Economy Grows in January: Leading Indicators

Economy Grows in January: Leading Indicators
Source: Pixabay

The Conference Board announced today that an index of leading economic indicators rose 0.4%, showing that the US economy is finally gaining ground and expanding.  The Conference Board also commented that they expect growth to pick up this year especially in spring and summer.

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“This fourth consecutive gain in the LEI reflected fairly widespread strength among its components, pointing to somewhat more positive economic conditions in early 2012,” says Ataman Ozyildirim, an economist with the Conference Board.

The LEI has ten different economic indicators that are supposed to be able to tell when the economy is at a peak or trough.   In January, seven of the ten indicators gave us positive signs.  The positive indicators include: interest rate spread, manufacturing hours, stock prices, credit index, building permits, ISM new orders index and manufacturers’ orders on materials and consumer goods.  The three laggards were consumer expectations, initial claims for jobless and manufacturers’ new orders on non-defense orders.

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As you can tell there is still some progress that needs to be made but we are finally getting some recognition that the recovery is in full swing, full slow swing.  The economy is growing slowly which is why the Federal Reserve is thinking about QE3.  However, some investors think that another easing program would hurt economic progress and just inflate prices.  Whether this is the case or not is not yet known.

Instead of another easing program, the government and the Federal Reserve should be trying to stimulate job growth.  Nothing stimulates the economy more than a low unemployment rate and people spending money.  If you have a job recovery, you have a housing recovery, simple as that.  The government is trying to take on jobs and housing as two separate entities, yet if they just create a growth friendly environment the housing will come naturally.  If people have a steady income they will want to spend it and move into a house because they have the money and it’s an ideal option for a family.

Are jobs the full answer to our economic problems? No but it would solve more problems than you think.  Stimulating jobs you would think wouldn’t be so difficult for a government, yet Democrats and Republicans have different definitions of what “job stimulation” means so nothing will get done.  This gridlock government is hurting our economy and all the people that are hurting because they do not have a job and are feeling the pressure from the economy will remember this in November.

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