Tuesday, July 21, 2009

LEI: the rise is real!!

JOY JOY JOY!! The LEI-leading economic index, is jumping... if not for joy, for recovery. Its annual rate rise of 12.8% over three months is near the 14.5% peak rate it registered in the recovery period shortly after ending the recession in 2001.

The coincident index is not yet rising but if this is a real recovery it will begin to rise soon.

In the 1981 and 2001 recoveries the coindcident index DID NOT RISE in the first month of recovery. At the end of the severe 1973-75 recession the coincident index fell in the first month of recovery. So the mo/mo drop in this period is hardly decisive as a recession-ending (or not) signal. Moreover, remember that before applying too-strict of a standard, these figures will wind up being revised so we should look at trends more than trying to hold the monthly readings to their currrent decimal points of value.

Fortunately the trend is your friend. So far the signals are good and encouraging.

See my previous entry from last week on jobless claims and my own comment underneath which replies to the comment from a nervous or angry reader.

Don't look a gift horse in the mouth or deny progress when it is being made. The President needs to jump on the bandwagon of hope. He nneds to stick his political neck out instead of playing it safe. We are far enough into this thing and he was such a part of a major effort on stimulus, that if it does not work he will be held accountable. There is no blaming the Republicans for lack of recovery anymore...

The stimulus plan was mostly of Democrat construction. We need some cheerleaders badly. Pessimists need not apply. Politicians looking for a safe place to keep their heads down, or a place to wait to jump out from and claim credit: go home!!

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