Is the Recovery Here?
In other words, is this all there is? That was the question I had to ask myself today after reviewing weeks of economic reports that moved the needle slightly up or down, or reversed a trend ever so slightly, or gave multiple data points that danced around the same reading.
Looking for solid news of a rebounding recovery has been as elusive as the proverbial needle in a haystack. So the question remains, are we looking at it…. is the haystack the recovery? Is this as good as it gets?
Let’s take a look at the personal income and consumption report today from the Department of Commerce. The good news is if you are looking to buy a car, this might be a good time to do it ─ consumer spending remains soft, particularly in durable goods (up only 0.1 percent) but only if you have the money to spend, as personal income rose a lower-than-expected 0.1 percent for the month of January. Savings also dropped and spending on services was weak, up a modest 0.2 percent. Prices, however, remain tame with an increase of 0.0 percent for the month and a year-to-year increase of only 1.4 percent.
Recently, the construction industry became the focus of economic optimism. The larger-than-expected 2.8 percent January increase boosted hopes that the housing recovery was beginning to take root. But was the concentration of new apartment housing a sign that the “American Dream” (no, not beating Canada for the gold) of owning a home would again be out of range for most folks?
According to today’s construction spending report from the Department of Commerce, construction spending dipped by another 0.6 percent in January following a revised 1.2 percent dip in December. The biggest takeaway from the report: the fact that total construction is down by 9.3 percent for the year. Enough to start thinking about what kind of a boost construction could get following a small earthquake.
And then there’s the ISM Manufacturing Index for Feb, which came in at 56.5. The good news is manufacturing continues to hum along, boosting employment by 3 points to 56.1 and replenishing inventories. New orders, however, moderated their previously accelerating pace, dropping below 60 for the first time in several month. Backlog orders were up 5 points to 61, which bodes well for the sustainability factor.
So, again, is this the recovery we’ve all been hoping for? According to the famous lyrics of that existential lament “Is that all there is?” if that’s all there is my friends, then let’s keep dancing.