U.S.' Slow Recovery Still Intact

Includes: DIA, IWM, QQQ, SPY
by: Hale Stewart

The Conference Board uses four statistics for its coincident US economic index. In order of importance, these are: total employees (51%), real income less transfer payments (22%), industrial production (14%) and manufacturing and trade sales (11%). While the US recovery has been -- and continues to be -- weak, all of these metrics are still pointing to modest expansion. Let's take these in their respective order of importance in the coincident index.

Total employees on payrolls has been increasing solidly since mid-2010.

Real income less transfer payments has been increasing since early 2010. However, these data series has moved sideways for the last approximately 6 months. Considering that unemployment is still high, this is hardly surprising as a weak employment situation means employees have muted salary bargaining power. The closer the economy comes to full employment, the larger this increase should be.

IP bottomed right at the end of the recession and has been on an upward path since.

Real trade and manufacturing sales have also been steadily rising, although their path is less "straight up" and more "a month of strong advances was followed by a decline."

While the pace of expansion is agonizingly slow, it is still an expansion.