Finally Some Convincing Indications of Economic Recovery

U.S. light vehicle sales in March were up 24% from the previous year, the first impressive year-over-year improvement in quite some time, and the best month we’ve seen since August 2008, if you don’t count the cash-for-clunkers August of 2009 (and I don’t). If you’re looking for something to gripe about, you could still complain that March 2010 remains 21% below the level of March 2008 and 31% below March 2007. But I’ll take what I can get.

Data source:

Even with the U.S. gains, GM still sold more cars in China in March than in the U.S. Here’s how the numbers look seasonally adjusted.

Source: Calculated Risk

The Institute for Supply Management PMI manufacturing index also looked great, rising to 59.6 for March. This means that managers reporting improvements outnumbered those reporting declines by the highest margin seen since 2004. Improvements in PMI numbers are also being reported around the world; see the Wall Street Journal for a nice tabular summary.

Source: FRED

And perhaps the biggest news was the March employment report from the BLS, whose establishment survey estimated that U.S. employment increased by 162,000 workers in March on a seasonally adjusted basis. I was surprised that Mark Thoma, Dave Altig, and Dean Baker found this disappointing. Certainly it was better than ADP’s estimate that seasonally-adjusted private-sector employment had fallen by 23,000 in March, and received confirmation from the separate BLS household survey estimate that March employment grew by 264,000 workers, as well as from the 55.1 reading for the employment component of the ISM manufacturing report. True, 48,000 of the 162,000 new payroll jobs represented temporary Census positions. But those people are nevertheless now working rather than unemployed, and earning a salary with which they can buy goods and services or avoid bankruptcy and foreclosure. It’s also true that another 40,000 of the March gain came from temporary help services, but that’s often where employment growth first shows up. And I acknowledge that 162,000 isn’t enough to bring the unemployment rate down, which remained stuck at 9.7% for March. Even so, this is enough better than what we’ve been seeing and than we could have seen that I personally am quite relieved. For a mix of the range of other optimistic and pessimistic takes on the employment numbers, see Phil Izzo’s usual nice summary.

Or if you prefer a purely objective read, note that this was enough to lift the Aruoba-Diebold-Scotti Business Conditions Index most of the way out of negative territory.

Aruoba-Diebold-Scotti Business Conditions Index

Looks good to me

About James D. Hamilton 244 Articles

James D. Hamilton is Professor of Economics at the University of California, San Diego.

Visit: Econbrowser

Be the first to comment

Leave a Reply

Your email address will not be published.