From Reuters:
The world economy has avoided "utter catastrophe" and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.
"I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now," Krugman told a seminar.
"I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year."
"We have averted utter catastrophe, but how do we get real recovery?
"We can't all export our way to recovery. There's no other planet to trade with. So the road Japan took is not available to us all," Krugman
So -- what is it that Krugman Sees?
Let's start with industrial production. The rate of month over month decline is decreasing. Starting in December of last year we see a month to month decrease of (-)2.2%, (-)2.1%, (-)1.0%, (-)1.7%, (-).5%. The series is slowing. Granted -- the year over year rate is still in terrible shape:
But -- the year over year rate won't stop decreasing until the month over month rate decreases and it appears we are getting that.
Then there is the big bump we say in leading indicators:
As the conference board reported:
The Conference Board LEI for the U.S. rose sharply in April, the first increase in seven months, and the strengths among its components exceeded the weaknesses for the first time in one and a half years. Stock prices, the interest rate spread, consumer expectations, initial unemployment claims, the average workweek, and supplier deliveries all contributed positively to the index this month, more than offsetting the negative contributions from real money supply and building permits. The six-month change in the index has risen to 0.6 percent (a 1.2 percent annual rate) in the period through April 2009, up from 2.4 percent (a 4.8 percent annual rate) from April to October 2008. However, the weaknesses among the components have remained widespread over the past six-month period.
And then is the statistic that originally caught my eye -- initial unemployment claims. Notice how the four week moving average appears to have topped out:
And then yesterday we got this bit of information, also from the Conference Board:
The Conference Board Consumer Confidence Index™, which had improved considerably in April, posted another large gain in May. The Index now stands at 54.9 (1985=100), up from 40.8 in April. The Present Situation Index increased to 28.9 from 25.5 last month. The Expectations Index rose to 72.3 from 51.0 in April.
The Consumer Confidence Survey™ is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world's largest custom research company. The cutoff date for May's preliminary results was May 19th.
Says Lynn Franco, Director of The Conference Board Consumer Research Center: "After two months of significant improvements, the Consumer Confidence Index is now at its highest level in eight months (Sept. 2008, 61.4). Continued gains in the Present Situation Index indicate that current conditions have moderately improved, and growth in the second quarter is likely to be less negative than in the first. Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months. While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us."
This jibes with the following charts from Pollster.com
<script></script>
<script></script>
I want to caution: we are dealing with preliminary information. There is still plenty that could go wrong right now. And there are serious questions about how we will actually grow again once we bottom out. But, there are good pieces of news out there.