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U.s. Economy's Mixed Vital Signs Flummox Experts

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Interesting analysis on the state of the US economy and the confusing signals created.

I think the significance of this is why are these economic signals conflicting and acting against the historical norm.

IMO this is because our governments and monetary leaders have learnt from history and are apply this knowledge in ever more sophisticated ways to keep the ball in the air for that bit longer. The fact that we are starting to see the impact of these efforts shows that they are a fare way into the battle they are fighting. Will they win? I think it would be a first.

A far worse interpretation would be they are not doing anything to keep things going but just manipulating key figures to keep people (DOW) thinking everything is fine.

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

Interesting analysis on the state of the US economy and the confusing signals created.

I think the significance of this is why are these economic signals conflicting and acting against the historical norm.

IMO this is because our governments and monetary leaders have learnt from history and are apply this knowledge in ever more sophisticated ways to keep the ball in the air for that bit longer. The fact that we are starting to see the impact of these efforts shows that they are a fare way into the battle they are fighting. Will they win? I think it would be a first.

A far worse interpretation would be they are not doing anything to keep things going but just manipulating key figures to keep people (DOW) thinking everything is fine.

Interesting. The US economy’s leading indicator, referenced in the article, combines component data elements, all of which are released and available in their own right, so it is merely a summation indicator of what the component data elements mean. But markets largely ignore the leading indicators report, because it isn't bringing any fresh performance data and also because some component elements are often revised, resulting in the leading indicator also having to be revised the following month.

Employment has been decelerating, as pointed out in the article, but this is from a stand of almost full employment (unemployment is at 4.5%) and a sustained period of robust economic growth. Despite the woes in the construction and manufacturing sectors, the overall economy has still been creating new jobs every month and not losing jobs. Employment is also a lagging indicator (you may not lay off staff after one month of no orders, but you will after two), so it could be a few months before payroll numbers reflect the true situation.

Recent indicators have shown improvements in the ISM employment index of both the manufacturing and services sectors, so the current downward trend in US weekly jobless claims should not come as a surprise. The downward trend is only 3 weeks old, so it is much too soon to be reading too much into it. Still, jobless claims are now at their lowest annual rate since January and when looked at together with recently reported increased industrial production output and greater expansion in manufacturing and services, the US outlook suddenly looks a bit better. A real test of this recovery question will come when the nonfarm payroll numbers for May are released (coming 2 months after the weakest quarter of growth seen in 4 years). However, housing remains anchored in a downturn, so this sector looks as if it will remain a drag on growth for at least the coming 2 quarters, regardless of what happens elsewhere.

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