 2012 Election: Based upon data from Chris Matthews, MSNBC Hardball, when the unemployment rate is more than 7% the incumbent President loses. This suggests that a Republican wins in November 2012. If you are a Democrat, you better help President Obama now.

2) Commodity Prices: The data suggests that in general commodity prices stay flat. So anticipate that the price of gas, oil, gold, silver, copper, etc. stays relatively flat.

3) News Media: Since we had a deep recession, and all of us want a faster recovery, expect the news media to focus on the negative rather on the positive. Keep this in mind as you watch the experts.

Trivia

Here is a trivia question and answer from the 2011 College World Series in Omaha, NE. The question is who is the first pitcher in the new T.D. Ameritrade Stadium and what High School did he attend? Answer: Patrick Johnson, Saint Stephens High School in Hickory, NC. The same school that Rachel and Becca attended.