Leading Indicators Climb, Signaling U.S. Economy Nearing End of Recession

[Purveyor]

Source: Bloomberg

By Bob Willis

July 20 (Bloomberg) -- The index of U.S. leading indicators rose in June for a third consecutive month, reinforcing signs the economy may be emerging from the worst recession in five decades.

The Conference Board’s gauge of the economic outlook for the next three to six months increased 0.7 percent, more than forecast, after a revised 1.3 percent gain in May, the New York- based research group said today. It is the first time the index has climbed for three months in a row since 2004.

Smaller job losses, rising stock prices and stabilization in homebuilding and manufacturing are evidence that government efforts to stem the financial crisis and lower borrowing costs may pay off. A jobless rate that is forecast to reach 10 percent and falling home values are a reminder that any expansion will be muted as consumers rein in spending and boost savings.

“The numbers are signaling an outright turning point,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “The recession will end in the third quarter. We’re moving in the right direction.”

Stocks, one component of the leading index, extended gains following the report. The Standard & Poor’s 500 Index rose 0.2 percent to 941.87 at 10:40 a.m. in New York. The S&P 500 index average rose 2.6 percent in June and has soared about 40 percent since March 9 -- when it reached its lowest level in more than 12 years. Last month’s gain contributed 0.1 percentage point to the leading index.

Exceeded Forecast ...

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aOGTGOSNQ.yM

[xchrom]

1. fingers crossed -- i'd like to launch a new phase

in my life -- and hard to think about doing that with the way things are.

[cliffordu]

2. Ah.....Back on the bubble...

Can you have an economy that doesn't produce any actual goods??

I mean except 'financial instruments' and other 3 card monte variants.

[bemildred]

3. Dead cat bounce.

The basic structural issues remain.

[ixion]

4. uh-huh... right. Ask yourself this: what has changed?

The answer: Nothing.

- Banks have yet to write down their assets.

- Job losses are still happening on a major scale.

- We're still seeing "bank failure Friday's"

- We still lack a manufacturing base.

- Option ARM and Alt-A loans are still resetting.

They can look for green shoots all the want. The truth is that we're still in a river of sh*t.

[truthisfreedom]

15. No kidding. This is a bear rally, nothing more.

http://www.financialsense.com/Market/wrapup.htm

Have housing prices bottomed? Are foreclosures not still at or near all time highs? Is the consumer still not drowning in debt? Are bankruptcies still not high? Have unemployment levels come down? Is the small business owner still struggling? Are layoffs still not continuing? Are car sales still in the toilet? Are the powers that be still worried about the economy? Did the rally this past week solve your financial issues? I could go on and on, but I think you get the point. The optimism about this week is high and I understand that. Hey, depending on what happens with my intermediate-term Cycle Turn Indicator, we could see this rally still run further as the advance out of the March low could continue. But, when we back up and look at the big picture, nothing has changed. We are indeed still operating within the worst financial crises this country, if not the world, has ever seen and the Fed’s efforts over the past year or so have not solved the problem. You have been warned!

[Mojorabbit]

22. And commercial paper defaulting as well

as prime loans. I don't buy it either.

[Coyote_Bandit]

5. Recovery?

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

Maybe by Wall Street standards. But where are the fucking jobs?

[scheming daemons]

20. Jobs are a lagging indicator... it will be another year before that starts to turn around

[Coyote_Bandit]

21. Ummmm......No

While it is true that employment is a lagging indicator it is also true that the labor force participation rate has been dropping - even before the most recent recession. Many of the jobs that have been lost are simply not going to come back. At least not until previous levels of wealth and consumer spending return. And the only stimulus measures we have in place for job creation are dependent upon trickle down job creation. No stimulus programs that directly create jobs and no significant increase in funding to encourage the creation and deelopment of small business.

We have a fucking third world service economy that is dependent upon consumer spending. An economy that is ultimately unsustainable. Why? Because continued economic growth (which is required to maintain an increasing population) Is dependent upon continued exponential growth in consumer spending. When consumers no longer have the resources, the income, the access to credit or the desire to purchase then the economy is forced to contract. Meanwhile, fewer than 10% of US workers are employed in any capacity (including white collar positions) in manufacturing industries. We make money by using money. For the most part we do not make money by generating tangible production. And our consumption habits have been altered in a manner that is not conducive to replacing all those lost jobs.

Long-term this suggests that Americans will be forced to accept a lower standard of living and that there will be continued high rates of unemployment and underemployment. The official unemployment numbers will start to decline in another year or so. Big frickin deal. What that number will not reflect is yet another group of discouraged workers who have given up on seeking employment, another group of new unemployed grads not included in those figures, a bunch of part-timers who want full-time work (and the average work week is indeed getting shorter) and a bunch of educated and overqualified folks who are working in call centers.

[girl gone mad]

27. Unemployment is not a lagging indicator in a consumer-driven recession..

which is (in large part) what we are facing right now.

[liberalmuse]

6. So we can pretend everything is okay again?

Like we did under Bush, and in some ways, Clinton? Awesome! :eyes:

[Javaman]

11. pretending it all we have left.

I'm sure all those people that goes canned when GM and Chevy croaked are just sooooooo happy with this news.

same as it ever was.

[robinlynne]

7. I hear that. but I see things getting worse and worse over here in real life.

[Javaman]

8. A jobless recovery, who would have thunk it?

not me.

[Deja Q]

12. There are plenty of jobs...

Just not as many in the US.

:(

[Jack from Charlotte]

16. Job creation is a ....lagging.... indicator.....

The last part of a recession is the job creation.

Think about it.... Employer has lay ed off people the last 2 years. Business finally starts to improve. business owner has been having his butt kicked for two years and is finally starting to make money. Do you think the first thing he does is go out and start hiring again? No way. He goes as long as possible without hiring for a couple of reasons.... #1 wants to be sure the worm has turned, business wise. #2 Wants to pocket all he can by working extra to make up for not having much work to do over the last few years.

I'm shocked how the media people have not corrected people talking about lack of job creation early in a recessions potential turnaround.

[NickB79]

23. But, is this recession like other recessions? Can we make these assumptions?

Since our economy is now based 70% on the service sector and consumers buying things, how is your hypothetical employer going to see his business go back up if we have 10% or more unemployment and people are pinching their pennies left and right?

After the last recession, the boom in the housing industry (and the concurrent mortgage/banking bubble) fueled the rebound in the economy. This time around, we aren't going to see a repeat of that. Green jobs are already being exported to China and India. What is the next big thing that will stimulate job creation?

[girl gone mad]

28. Again, that's not accurate when you are talking about a recession driven by an across the board...

drop in consumption. Consumers cannot and will not resume past habits as long as the job losses are mounting.

If you want to get technical about it, there is certain specific unemployment data that has actually served as a useful leading indicator in past recessions. Temp. numbers, hours worked per employee, etc. When you look at these specific figures, they all portend a still worsening economic picture.

[Autumn]

9. Now if only there were

jobs to be had, everything would be good.

[HopeHoops]

10. Prediction: FOX is dedicating all reporting today to glowing praise for Bush and his policies.

OBVIOUSLY that's the reason things are getting better. Obama couldn't POSSIBLY have had any impact on something that turned out positive! Of course, if it is negative, it was his fault before he even announced he was running for office.

[OHdem10]

13. May be ending for Wall Street, but not mainstreet.

[DebbieCDC]

14. Let's keep up that happy talk!

Ignore all those jobless, homeless, underpaid, uninsured people out there. Wall Street is fat and happy again, so fuck the rest of you. Recession over, move on, nothing to see here.

[99 Percent Sure]

17. It's what is called 'false positives'

What they mean is corporate America--banks and the like-- is almost back to SOP. The depression "deep" recession will be upon what our govt officials call Main Street when speaking of us regular folk, for months and months.

Even then, there still won't be many, if any, jobs for the majority of we the currently unemployed.

And you can take my prediction to the bank credit union.

[99 Percent Sure]

18. Backup to my prediction from the only economist I basically trust,

Dr. Nouriel Roubini:

Jul 16, 2009
“It has been widely reported today that I have stated that the recession will be over 'this year' and that I have 'improved' my economic outlook. Despite those reports - however – my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.

“I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If, as I predicted, the recession is over by the end of the year, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end.

“Indeed, last year I argued that this will be a long and deep and protracted U-shaped recession that would last 24 months. Meanwhile, the consensus argued that this would be a short and shallow V-shaped eight-month long recession (like those in 1990-91 and 2001). That debate is over today as we are in the 19th month of a severe recession; so the V is out the window and we are in a deep U-shaped recession. If that recession were to be over by year end – as I have consistently predicted – it would have lasted 24 months and thus been three times longer than the previous two and five times deeper – in terms of cumulative GDP contraction – than the previous two. So, there is nothing new in my remarks today about the recession being over at the end of this year.

“I have also consistently argued – including in my remarks today - that while the consensus is that the U.S. economy will go back close to potential growth by next year, I see instead a shallow, below-par and below-trend recovery where growth will average about 1% in the next couple of years when potential is probably closer to 2.75%.

“I have also consistently argued that there is a risk of a double-dip W-shaped recession toward the end of 2010, as a tough policy dilemma will emerge next year. On one side, early exit from monetary and fiscal easing would tip the economy into a new recession as the recovery is anemic and deflationary pressures are dominant. On the other side, maintaining large budget deficits and continued monetization of such deficits would eventually increase long-term interest rates (because of concerns about medium-term fiscal sustainability and because of an increase in expected inflation), thus leading to a crowding out of private demand.

“While the recession will be over by the end of the year the recovery will be weak given the debt overhang in the household sector, the financial system and the corporate sector. Now there is also a massive re-leveraging of the public sector with unsustainable fiscal deficits and public debt accumulation.

[ItNerd4life]

19. This guy makes sense.

The W possibility is something I've been thinking for a while. Very Interesting, thanks for posting.

[99 Percent Sure]

25. You're welcome. n/t

[timeforpeace]

24. False good news is better than no good news.

[truthisfreedom]

26. Hahahahahaha.

Nice one.

[ohio2007]

29. the next spin: It's a "jobless" recovery !!! Happy days are here again

finnaly, a noisy light in the tunnel