Economic Indicators

Weekly Leading
Weeklies are still trending down, but the momentum to the downside
has eased markedly, signaling a short term moderation in the pace
of the downturn.

Monthly Leading
New order breadth measures for Feb. again came in above the record
lows for 12/08, but downtrends persist. Monthlies also signal a
moderation of the downturn short term.

Comparable global measures are short run stable at low levels.

Economic Power Index
The real wage rate is holding up decently at 3.6% yr/yr, but the
employment rate has fallen sharply to -3.0% yr/yr, undercutting
the wage. A lower consumer tax bill at the outset of the year and
lower witholding ahead are boosting after tax incomes. The
strong real wage continues to give the economy a decent shot at
recovery this year if liquidity preference moderates in favor of
spending.

Business Strength Index
A weak 110 for Feb., with 135 indicating decent expansion. Business
output and operating rates remain at deep recession levels.

Economic Slack
Slack continues to rise as short rates are very low, operating rates
have been falling and unemployment is trending up sharply.

Profits Indicators
Continued weakness for Jan. , Feb. Suggests Q1 '09 profits will be
sharply lower yr/yr.

Inflation (Deflation) Thrust
The indicators remain consistent with the development of mild
deflation this year when measured yr/yr. Focus of market players is
likely now more directed to month-to-month changes to see if
a fresh trend might emerge.

Summary
The indicators point to an ongoing deep global recession with some
moderation in the power of the decline so far this year. Profit
margins remain under pressure from very weak sales. Within a
12 month perspective, the pricing outlook is mildly deflationary. Too
early to tell yet whether leading indicators have paused in their
decline or are signaling eventual, firmer stabilization.