In Defense of Green Shoots

by: Arnold Landy

Several recent economic reports showed real growth in some areas of the economy. The green shoots famously noted by Ben Bernanke were mostly signs of optimism for the future, but lacked immediate realtime impact on our economic wellbeing. Or they were a slowing in the rate of decline (such as for auto sales), instead of actual increases. So, here is a list of signs of real growth reported within the past thirty days:

1) Housing Industry:

(NYSE:A) Housing starts rose, both single-family and multi-family

(NYSE:B) Sales of existing homes rose

2) The Consumer:

(A) Consumer spending rose (although retail sales,within that, continued to fall)

(B) Personal income rose

3) Manufacturing:

(A) Durable goods orders rose

(B) The factory production component of the ISM survey rose above 50, implying expanded production (although the overall index is merely contracting more slowly).

(NYSE:C) Average manufacturing workweek hours rose (even as average workweek for the overall economy fell). This manufacturing component of the monthly employment report is one of the two employment indicators within the Index of Leading Econmic Indicators. The other one is initial claims for unemployment insurance, which has been improving since April.

As these and other indicators continue to strengthen, the economic recovery, which is now in its earliest stage, will become more apparent.