Monday, May 25, 2009

Some Signs of Light at the End of the Tunnel: End of the Recession

1. The new order component of the manufacturing surveys has been turning up.

In the recessions which bottomed in March 1975, July 1980, March 1991, and November 2001, the new order index from the ISM bottomed 1 to 3 months before the recession bottomed. The ISM new order component hit bottom in December 2008 at 22.7. ISM

For April 2009, it was at 47.2, up from 41.2 in March. ISM

The longest lag was in the recession that bottomed in August 1982 when the new order index bottomed 12 months prior to the end of the recession.

2. Japan raised its economic outlook for the first time in 3 years today. Reuters

3. In the following linked article, Robert Gordon, an economist and member of the NBER Business Cycle Dating Committee, claims that there is a very high correlation between the end of a recession and a "lagged peak" in unemployment claim| vox
He views it as "highly probable" that the new claims peak has already occurred and consequently he concludes that the U.S. recession will end in May or June 2009.

4. The German Ifo's business climate index rose in May.

5. Intel is still predicting a return to seasonal patterns in its business.

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