In any complex system there are numerous interactions and causal relationships. A specific event oftentimes leads to an outcome quite a bit later. Yesterday we got the first quarter GDP numbers and they were down more than expected. However, first quarter economic activity, ended over a month ago. It is a lagging indicator in most respects. Inside the numbers there was a very encouraging item. Consumer spending was up over 2%. This when GDP was down 6.1% would indicate that a lot of inventory was sold off.
If the inventory levels are way down and current capacity has been reduced via all the layoffs, we are going to see some growth in manufacturing activity at a more productive rate than we had during the bubble. Also any increase in consumer confidence is likely to lead to more buying of homes, cars, etc. This is the predictor that will result in an upturn. My own personal opinion was that I saw a lot more shoppers in New York, Delaware and the DC area in April. Maybe it was Easter but seeing shoppers out is one of my own favorite indicators.
No comments:
Post a Comment