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All Six Recovery Indicators are Positive: First Time Since May 2011

For the first time since May 2011,

By Dr. Joe Webb
Published: January 16, 2012

For the first time since May 2011, all six of the recovery indicators are now positive. Will they stay that way? In the last couple of weeks, major financial institutions have been releasing their 2012 economic forecasts, and most of them are in the 2-2.5% range, backing off from more optimistic forecasts that they made just a few months ago for the same period. Most of their concerns are about the effects of a recession in Europe dampening economic prospects for emerging markets and the US, but the prospect of a "double-dip" US recession is considered to be waning. (click chart to enlarge)

The NASDAQ is barely ahead of its December 2007 close, but it is ahead nonetheless. When adjusted for inflation, however, the NASDAQ was 6.8% below its value at that time. The ISM's manufacturing index had an excellent report earlier this month, with strength appearing across all of its sub-categories, including employment. The non-manufacturing report was spotty, showing slight contraction in employment in spite of its more bullish new orders indicator. Proprietors' income, a measure of the health of small business, was revised to +0.7% (from +1%) for the third quarter, and is +2.3% higher than the start of the recession. Unfortunately, inflation has eroded those gains, and then some. Proprietors' income is below the December 2007 level on an inflation-adjusted basis by -5.2%. The Q4 proprietors income data will be released soon as part of the Q4 GDP report. The recovery here is still on mushy ground where it is easier to move sideways than leap upward. Last week's retail sales figures were disappointing, and holiday sales did not meet expectations. Consumer electronics sales were down -5.9%, but those data did not include rather robust sales smartphones (+140% increase in Christmas Day activations). After all, why buy TVs when you can watch television shows as they stream on your phones. Isn't that what Alexander Graham Bell really wanted?

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink's Economics and Research Center.



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