Saturday, September 19, 2009

Markets In Everything: Farm-Fresh Fish

By the end of this year, the world is projected to reach an unheralded but historic milestone: Half of the fish and shellfish we consume will be raised by humans, rather than caught in the wild.

~Washington Post, Page 1 Sunday edition

The Deeper the Slump, The Zippier the Recovery

The error of optimism dies in the crisis, but in dying it gives birth to an error of pessimism. This new error is born not an infant, but a giant.

~English economist Arthur C. Pigou, quoted in today's WSJ by James Grant in his article "
From Bear to Bull," where he argues that the latest gloomy forecasts ignore an important lesson of history: The deeper the slump, the zippier the recovery.

TIPS Derived Expected Inflation: Only 1.75%

The top chart shows the weekly, bond market-based 10-year TIPS-derived expected inflation back to 2003, calculated as the difference between 10-year regular, nominal Treasury yields and 10-year Treasury inflation-indexed yields (measure of the real interest rate), both on a constant maturity basis (St. Louis Fed data here for 10-year TIPS and here for regular 10-year Treasuries); see the bottom chart for those yields graphed separately.

After an unusual period in late 2008 resulting in a narrowing spread when the TIPS 10-year yields were unusually high and approaching 3%, and regular Treasury yields were unusually low and approaching 2%, the Treasury market seems to have stabilized, and the bond market's 10-year expectation of inflation is now around 1.75%, lower than the inflationary expectations from 2003-2007 of around 2.5%.

Many analysts and economists seem to be worried about future inflation, resulting from the easy Fed monetary policy in 2008. Why doesn't the bond mark share those concerns? According to the inflationary expectations derived from the bond market, future inflation is less of concern now in 2009 than it was in 2007 before the increase in liquidity. What gives?

MSCI Emerging Markets Index Hits 12-Month High

The MSCI Emerging Markets Index went above 900 on Wednesday for the first time in more than a year, and reached a new 12-month high on Thursday of 919.89, before falling slightly on Friday to 918.9. From the March low of 475.08, the Emerging Markets Index has almost doubled, rising by 93.4% in the last six months.

Friday, September 18, 2009

Philadelphia Fed Survey: All Broad Indicators Positive for the First Time Since November 2007

Philadelphia Fed -- The region’s manufacturing sector is showing some signs of stabilizing, according to firms polled for this month’s Business Outlook Survey. Indexes for general activity, new orders, and shipments all registered slightly positive readings this month. For the first time since November 2007, all of the survey’s broad indicators were positive.

Although firms reported continued declines in employment and work hours this month, losses were not as widespread. Most of the survey’s broad indicators of future activity continued to suggest that the region’s manufacturing executives expect business activity to increase over the next six months.

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, increased from ‐7.5 in July to 4.2 this month. This is the highest reading of the index since November 2007 (see chart above). The percentage of firms reporting increases in activity (27%) was slightly higher than the percentage reporting decreases (23%). Other broad indicators also suggested improvement. The current new orders index edged six points higher, from ‐2.2 to 4.2, also its highest reading since November 2007. The current shipments index increased 10 points, to a slightly positive reading.

Thursday, September 17, 2009

Men Underrepresented: 7 of 10 Grad School Fields

The Council of Graduate Schools just released data on graduate schools for 2008, and total graduate student enrollment by gender is displayed in the chart above (based on Table 2.13). Women represented 58.9% of all graduate students in 2008, meaning that there were 143 women enrolled in graduate school for every 100 men. Further, women were overrepresented in 7 out the 10 fields of graduate study and underrepresented in three fields (business, engineering and physical sciences).

Q: Why does the underrepresentation of women in engineering, math and science get so much more attention than the underrepresentation of men in arts and humanities, biology, education, health sciences, public administration, and social sciences? After all, male graduate students are about as underrepresented in fields like health sciences (20.1% male, and 398 women per 100 men), education (24.8% male) and public administration (25.5% male) as women are underrepresented in engineering (22% female).

Heading Out East to American Enterprise Institute

I'm heading out today on a road trip for The American Enterprise Institute (AEI) in Washington, D.C., where I'll be working for the rest of the fall semester during my sabbatical. Blogging might be light for the next few days, but I'll continue blogging on Carpe Diem and will also be writing and blogging for AEI for the next three months, more specific details to follow! For now, I invite all CD readers to become familiar with AEI if you are not already, it's a great organization:

American Enterprise Institute
main website.

American Enterprise Institutes's
Enterprise Blog.

American Enterprise Institute's journal
The American.

Bank Stocks Hit 9-Month High, +162% Since March

The KBW Bank Index reached a new 9-month high today, and is currently trading at 48.69, the highest level since December 8, 2008.

Chinese Girl Wants To Grow Up and Be a What???

Be sure to watch until the end and see what the last young girl wants to be when she grows up.

Top 5 Medical Tourism Destinations

Guess who made the list? United States is #5.

Jobless Claims Have Fallen 17 of Last 23 Weeks

WASHINGTONThe number of newly laid-off workers seeking unemployment benefits fell last week to the lowest level since early July, evidence that job cuts are slowing. The Labor Department said Thursday that initial claims for unemployment insurance dropped to a seasonally adjusted 545,000 from an upwardly revised 557,000 the previous week.

The decline is the third in the past four weeks. The four-week average, which smooths out fluctuations, dropped 8,750 to 563,000 (see chart above).

MP: Since the early April peak, the weekly jobless claims (4-week moving average) have fallen in 17 out of the last 23 weeks.

U.S. Income Taxes: Headed in the Wrong Direction

The chart above is based on global personal income tax data (highest marginal rate) just released in KPMG' study "Individual Income Tax and Social Security Rate Survey 2009." The trend globally over the last six years is towards reductions in the highest personal income tax rates, which have fallen from 31.2% in 2003 (average of 86 countries) to 28.9% in 2009. The highest marginal tax rate in the U.S. has been 35% since 2003.

As Chris Edwards at the Cato Institute points out:

The Obama administration plans to let the U.S. rate jump to 39.6% in 2011, which would be almost 11 points higher than the international average. Worse still, the United States has state income taxes with rates up to 10% that are piled on top of the federal tax. Some of the nations in the survey (e.g. Canada) also have subnational income taxes, but many, or most, of them do not.

HT: Cato Institute

World Stock Market Rally Continues, Bloomberg US Financial Conditions Index Reaches Two-Year High

The MSCI World Stock Market Index reached a new 11-month high yesterday, rising to the highest level since early last October. From the March bottom, the index is up by 65% (see chart above).

The Bloomberg U.S. Financial Conditions Index reached a two-year high yesterday, closing at the highest level since August 8, 2007 (see chart below).

Wednesday, September 16, 2009

Chart of the Day: Median CPI vs. BLS CPI

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.1% (1.8% annualized rate) in August. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Over the last 12 months, the median CPI rose 1.8%, the 16% trimmed-mean CPI rose 1.1%, the CPI decreased 1.5%, and the CPI less food and energy rose 1.4%.

Kudlow 101: Perfect Sunshine of Econ. Recovery

CNBC's Larry Kudlow looks at indicators of an economic recovery, including the TED spread as featured yesterday on Carpe Diem.

First Two Month Increase in Industrial Production Since 2007, Highest Two-Month Gain Since 2005

The Federal Reserve reported today that industrial production increased by .80% in August, following a 1% increase in July, the first back-to-back monthly increase in U.S. manufacturing production since the end of 2007 (see shaded area above), and the largest percentage increase for a two-month period since November-December 2005.

According to an
Associated Press story:

Industrial companies boosted production more than expected in August, making more cars, clothing and other goods in the early stages of a broad economic recovery. Factories boosted production of cars, machinery, food products, clothing and other goods in a fairly broad-based pickup in August.

Markets in Everything: A New 19 Year Light Bulb

Panasonic is touting a new LED bulb that will last a whopping 19 years. Can you imagine putting new bulbs in your infant’s room and not having to change them until they’re already in college? What’s even better is that this 60-watt equivalent bulb will only cost around $3 per year (as opposed to around $26 for a standard incandescent bulb) to operate. Even at $40 a pop, these things will definitely pay for themselves in the long-run. Unfortunately they’ve only been announced for Japan, hopefully we’ll be getting them over here before long.

Tuesday, September 15, 2009

Dr. Milton Friedman Argues for No Licensure of MDs to a Group of MDs at the Mayo Clinic in 1978

Speaking to a group of medical professionals at the Mayo Clinic in 1978, economist Milton Friedman argues for "no licensure of physicians," because that would help to "reduce and elmininate the monopoloy power of the Amercian Medical Association. That monopoly power is derived almost entirely from the fact that the practice of medicine is an activity which can be engaged in by only those who have licenses from government. And the control over that licensure procedure is what has enabled the AMA to exercise its monopoly power for these many decades."

In addition to being an excellent economist, Milton Friedman was a brave and fearless man.

Milton Friedman Speech At the Mayo Clinic in 1978

Government's Health Care Role

Rising Cost of Health Care

The genius of Milton Friedman is that his economic insights are as powerful as they are timeless. Despite the fact that these comments were made more than thirty years ago in 1978 at the Mayo Clinic in Minnesota, they ring as true today as they did then.

Walmart’s Ongoing Commitment To Drive Unnecessary Costs Out of the Health Care System

BENTONVILLE, AK, Sept. 15, 2009 While the debate over health care reform continues, Walmart remains committed to doing its part to reduce the cost of health care for everyone. Walmart announced today it is expanding its prescription mail delivery program nationwide, making it easier to receive prescriptions regardless of whether or not customers live close to a pharmacy. From Cromberg, California, to Rockleigh, New Jersey, Americans can order, with a valid prescription, a 90-day supply of eligible prescriptions for only $10 and receive them via free mail delivery, simply by visiting or by by calling 1-800-2REFILL. Further, Walmart’s free mail delivery program has no gimmicks, no memberships and no enrollment fees.

Walmart’s $4 generic drug program has helped so many patients afford their medication needs, but unfortunately we’ve found there are still too many patients unable to take advantage of our low prices because they are home-bound or live too far from a Walmart or Sam's Club pharmacy,” said Dr. John Agwunobi, president of Walmart’s health and wellness division.

“With this program, we’re able to provide consumers in every rural town or big city across America with more affordable prescription medicines through a convenient, free mail delivery system. Our $10 mail delivery prescription program is a true reflection of Walmart’s commitment to drive unnecessary costs out of the health care system so Americans can live healthier, better lives,” said Dr. Agwunobi.

Bottom Line: Wal-Mart deserves the 2009 Nobel Peace Prize for all its ongoing anti-poverty measures, including Everyday Low Prices and $10 prescription drugs.

The Empirical Evidence Against Big Government

The video above is Part II of a series on government spending, and this segment focuses on real-world evidence about the negative impact of government spending on economic performance, featuring Dan Mitchell of The Cato Institute. Part I is available here.

TED Spread Has Fallen 450 Bps in Last Year, Now At The Lowest Level in 5 Years, Since June 8, 2004

The TED spread is the difference between the risk-free three-month T-bill interest rate and three-month LIBOR (includes a credit risk premium), and is considered to be a good indicator of the overall amount of perceived credit risk in the economy. A year ago on September 15, 2009 the TED Spread jumped by 65.5 basis points (from 134.855 bps to 200.3588 bps) as Lehman Brothers filed for bankruptcy and fears about credit risk soared. Two days later on September 17 as fears about credit and financial risk intensified, the TED Spread jumped by another 82.6 basis points (bps) to more than 300 bps, setting a new record (back to at least 1990) for the largest one-day increase in the TED spread (that record still stands), and setting a new record for the highest TED Spread to date.

At the height of the financial crisis about a month later, the TED Spread hit 456.485 basis points on October 13, 2008, an all-time record. As the credit and financial markets have gradually healed, the TED Spread has fallen by more than 450 bps to the current level of about 15.75 bps, the lowest level in more than 5 years, since June 8, 2004 (see chart above). One more sign that the recession has ended.

Thomas Sowell's "Single Payer Plan": HIMSELF!

What did we do, back during the years when most Americans had no medical insurance? I did what most people did. I depended on a "single payer"-- myself. When I didn't have the money, I paid off my medical bills in installments. The birth of my first child was not covered by medical insurance. I paid off the bill, month by month, until the time finally came when I could tell my wife that the baby was now ours, free and clear.

In a country where everything imaginable is bought and paid for on credit, why is it suddenly a national crisis if some people cannot pay cash up front for medical treatment? That is not the best way to do things for all people and all medical treatments, which is why most Americans today choose to have medical insurance. But millions of other people choose not to-- often young and healthy people, sometimes deadbeats who use emergency rooms and don't pay at all.

Is this ideal? No. But if every deviation from the ideal is a reason to be panicked and stampeded into putting dangerous arbitrary powers into the hands of government, then go directly to totalitarianism, do not pass "Go", do not collect $200.

~Thomas Sowell

U.S. Tire Industry Opposed The Tire Tariffs

One of the most amazing and overlooked details about the "punitive tire tariffs" is that they were actually opposed by the domestic tire industry (Goodyear and Cooper). It was the United Steelworkers who filed the complaint, not domestic tire workers or the domestic tire industry.

From the NY Times:

Mr. Obama, responding to a complaint by the United Steelworkers, imposed a 35% tariff on Chinese tires for cars and light trucks. China has deplored the administration’s decision, suggesting it caved to domestic support for protectionism. The Tire Industry Association, which represents American tire retailers, said the decision was ill-advised and would lead to higher prices for consumers.

Retail Sales Increase By Largest Amount in 3 Years

WASHINGTON (MarketWatch) - U.S. retail sales rose a seasonally adjusted 2.7% in August, the biggest increase in more than three years (see chart above), boosted by government subsidies for cars, higher gas prices, and busy crowds at the malls, the Commerce Department estimated Tuesday. Sales were stronger than the 2.3% expected by economists surveyed by MarketWatch, largely because of widespread sales gains outside the gas stations and the auto lots.

The strong August sales will probably boost consumer spending in the third quarter, and help the economy grow for the first time in more than a year, economists say. Sales were strong at traditional mall stores. Sales at general-merchandise stores rose 1.6%, the most in more than two years. Sales at clothing stores rose 2.4%, while sales at stores catering to leisure-time activities, such as sports and reading, rose 2.3%, also a two-year high.

Empire State Manufacturing Survey: It's Beginning To Look A Lot Like The 2002 Recovery

NEW YORK FED -- In September, the Empire State general business conditions index posted its third consecutive monthly increase and its second consecutive positive reading (see chart above). Rising 7 points to 18.9, the index was at its highest level since November 2007, with nearly 40% of respondents reporting that conditions had improved in September and 20% reporting that conditions had worsened. Future indexes were generally positive and near last month’s levels. The future general business conditions index rose 4 points, to 52.3, a level last reached in October 2004.

MP: Both Empire indexes (general and future conditions) are pointing to an economy in recovery and both look a lot like the conditions in early 2002, in the post-2001 recession period.

Monday, September 14, 2009

Boeing Workers Vote 3 to 1 to Go "Union-Free"

Boeing Co. workers in North Charleston (SC) voted overwhelmingly to disband their union in a move that could give the region an edge in landing an aircraft plant the company is looking to build. Of the 267 ballots cast, 199 were in favor of decertifying the election that made them members of the International Association of Machinists. The company was pleased; the union was disappointed.

There's Really Only One Beneficiary of Tire Tariffs

You can probably guess who it is, but find out here for sure from The Cato Institute's Daniel Ikenson.

Believing in the "Magic of the Marketplace"

President Reagan’s visit to the NYSE in 1985 marked the first time a sitting president had visited the Exchange.
We who live in free market societies believe that growth, prosperity and, ultimately, human fulfillment are created from the bottom up, not the government down. Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success – only then can societies remain alive, dynamic, prosperous, progressive and free.

Trust the people. This is the one irrefutable lesson of the entire post-war period, contradicting the notion that rigid government controls are essential to economic development. The societies that have achieved the most spectacular, broad-based progress are neither the most tightly controlled, nor the biggest in size, nor the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace.

~Ronald Reagan, quoted in the New York Stock Exchange's "A Tribute to President Ronald Reagan."

Wal-Mart Helps Many Small, Local Businesses

We have heard a lot of criticism of Wal-Mart by groups like Wake-Up Wal-Mart, which claims that Wal-Mart mistreats it workers with low wages, unpaid overtime, mandatory working off-the-clock, sub-standard benefits, etc. They also claim that Wal-Mart discriminates against women, it violates child labor and safety laws, and it destroys the environment and it even desecrates sacred grounds. Oh, and of course there is the claim that Wal-Mart hurts small, local businesses when it comes to town.

What you won't hear from the anti-Wal-Mart groups are stories like this from the
Idaho Falls Post Register, about how Wal-Mart actually provides significant benefits for local businesses:

Liberty Tomato Co.'s distinguishable gold bell label is likely a familiar sight to local Wal-Mart customers purchasing fresh herbs. For almost 10 years, the national chain has sold herbs grown by the Pingree (ID)-based business at Wal-Marts in Idaho, Utah, Wyoming and Montana.

Liberty owner Karen Reed said the partnership has been essential to the survival of her company, which opened in 1987. "We wouldn't be in business if we didn't have the partnership with Wal-Mart," she said. They are our biggest customer."

According to Mark Marvin, market manager of the Wal-Mart in Idaho Falls, Wal-Mart has partnered with several Idaho growers and producers over the years. These local suppliers will be highlighted during September at 16 Idaho Wal-Marts, including the Idaho Falls store, to promote the company's commitment to purchase from regional vendors.

Wal-Mart purchased $269 million in products from 316 suppliers located throughout Idaho in 2009, Marvin said.

The family-owned business, which was started by Wada's grandfather Frank in 1943, was among the first Idaho growers to partner with Wal-Mart 16 years ago, he said. Wal-Mart purchases about 12 percent of Wada's fresh potato crop for its regional stores, said Tom Barnes, Wada's Wal-Mart account manager. Specialty products made by Wada are also for sale in all of Wal-Mart's stores.

Gallup Index of Investor Optimism, U.S. Stock Market Capitalization Hit New Highs

PRINCETON, NJ -- Consistent with Gallup's Consumer Confidence measure and the continued strong performance of the equity market, the Gallup Index of Investor Optimism -- a broad measure of investor perceptions -- in August hit a new 2009 high of 9. This represents a 12-point increase from July and is the first time the Index has been positive since June 2008. The Index has improved by 73 points from February's -64 reading -- its lowest level since its inception in October 1996.

And as the chart below shows (using
World Federation of Exchanges data), investors have reason to be optimistic - the U.S. stock market capitalization has increased for the last six months, and by about $4 trillion since March, from $10 trillion to $14 trillion (estimate for September), the highest level since last September.

Tariffs Punish Our Own Consumers and Producers

From the WSJ article "Tariff on Tires to Cost Consumers":

1. Consumers who buy low-price Chinese tires -- the bulk of the tires China exports to the U.S. -- will be hit hardest by the new tariff, as shortages in this market segment cause retailers to scramble to find alternative sources in other countries.

2. The tariffs won't just hit Chinese producers. Both of the U.S.'s remaining domestic manufacturers -- Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co. -- make tires in China that they sell in the U.S. Cooper this year is on track to import 2.5 million tires that it made in China. It was planning to boost that to four million next year.

MP: In other words, the "punitive tariffs" on the Chinese will actually punitively penalize our own American consumers, especially poor and middle-class, the largest buyers of low-price Chinese tires, and we'll also punitively punish two of our own Ohio-based tire companies, which combined employ more than 88,000 full-time employees, many in the U.S.

Sunday, September 13, 2009

Greatest Human Being You Never Heard Of

Penn and Teller profile Norman Borlaug and his contributions to genetically engineered food (some strong language).

New York Times article today -- Norman E. Borlaug, the plant scientist who did more than anyone else in the 20th century to teach the world to feed itself and whose work was credited with saving hundreds of millions of lives, died Saturday night. He was 95 and lived in Dallas.

HT: Johan Norberg

Update: Reason Magazine interview with Norman Borlaug (Hat tip: HappyJuggler)

Obamacare: Suspending the Laws of Economics

In exchange for some bitter tax pills, Obama promised Americans would get eternal health care "security and stability." To deliver that, he would of course ban insurance companies from denying coverage to those with pre-existing conditions--tantamount to forcing fire insurance companies to write coverage on a burning building. He would also prohibit insurers from putting any limits on the coverage they offer and cap what they can require patients to pay out-of-pocket.

In other words, Obama would encourage unlimited health care consumption by patients while eliminating the last vestige of price consciousness. But the reason America is facing unsustainable health care cost increases is precisely because its third-party system of insurance doesn't encourage prudent consumption by patients. Indeed, if Obama really can tame health care costs by making patients even less cost-conscious, I have an even better idea for him: Simply pass a law banning anyone from falling sick and mandate good health for all. If he can suspend the laws of economics, perhaps he can also transcend the laws of physiology.

~Shikha Dalmia in Forbes

HT: Scott Grannis

Intrade Odds for Obamacare Fall From 40% to 15%

In a little more than two weeks, the Intrade odds for the contract "A federal government run health insurance plan to be approved before Dec 31, 2009" have fallen to 15%, down from 30% odds only about a week ago, and down from 45% a little more than two weeks ago (see chart above).

Cartoon of the Day: A Classic from Henry Payne

Why Do Politicians Prefer Targeted Tax Breaks?

You've got to hand it to the folks at the Mackinac Center for Public Policy. The free-market think tank in Midland (MI) keeps churning out studies that criticize the effectiveness of Michigan's economic development incentives, even though those reports are met mostly with indifference in Lansing.

Its latest study, finds that between 1995 and 2004, the Michigan Economic Development Corp.'s main business tax credit program generated just 17,971 of the 61,043 jobs the credits were expected to produce.

As it has several times in the past, the Mackinac Center is calling for the state to eliminate the MEDC and its Michigan Economic Growth Authority (MEGA) tax credit program. "You could shut down the department itself and we would be no worse off than we are today," said study author Michael LaFaive, director of fiscal policy at the Mackinac Center.

A scathing Wall Street Journal editorial on Sept. 4, agreed. Citing the Mackinac Center study, the Journal asked if the MEGA tax credits might better be called "cash for clunkers." The Journal editorial, though, ignored the fact that every state employs some kind of economic development incentive.

The Mackinac Center's core belief is that Michigan should end targeted tax breaks and lower business costs across the board. But shuttering the MEDC is about as a likely to occur as the Detroit Lions winning the Super Bowl this year. Created by Republican Gov. John Engler in 1999, the MEDC enjoys wide bipartisan support and has been strongly endorsed by Democratic Gov. Jennifer Granholm.

~Michigan business writer Rick Haglund

MP: There's a very good reason: a) why every state including Michigan has targeted tax breaks for targeted economic development, b) why those targeted incentives enjoy wide bipartisan support, and c) why targeted tax breaks and incentives are preferred over non-targeted, across-the-board lower business costs.

Q: What is the reason? Hint: It has nothing to do with economics, and everything to do with pure politics and photo opportunities.

6th Consecutive Monthly Gain in World Stock Value

As stock markets around the world gained ground last month, the total world stock market capitalization increased by $2.26 trillion in August, according to preliminary data from the World Federation of Exchanges. The August gain follows increases of $1 trillion in March, $3.59 trillion in April, $3.82 trillion in May, $600 billion in June, and $2.84 billion in July and is the first time in two years of six consecutive monthly advances in world stock market value.

The cumulative six-month gain of $14.145 trillion in world stock market capitalization brings the value of world equities up to $42.815 trillion in August, the highest level since September 2008, and marks a 49% increase from the February bottom (see chart above).

Global "Green Shoot" Explosion


The MSCI World Stock Market Index continued its six-month rally and reached a new 11-month high on Friday of 1119.23, the highest close since October 3 last year. From the March low, world stocks have now risen by 62.5% (see chart above).

Yesterday's (Saturday) Wall Street Journal was full of stories about positive economic news here and around the world, here's a sample below. Pretty amazing for so much positive news of economic "green shoots" in just a single issue of the WSJ (the last story below was from Friday).

1. Brazil Exits Recession in 1.9% Lift. Brazil pulled itself out of recession in the second quarter with strong performances by its industrial and service sectors. Gross domestic product expanded 1.9% in the second quarter compared with the first period, the Brazilian Census Bureau, or IBGE, said Friday.

OECD Data Point to Broad Economic Recovery. There are increasingly strong indications that the world economy is on the path to recovery, with both the leading developed and the leading developing economies emerging from a downturn, according to figures released Friday by the OECD.

China Industrial Output Rises, Bank Lending Picks Up. The Chinese economy continued to recover in August, official data showed Friday, as the expansion in industry accelerated and bank lending picked up.

Economic Confidence Rebounds. Economists and consumers [in the U.S.] are feeling better about the economy a year after the most frightening moments of the financial crisis.

Volkswagen to Boost Production in China. Volkswagen AG said Friday it will invest $5.83 billion in increasing production and capacity in China by 2011 in a bid to keep pace with soaring demand.

"Fear Gauge" Is Showing Far Less of It. The stock market's "fear gauge" registered a 52-week low Friday, nearly a year after the market sank in the wake of Lehman Brothers' collapse. The Chicago Board Options Exchange's volatility index (VIX) hit as low as 22.5 before closing at 24.2, up 2.6% from Thursday.

FedEx Raises Outlook, Stokes Hopes for Recovery. FedEx raised its earnings expectations in a further sign that the global economy is stabilizing, citing a recovery in international markets. The package-delivery giant is a bellwether for economic activity.

Is the Recession Over? Wait Until 2010 for NBER’s Answer. The economy is pulling out of its downturn, but don’t expect an end-of-recession declaration anytime soon from the National Bureau of Economic Research. One member of its Business Cycle Dating Committee, Northwestern University economist Robert Gordon, said he believes June will mark the trough for the recession that started in December 2007 (MP: In that case, we are now in the third month of an economic expansion). But he expects the NBER’s recession-dating panel to wait six to eight more months before voting on an end date to ensure the economy doesn’t experience a double-dip recession.