Most recent economic data are mixed, tilted slightly to the positive side:
- March ISM Manufacturing came in 53.4 but construction spending was down -1.1% for February. Globally, Europe has the worst shape with various indicators pointing to on going recession or slowdown. Asia has been a brighter spot but with plenty of worries.
- U.S. disposable personal income has been up with a slower rate but personal spending is way up. Americans are again not saving enough.
- Unemployment rate is still high at 8.3% with declining low labor force participation rate (63.7%).
- Inflation/Deflation: CPI is low but energy cost (oil price specifically) is sky rocketing. Housing is still the weakest.
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Structural Problems Not Solved
The structural problems identified by many for the Great Recession include:
- Highly leveraged banks/financial system
- Over leveraged households
- Low saving rates
- Low employment rate due to losing manufacturing and scientific/engineering competitiveness.
- Low quality K-12 education
The highly leveraged banks/financial system problem has been transformed (and transferred) to sovereign debt through taxpayers funding. This just puts even more burden to Americans as a whole. Other problems are pretty much as they were before the recession. The solutions so far are not structured to tackle the above structural problems.
To summarize, the recovery is still fragile. If economy does recover strongly, its mega up trend will be here for years and investors should have patience for this to play out. For now, we do not see the global economic structured fundamentals have been much changed.