Economic Insights - December 2011

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For at least the past three years, the economy has weathered wave after wave of bad news.  In fact, as we’ve been predicting, it’s likely that few people will recognize for at least another year that we’ve emerged from the Great Recession. However, a recent Wall Street Journal poll shows that nearly half of Americans feel the worst is behind us.  It’s true that the economy is growing.  It grew at an annual rate of 2 percent in the third quarter — the best performance in a year.  Many economists are forecasting stronger numbers for this quarter. Admittedly, hiring is not very strong.  On the other hand, the four-week average of the number of people applying for unemployment benefits fell below 400,000 for the first time in seven months. The Conference Board’s Leading Economic Indicators Index rose 0.9 percent in October, outpacing increases in the previous two months and providing some grounds for hope of more robust economic growth to come.  The index is comprised of 10 components intended to signal economic trends by taking a comprehensive look at the data. This month, 9 out of 10 indicators were positive, and this increase was sharply higher than those in September and August.  The October rebound of the Leading Economic Indicators was “largely due to the sharp pick-up in housing permits,” which “suggests that the risk of an economic downturn has receded.” More over, while the index “does suggest that the economic outlook has begun to brighten a little bit,” the sovereign debt crisis in Europe, political paralysis in Washington, and rising tensions in the Middle East concerning Iran’s nuclear program could create a shock disrupting this fragile uptick.

References

Fox Business, November 17, 2011, “Some Positive Economic News… for a Change!” by Gerry Willis.  © 2011 Fox News Network, LLC.  All rights reserved. To view this article, please visit: http://www.foxbusiness.com/on-air/willis-report/blog/2011/11/17/some-positive-economic-news-change Daily Finance, November 18, 2011, “Index of Leading Economic Indicators Rises,” by Eamon Murphy.  © 2011 AOL Inc.  All rights reserved. To view this article, please...

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