Yes, we’re still in the economic recovery phase, and yes, it still looks pretty sluggish.
Americans bought 1.1 million light vehicles in May, 19% more than in May 2009. Apart from the cash-for-clunkers blip last August, that’s more cars sold than in any month since August 2008. But the latest number is still almost 30% below May 2007. The recovery is underway, but we have a long, long way to go before you’d call things normal.
Data source: Wardsauto.com
Temporary government hiring for the 2010 Census added 411,000 workers to the employment rolls in May, but that was about it on the employment front. BLS says the private sector added only 41,000 jobs (ADP had a similar estimate), half of which were taken away by losses of state and local government jobs. The unemployment rate edged down to 9.7%, but this was entirely accounted for by people dropping out of the labor force. Even with the Census jobs, we’re still below the employment level of May 2009. Although disappointing, all this leaves us about on track for what might be expected at this point for the sluggish recovery many had been anticipating. Healthy job growth is still something we’re hoping will come in the future as opposed to something anybody claims to be seeing so far.
100 times the 12-month change in natural log of seasonally adjusted nonfarm payroll employment, from FRED, with NBER recessions as shaded regions and dashed line at 0.0 threshold.
But there are some other more favorable indicators. Earlier in the week, ISM reported its PMI manufacturing index was at 59.7 for May. Some outlets reported that this was less favorable than the 60.4 reading for April, but that’s the wrong way to interpret this statistic. Any value above 50 means that more of the managers surveyed reported that May was better than April than reported worsening conditions, and a value near 60 is quite a strong indicator that things are getting better.
The Federal Reserve’s index of industrial production, released a few weeks ago, also looked pretty good.
100 times the 12-month change in natural log of index of industrial production, from FRED, with NBER recessions as shaded regions and dashed line at -1.0 threshold
The Chicago Fed National Activity Index, one of the best overall indicators of economic activity, has been in positive territory for two months in a row now.
Source: Federal Reserve Bank of Chicago
And the Aruoba-Diebold-Scotti Business Conditions Index has been sending pretty favorable readings.
So my assessment remains as it’s been for some time– we are in the recovery phase, but it remains disappointingly sluggish. Our Econbrowser Emoticon, which has been stuck in neutral for almost a year, looks like it will be staying put for a while yet.