Good News Friday - August 14, 2009

Good News Here, There and in Between

Good News Here: Nonfarm business productivity soared by 6.4 percent at an annualized rate in the second quarter as companies were quick to implement layoffs, helping to explain why revenues were down while profits were up last quarter at many publicly traded companies. While this doesn’t sound like very good news, it means there is little slack left in the labor market, so when demand picks up, companies may be likely to hire more quickly than many expect. The report also determined that companies saw unit labor costs fall by 5.8 percent in the second quarter, a sign that inflation is likely to pose little threat for the next year or two at least.

Good News There: “France and Germany exit recession,” trumpeted the BBC as Europe’s two largest economies saw GDP expand in the second quarter.

Good News in Between: Exports and imports expanded by 2.0 and 2.3 percent, respectively, from May to June. It was the first month since June 2008 that both measures increased. Trade is poised to resume as global economies emerge from recession and credit becomes more widely available.

More Good News Here: 27 of 47 economists surveyed by The Wall Street Journal this week say the recession has ended. However, we won’t know for sure until sometime next year when the National Bureau of Economic Research, a committee of economists charged with dating business cycles, announces its findings. The NBER typically waits until well after the fact when the data are unequivocal to set the starting and ending dates of recessions.

Have a great weekend.

Robert Bach
SVP, Chief Economist
Grubb & Ellis
312.698.6754