Tuesday, June 23, 2009

Richmond Fed Index Rally Suggests Econ Recovery

Manufacturing activity in the central Atlantic region advanced somewhat faster in June, according to the Richmond Fed’s latest survey. The seasonally adjusted manufacturing index — our broadest measure of manufacturing activity — jumped to 6 from May’s reading of 4 (see chart above). Looking at the main components of activity, new orders expanded further, while factory shipments grew at a slightly slower rate and employment exhibited more moderate weakness. Other indicators were mostly positive. Backlogs increased for the first time since August 2007, while vendor delivery times stabilized and capacity utilization edged higher. In addition, manufacturers reported somewhat quicker growth in finished goods inventories.

MP: Signalling the end of the 2001 recession, the Richmond Fed Manufacturing Index was above zero by early 2002 when the U.S. economy was officially in economic recovery (see chart above). The Richmond Fed index has increased 61 points since the end of 2008, and has now been in positive territory for two consecutive months for the first time since the summer of 2007, suggesting that the recession has ended in the Richmond Fed region (MD, VA, WV, NC, SC and DC).

There have been a lot of somewhat-sensationalized descriptions by the media of the current recession ("Worst economic crisis since the Great Depression
®, "Great Depression II™," etc.), and I'm wondering how the media will describe the pending economic recovery? We'll probably be more likely to hear descriptions like "The Slowest/Weakest Most Sluggish Economic Recovery Since ______" than descriptions like "The Greatest/Fastest/Strongest Economic Recovery Since _____."

8 Comments:

At 6/23/2009 9:55 AM, Anonymous Anonymous said...

Sure hope these charts hold up for next few months...recent action on stock market does not comfort....
-Benjamin

 
At 6/23/2009 10:27 AM, Blogger Marko said...

This comment has been removed by the author.

 
At 6/23/2009 10:29 AM, Blogger Marko said...

We have a democrat in office, so it will be described as the best recovery ever! Especially since it was the super massive spending by Obummer that saved us from the stupid and evil merely very large spending by Bush.

 
At 6/23/2009 10:51 AM, Blogger Robert Miller said...

This comment has been removed by the author.

 
At 6/23/2009 11:40 AM, Blogger bobble said...

scroll thru these charts if you want an alternate view

" . . when we look globally . . the decline in industrial production in the last nine months has been at least as severe as in the nine months following the 1929 peak . . "

 
At 6/23/2009 11:46 AM, Blogger Moses Kim said...

It's interesting that the analysis blithely ignores the one time the index did not predict recovery, namely the depression of the 1930's. Since the downward spiral in real estate, stocks, and industrial production most mirrors that of the Great Depression, this is a huge oversight in my opinion.

 
At 6/23/2009 12:22 PM, Blogger 1 said...

Hey bobble, thanks for the link...

Interesting stuff sir! Very interesting...

 
At 6/23/2009 4:08 PM, Anonymous Anonymous said...

The May Philly Fed Coincident Index confirms that the economy is burping along the bottom of the [w]orst economic crisis since the Great Depression®, "Great Depression II™," etc.

The ugly chart.

You want more ugly charts, juandos.

 

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