Economic Indicators

The weekly and monthly leading indicators continue to move up
sharply, signaling that the US economy is setting up to recover
from deep recession. The indicators have surged from very
depressed levels, so it remains a little foggy to tell just how
imminent expansion may be. The Economic Power Index remains
positive but the index is being carried entirely by lower tax
witholding rates, unemployment insurance and the large increase
in Social Security payout. The real wage remains strong, but the
continued deterioration of employment has flattend the US
payroll pretax. Straight ahead, there will be pressure in DC to
make sure the spending stimulus dollars are being pumped out. The
very large inventory liquidation underway since late 2008 puts
the economy in a position to benefit from pipeline refilling as final
demand continues to stabilize. Continuing constraints to growth in
the short term remain strong private sector liquidity preference and
the large inventory of unsold homes ( A measure of pending home
sales is showing recovery.)

Capital slack continues to increase and is quite large with
employment, capacity utilization and business credit demand at low
levels. The Obama spending program has been designed to take up
some of this slack. If private sector interest in building liquid assets
up does not ease off some with improved confidence, then Team
Obama may look to enlarge the scope of fiscal stimulus.

No shortage of issues and worries here, but the indicators are
pointing northward, which what is needed most.

On a global basis, total output and new orders measures continue to
recover from exceptinally low levels registered around the end of
2008. these measures are a little more than half way to expansion
readings.