Divergent Views on Signs of Life in the Economy

[groovedaddy]

Signs of revival on the factory floor emerged in the United States and Asia on Monday, fueling exultant buying on Wall Street and reinforcing a sense that genuine economic recovery was unfolding.

But if the Great Recession has indeed relaxed its grip on American life, it has been replaced by something that might be called the Great Ambiguity — a time of considerable debate over the clarity of economic indicators and the staying power of apparent improvements.

Manufacturing expanded in the United States in December, the fifth straight month of gains, amplifying hopes that a job market hobbled by double-digit unemployment might finally be adding paychecks. New jobless claims slipped markedly last week. Some economists think data to be released on Friday will show the economy gained jobs in December, the first monthly net increase in two years.

“We’re really coming back,” said Allen Sinai, chief global economist at the research firm Decision Economics. “The expansion is picking up the pace.”

Investors pushed up stock prices, with the Dow Jones industrial average gaining 156 points, or 1.5 percent, and oil prices reaching a 14-month high, $81.51 a barrel.

http://www.nytimes.com/2010/01/05/business/economy/05econ.html?th&emc=th

[angryfirelord]

1. I sure hope so

My dad is going to be out of a job by the end of February. The last time he was unemployed, it took him 8 months to get a job that ended up being in another state, and this was back in 2004.

I'm still saying the true litmus test is going to be the unemployment numbers that show up for the next couple months. Christmas is naturally going to make things more positive due to seasonal demand. But even if we are getting better, it certainly won't be what happened in the 1990s.

[whattheidonot]

2. no savings, no credit, no wealth. weak dollar

With credit tight, unemployment high, millions having lost savings and equity and the dollar weak it will be a tight recovery and average Joe will take the hit. The recovery will be weak. Efficiency of companies will be good but sales will not. Nothing robust about it. High oil prices hurt the average guy. The rich will get richer. The middle class will continue to dwindle, and the big guys like Walmart will survive and prosper as the choices on where to shop will decrease both through companies closing and necessity. Stocks may do ok, the economy in general will not. The wars, the cost of government, the war machine, all our a drag on the economy. Trying to pull off a recovery from a position of weakness is tough. New enterprise will be few. These guys paint a rosy picture because it is in their best interest. truth is things have changed and will not be the same. When the 20 somethings reach maturity , have kids etc, they will start a new movement in or out of the mainstream. They will have too. That generation has been through nothing but change. They are resilient, precious and smart. Stacking all of the wealth and assets into the hands of a few changes society. It changes banks, neighborhoods, construction, you name it.

[CanonRay]

3. So how are they defining "Manufacturing" these days?

Have they changed the definition? Does it include Burger King?

[wuvuj]

4. Go ahead...jump in?

http://www.moneyandmarkets.com/mutual-fund-cash-levels-do-not-support-this-rally-37217

As a group, mutual fund managers are as good a contrarian indicator for the stock market as they come. History shows that they hold relatively high cash levels at the beginning of a bull market. Then at the end of a bull market they don’t have much cash since they’re more or less fully invested.

And if you look at mutual fund cash levels in relation to the S&P 500 over the years, as shown in the chart below, you can easily spot this pattern.

...

Now we’re seeing a similar pattern evolve: Near the stock market’s low in 2009, cash levels reached nearly 6 percent. Then they rolled over sharply and quickly fell back below the 4 percent threshold. They are currently at 3.8 percent.

[LeftHandPath]

5. We borrowed $1.8 Trillion last year...

to pump up the economy. And we're borrowing another $2 trillion this year to maintain the status quo.

Debt is not production. At some point servicing this debt consumes economic output, and then its game over.