@Tom Humes

@Stacey Derbinshire

@Sue Massey

@Randy Pena

Thanks for your comments about my blog. I can see by the message boards and Prads comment that this post has been very controversial. The biggest argument that I have faced is how can there possibly be a recovery with the astonishing unemployment numbers. As discussed in the newsletter Unemployment is a lagging indicator and will begin to improve after the economy has bottomed.

Jeffery Saut of Raymond James Financial illustrates this point, “As for the all the “doubters” we encountered last week, who keep pointing to the rising unemployment numbers, we reminded them that employment is at the back-end of the cycle. Nevertheless, their chant goes like this, “how can we have a durable economic recovery when consumers account for roughly 70% of the economy; and, unemployment continues to rise while consumers continue to leave their “billfolds on their hips?” Ladies and gentlemen, the typical economic recovery is driven by corporate profits, not consumption! Those profits turn into the “investments” that foster a capital expenditure cycle, which eventually spurs corporate hiring. That’s the typical sequence and we think it plays that way this time. Verily, corporate profits are surging, which should stimulate more than just the “inventory rebuild” the naysayers suggest will quickly peter out. Accordingly, we think there will be a more durable capex cycle followed by the envisioned improvement in employment, which will indeed drive consumption.”

I am not trying to argue that everything is fine and dandy or that there will be an immediate turn around but I see the signs that things are getting better. Hopefully by this time next year we all the doubters will finally be feeling better about the economy.

A good website to visit for more information about leading/ lagging indicators and business cycle research in general is: http://www.businesscycle.com/resources/

In addition, there is a great report by NPR with Lakshman Achuthan (Managing Director at the Economic Cycle Research Institute) that discusses the state of the economy and the signs of improvement.
http://www.businesscycle.com/news/press/1596/