Business Week, April 25, 2009(BW) - File under Good News That Could Turn Bad: An index developed decades ago by the independent Economic Cycle Research Institute suggests the economy may recover before yearend.There are some having faith in government criminality to lead the way, but, unless, you find enough evidence that we are anyway repeating the credit cycle that turned during the Great Depression, the outlook is improving...
The growth rate of the Weekly Leading Index—composed of forward-looking indicators for sales, jobs, income, and output—has improved by a third from its Dec. 5, 2008, low of roughly -30%. While the rate is still negative, says Lakshman Achuthan, the institute's managing director, the uptick "has us forecasting an economic upturn."
In 16 of the last 17 U.S. downturns, a climb like this one was followed by recovery in about four months, Achuthan says. The exception: In 1930, after months of climbing, a similar index used by the institute went south, and so did the economy—into the Great Depression.
The core fundamental problem of credit markets remains unsolved, yet it gets even worse as level of economic activity shrinks.
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