Economic Indicators

Weekly leading indicator sets made new cyclical lows. The peak to current
declines are large enough to signal a substantial downturn could be underway.

The monthly data for March show a continuing downturn. They suggest
ongoing pressure on US profit margins, but are not yet weak enough to signal
that a recession is underway. The employment picture is consistent with
development of a recession, but production and new order activity are not.

The monthly global indicators show the world economy slowing toward
modest expansion, with the US leading the way down. Since private sector
activity levels for production and services are below prior year levels, it
will be interesting to see how much profits earned abroad offset weaker US
profits among US multinationals.

As recently discussed, US longer term indicators have turned positive, but
remain subdued. Underlying purchasing power to support the US economy
continues at -0.5% measured yr/yr. This is comprised of -0.1% for total
employment and -0.4% for the real wage. Growth of current $ wages has started
to slow as is normal in a downturn. Fortunately, inflation pressure has
subsided as we move into April, although the longer run trend is still intact.
Since the end of WW2, steep economic declines have been associated with
yr/yr drops of underlying purchasing power of -3 to-4%.