March data released today for industrial production and housing starts show unmistakable signs of growth and recovery. Economic growth in the first quarter of this year is almost certain to be much stronger than the anemic growth of the fourth quarter.
Here's a great example of how a sector of the U.S. economy that suffered a devastating blow during the Great Recession has staged a "V-shaped recovery." Industrial production has expanded by 19% since its low of mid-2009, and is only 1.4% shy of an all-time high. Production is up 3.5% in the past year, and it rose at an impressive 5.7% annualized rate in the first quarter of this year.
The chart above is a reminder of just how much better the U.S. economy is performing than the eurozone economy. The eurozone has been in a recession for almost two years, burdened by the struggling PIIGS economies and the threat of sovereign debt defaults, but the U.S. has shrugged off the problems across the pond and continued to forge ahead.
Pessimists focus on the fact that housing starts today are at levels that marked recessions in the past, but optimists focus (correctly) on the huge improvement on the margin. Residential construction has only recovered about half of what it lost in the Great Recession, but gains in the past two years have been nothing short of spectacular. Starts are up 92% since the end of 2010, they have jumped 49% since the end of 2011, and in the year ended March, they are up 48%. These are rather extraordinary statistics. The most beaten-up sector of the economy is coming back to life by leaps and bounds. Why are there still so many long faces out there?