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Recent reports of improvements in the manufacturing sector and increases in consumer spending have economists believing that “the worst is over.”
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Economists continue to claim they see signs of recovery from the recession that officially began December 2007. For one, the latest Institute of Supply Management (ISM) survey shows “significant improvement” for the month of April. The Purchasing Managers’ Index (PMI) went up 3.8 percent from 36.3 percent in March to 40.1 percent last month.
Although this is the 15th consecutive month that the manufacturing sector failed to grow and the seventh consecutive month that the overall economy contracted, the decline is moderating as the PMI has been inching closer to the 50-percent mark for the fourth consecutive month, the ISM Report on Business® notes. A reading above 50 percent indicates that the manufacturing economy is generally expanding.
“After six consecutive months below the 40-percent mark, the PMI, driven by the New Orders Index at 47.2 percent, shows a significant improvement,” according to Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee. “While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again.”
The only manufacturing industry to report growth last month was miscellaneous manufacturing. Still, new orders shot up 6 percent from 41.2 percent to 47.2 percent in April; production went from 36.4 percent to 40.4 percent; and employment climbed 6.3 percent from 28.1 percent in March to 34.4 percent in April.
“This is the first report we’ve seen in quite some time we can call very encouraging,” Ore told Bloomberg News. “It certainly looks like the worst is over.”
Other economic experts agree but add that more bad news will continue in the short run and that growth is not expected any time soon.
“We need to view the move with caution,” wrote Merrill Lynch economists Drew Matus and David Rosenberg (via MarketWatch). “The uncertainty surrounding the auto sector seems likely to crimp activity and could drive this series sharply lower in the near term.”
Still copper prices, “one of the most economically sensitive commodities,” Ore said, rose for the second straight month. “This is definitely a good start for the second quarter,” he adds.
Additionally, the Reuters/University of Michigan index of consumer sentiment jumped to 65.1 in April, the most in more than two years, Bloomberg News reports. Consumer spending rose at a 2.2 percent pace last quarter, but economists surveyed by Bloomberg believe spending will slump again in this quarter before picking up in the latter half of the year.
Addressing the Joint Economic Committee today, Federal Reserve Chairman Ben Bernanke explained that a number of factors, such as the weak labor market, declines in equity and tight credit, will continue to weigh on consumer spending. However, household spending will be boosted by the fiscal stimulus program.
“We continue to expect economic activity to bottom out, then to turn up later this year,” Bernanke added.
While many other analysts expect economic recovery to happen later this year, some are even going so far as to claim the recession will end later this month.
Brian S. Wesbury and Robert Stein at First Trust Advisors expect the recession — which they say began September 2008 — to end this month.
In their Forbes column, they cited the recent upturn in manufacturing activity, consumer confidence and spending, coupled with the supposed bottoming out of housing prices and commodity prices as signs of the recession losing steam.
“The end of the recession does not mean we won’t lose more jobs; employment is always a lagging indicator. And there will be more defaults, foreclosures and financial market problems too. But none of these are leading indicators,” Wesbury and Stein wrote. “In our view, there are no more shoes to drop.”
Are we nearing a downturn turnaround? Or are these isolated signs in a recession that will last for years? Let us know.
See Also
Promising Signs Amidst Tough Times
Resources
April 2009 Manufacturing ISM Report On Business
Institute for Supply Management, May 1, 2009
U.S. Manufacturing Contraction Slows in April, ISM Says
by Rex Nutting,
MarketWatch, May 1, 2009
U.S. Economy: Manufacturing, Confidence Increase
by Bob Willis and Courtney Schlisserman
Bloomberg News, May 1, 2009
Testimony Before the Joint Economic Committee, U.S. Congress: The Economic Outlook
by Chairman Ben S. Bernanke
Board of Governors of the Federal Reserve, May 5, 2009
The Recession is Over
by Brian S. Wesbury and Robert Stein
Forbes, May 5, 2009
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Of course, the world economy shows some signs of stabilisation. Certainly, it’s a right time and a good chance to follow up formulation of ‘progressive’ rules & regulation for a ‘Well-regulated & controlled-Capitalism’ with Public-Private-Partnership -3Ps for a healthy competitive pace of usary-free ‘Shared-Economy’; to get rid of on-going ‘micro’ as well as ‘macro’ economic-imbalances’ due to a resultant “stuck” in ‘distribution of wealth’ because of ‘un-regulated’ or ‘un-controlled’ Capitalism.
Anyhow, I would like to suggest at the meantime following inferences required immediate attention and practical action for rehabilitation of economic annihilation to protect the industrial & production sector affecting to GDP & National income within respective countries & nations cheering up overall to come out of the economic depression globally :
1. ‘Mega-Projects-Constructions’ leading to industrial growth with relevant economic ‘pace-of-development’.
2.Synchronization of largest economies of United State , European Countries and China as well; to develop policies of stregthening developing & emerging economies to an extent that they must have have to stand with Purchasing Power to import for their national development projects, to become a part of economic pave of development by projects like Gas Pipelines along with side-by-side Security-Cum-Business & peaceful travel Road-Maping, as well as alongside Bullet-Train type travel development facilities by developing trust & confidence with one another and so on joining all nations for International development process.
3. This is the time that the US President Barack Obama required to have to call an ‘INTERNATIONAL SUMMIT’ under umbrella of UNO to join National Heads to together for re-structuring of UNO for democratic & collective decision of United Nation with mutual understandings of all of the members of United Nation for Global Management, by getting rid of illogical VETO Power system i.e. the real cause which required special treatment of actually paralyzed “Security Council” , enabling to reconstruct the United Nation Organization to move ahead democratically for ‘New World Order’ of our melliniem for ‘Global Management’ as global solution for Global Problems of 21st century & future therof.
Getting a U.N. agreement to curb “Terror’ of global warming will be a first step as Global-Environmental Control-Management, as an strategy leading to finally reach on other Global solutions of highly important World-Problems such as long-term ENERGY solutions under Global-’Operational’-Management of collective participation of All member countries of UNO under its democratic re-structuring with mutual understandings.
4. Oceanographic search, research and discoveries of especially God-gifted marine-resources with well known MRAs (Marine Reserve Ares), 90% of which are still required to be explored for resolution of problems to overcome the growing human needs.
5. Re-Construction of the infrastructure development-works of “Shelter-the-Shelterless” program whereas it is required ‘with-immediate-effect’ to get positive results & impacts on development-economy, and so on for development of confidence & mutual Trust on each other.
In fact, ‘diplomacy-of-development’ as well as ‘real (Popular) democratic change’ is the right & only solution of Afghanistan, Iraq & other regional crisis of the globe. Of course, Government by the majority of the peoples ‘themselves’ and diplomacy of Development, Construction, re-construction & rehabilitation of annihilation are honestly the best constructive ways to achieve the positive objectives, because ‘underground-activists’ always emerged & survive in absence of real (Popular) democracy.
Consideration of Afghanistan either “War-of-Choice” or “War-of-Necessity” both will not be a ‘mistake’ as accepted by Ex-President of United State – George W. Bush for Iraq, but now it will be a ‘blunder’.
First-time mistake is not a mistake, but second time: it’s a mistake, while to repeat a mistake further always be count as ‘blunder’, and furthermore a ‘disaster’.
‘Invasion of Foreign Forces’ never been accepted by any nation, especially to peoples of said Afghan Areas, historically.
PEACE INITIATIVES for International Development is maily to overcome the global recession i.e. concerning with development of mutual trust & confidence, for ‘stream-pipe-lining’ of PEACE bridging Eastern & Western hemisphere along with Security-cum- business ‘Road’-Mapping side by side, rather than isolation of any nation.
“War begins in the minds of men, so defences for Peace too”. Let US re-consider Afghanistan for “Peace-to-Choice” and a real (popular) “Democracy-As-Necessity
6. Development of global Travel-industry i.e. one of the international pedestal of market economy & relevant business sector impact-full to industrial growth & international economic studies, collaborations for understanding of collective dependency on each other outstanding potential & worth.
7. Agricultural & Agro-based industrial development works pushing to invest by manpower by utilizing available fertile lands for cultivation by engaging peoples, investment along with scientific technologies and R&D excellence to grow more with such an excessive Supplies of commodities affecting positively on reduction of prices with healthy competition rather than monopolistic reaping of unjustifiable profit greediness.
8. Education, health, and R&D as well, are the real bases to do a lot practically for Economic Exaltation rather than Recession. So the PRODUCTIVE-INVESTMENTS of educational and R&d Loans and aids should have to be extended ‘interest-free’ with most ‘easy-to-return’ policies for individuals & Institutions, that may be possible to waived them out on outstanding achievements as AWARD.
9. NON-PRODUCTIVE investment of usuray interests of Financial sector policies specially for micro-economic level such as CREDIT CARDS______ are ‘Non-Productive’ financing i.e. one of the factual reason of on-going recession in market economy of the globe. Because the base of Market economy is the consumer class having purchasing power, that runs the wheel of successive-economy leading to development of large industrial, construction & so on projects sector.
Let, the ‘Part-of-Solutions’ of global economic players move ahead to stop or control the credit-card facilities to such an extent that, current financial institutions must have to convert their micro-financing policies to ‘productive-investments’ only such as that of SME development or agricultural loans, educational loans, R & D Loans, MRA (Marine Reserves) exploration & production loans, and other productive works, etc.
In the meantime, it’s also essential to develop policies to bring our the peoples from credit-card, personal-loans, House loans, educational and R&D Type of Loans-recoveries with ‘easy-to-return’ packages; such as that the total return must not exceed 25% of one’s income.
10. My sincere idea please be conveyed to US & Global Industrial, financial and other business organizations, that to “keep Hiring rather than Firing” the employees, just by estimation & costing the amount that may be required to save by lay-off of employees.
Of course, employment is always a lagging indicator. Any of the economy would never like to lose more jobs. Let drop the Mossas rod of shoes to stop adverse policies of Private sector Global Business (Industrial & Financial) players to undermine passing through stress test and overcome the Problem of such monopolistic attacks like lay-off designing of ha huge unemployment by re-structuring the ‘un-regulated,’ or ‘un-controlled’ capitalism and a large-scale privatizations, by a right & better solution of 3Ps (Public-Private-Partnerships) for a healthy & best competitive ‘Sharte-economy’.
11. ‘Sheltering-the-peoples’ is one of the main responsibilities of respective government. But, ‘House (usury) Loans’ packages with exhorbited interest are one of those enormous ‘non-productive’ investments which becomes now-a-days the actual & main cause of recession consciously engineered by opportunist usurers for ‘cutting-edge-slavery’ under a particular greedy class enjoying benefits of ‘unregulated-capitalism’ and step-by-step moving forward towards intended ‘satanic-proud’ despite dead poverty of the peoples’ majority.
So that, in my honest opinion, ‘90-years leasing’ with total remission of ‘usury’ will be a best stimulus package to stop foreclosure of houses, by bailing-‘indebted’ (peoples)-out of house lending ‘money-on-interest’. And, no-doubt, it is also a best economic solution to stimulate the consumer-market by overhauling of purchasing power of middle-class at the meantime to overcome the problem of on-going slump in economic activity.
Similarly, currently planned bailing-out of financial institutions on ‘macro-economic-level’ by the Government will be result-oriented iff (if &only if) subjected conditionally on relaxation of consumer-class on ‘micro-economic-level’ to come out of on-going economic recession, by exaltation leading to ‘pace-of-development’ in special relativity with market-economy to an optimistic ‘upturn’ of the graphic interpretation positively.
So that, development & implementation of freedom-loving public policies for ‘democratic-globalization’ are the real responsibilities of Peoples’ Government for overall independence, freedom and ‘development-for-All’.
Of course, future is in our hands, and sustainable developments are crucial to ensuring that sustainable actions and thinking are put into practice without any remissness.