Economic Indicators

Leading Indicators
The pace of recovery of the weekly leading indicators for the US
has re-accelerated following a flat period (late Sep. - early Nov.)
The weeklies are now running a little stronger than I expected.
The monthly indicators are also running stronger mainly reflecting
a recent surge in % of mfrs. reporting higher order rates. The
commercial side of the economy is running positive, but the
momentum of new orders has tailed off over the past two months.
On balance, the new order picture is stronger now but less even.

Looking globally, the world economy is growing, but the pace of
improvement in new orders has leveled off since Aug. following
a positive burst earlier in 2009. The US and China are showing
the broadest improvement in recovery, especially in manufacturing.

Profits Indicators continue on a sharp recovery path save for
finance where lower loan volumes and higher loan loss reserves
are penalizing results. Still, the financial sector may be modestly in
the black currently compared to enormous losses posted a year
ago.

Inflation Indicators
Gauges of future inflation are rising strongly and are signalling
that economic recovery will bring a cyclical acceleration of
inflation pressure. A stronger commodites market now leads
the way, but global capacity utilization has also turned up.

Economic Power Index
This index has weakened further. The yr/yr % growth of wages
has moderated in a weak labor market and the real wage has
turned down on a yr/yr basis, having been eclipsed by the 12
month inflation rate. The rate of decline of civilian employment
has started to moderate yr/yr, but remains formidable. On a
month to month basis, job losses are moderating and may be
entering a bottoming period.

From a political perspective, the Obama administration has 10
months to do its part to husband the economy along toward
jobs growth and a lower unemployment rate. It will likely
release the bulk of the stimulative program spending and target
additional measures to promote jobs growth this year. Pure
politics suggests that the economic recovery best be far
enough along by May to show a positive turn in employment
followed by subsequent declines of the unemployment rate to ward
off the GOP. Chief economic advisor Larry Summers is good
at this kind of statistical fire drill.