The weekly and monthly leading indicators continue to progress,
and signal the US is coming ever closer to closing out this very
deep recession. My business strength index, which made an
astounding cyclical low of just 101.9 for 12/08, has risen to
113.4 through June, with a reading of around 120.0 tantamount
to recovery. So, recession pressure has receded substantially,
and the pieces are all in place for a positive turnaround, including
an exceptionally strong reading for real disposable income of
the consumer sector to reflect a battery of fiscal counter -
recession programs. What's needed now is more confidence to
spend at retail and invest in housing and less emphasis on
building liquidity and savings. The window is there now,
especially after a large round of inventory liquidation, which
has taken production well below consumption.
There is not a ready formula to determine when consumers will
decide to reduce the flow of money into savings and to increase
their spending. At this point, it is much more a matter of psychology
than a macro econonomic fine point. For more on spending vs
savings, go here.
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