Good News Friday - May 29, 2009

Up

What does a new Disney/Pixar film have in common with some recent economic indicators? They are both “Up.” Moreover, both deal with transitions: the movie with life transitions and the economic indicators with the transition of the economy from recession toward recovery.

At this stage in the economic cycle, data points are mixed, but two particular series, both from the Conference Board suggest the economy is turning the corner.

• The index of leading economic indicators surged in April. It is a weighted average of 10 predictive data sets: the spread between the 10-year Treasury and the federal funds rate, M2 money supply, average workweek in manufacturing, manufacturers' new orders for consumer goods, S&P 500, average weekly initial unemployment claims, vendor performance, housing permits, consumer expectations, and manufacturers' new orders for non-defense capital goods.

• Consumer confidence jumped sharply for a second consecutive month in May, posting its largest two-month gain on record (since 1977). The gain was led by the expectations component, which spiked 21.2 points on top of the 20.8-point gain in April. This was the second-largest two-month gain on record.

The majority of economists expect the recession to end later this year. These recent indicators suggest the economy is on track to do that.

Have a great weekend.

Robert Bach
SVP, Chief Economist
Grubb & Ellis
312.698.6754