There's Good and Bad News On the Economy

Let’s start with the positive data, beginning with the leading indicators:

1-unit Building permits ticked higher in the latest report.  In addition, low mortgage rates are supporting buying activity and homebuilder sentiment has rebounded.

This week, we also received good news on several coincidental data figures.

Retail sales bounced back strongly in the latest report.  This probably shows the effect of federal stimulus.

Industrial production ticked higher as well.

When this data is combined with low interest rates, a positive yield curve, liquid credit markets, and rising equity markets, it’s possible to argue that we’re already seeing an economy that is making progress.

Then there’s the labor market.  There are no adjectives to describe how bad it is.

Let’s start with the 4-week moving average of initial unemployment claims, starting with the long view.

Today’s numbers are astronomically high relative to the historical pattern.

Here’s the data close up.  Again, it shows the severity of the damage. At last count, there were over 40 million people out of work.

And then there’s the payrolls data:

The job gains from the last 11 years are more or less gone.

The good news is that key numbers are ticking higher.  And not just one data point but multiple numbers.  That’s good to hear.

The bad news is that the damage to the labor market probably means we’ve got a very long way to go.  As in at least 12 months and probably more.