People Have Been Down So Long, It May Look Like Up
It may be optimistic, but there are a few more signs of hope amid the pervasive gloom in this sluggish, mired global recovery. Sure, there doesn’t seem to be a whole lot of buy-in with this equity rally. Sure, the EU is still in shambles and China has slowed. And sure, businesses are still being very cautious.
But, consider these points and tell me that there’s not some “silver lining” to these dark clouds. Consumer confidence seems to be building. The Bloomberg Consumer Comfort Index has been building steam, and was at a seven-week high at the middle of September. Consumer sentiment measured by Thompson Reuters and the University of Michigan was at its highest level since May. The Rasmussen daily Consumer Index is a full seven points above August readings and five points above where it was in June.
Consider also that business investment has actually recovered its lost ground (unlike payrolls). The graph below portrays equipment and software purchases made by private businesses and non-profit institutions. This consists of machinery, vehicles, computer software, equipment and the like. Recent readings show that businesses have gotten back to levels they were at before the recession. You can see the data for yourself here.
Source: St. Louis Federal Reserve; from U.S. Department of Commerce: Bureau of Economic Analysis ; http://research.stlouisfed.org/fred2/series/NRIPDC96; accessed September 25, 2012
Last week’s plunge in durable goods orders and the second decline in core capex orders, though, show that while we may be back to where we were, there may still be a lot of wood to chop to get to where we need to be. But PMI numbers around the world are acting a little better and this week’s US ISM was the highest reading since May. So maybe things aren’t as bad as people think; global growth may be bottoming. Of course, there was an Italian art dealer who once said that “an optimist is he who believes that things can get no worse than they are.”