Indicators, Philly Fed Flash Growth In Sign Downturn Has Ended
BY DONALD H. GOLD
New data released Thursday show the economy may be bouncing back from recession.
The Index of Leading Economic Indicators rose 0.6% to 112.2 in January, The Conference Board said. That's the fourth straight monthly gain, boosting hopes the 11-month slump is ending.
Also, the Philadelphia Federal Reserve's regional business index for February notched a bigger gain than most analysts expected.
Separately, the nation's trade deficit narrowed to $25.3 billion in December, as exports rose and imports fell. For all 2001, the trade gap shrank for the first time in six years.
Analysts are scouring economic data for signs of growth. The Leading Economic Indicators index tracks 10 forward-looking gauges.
Of those, six lifted the index: a steeper yield curve, vendor performance, consumer expectations, jobless claims, building permits and money supply.
The four dragging factors were average weekly factory hours, stock prices, factory orders for nondefense capital goods and factory orders for consumer goods.
"The strong signal from the indicators is that the recession is ending and that the recovery could be more vigorous than earlier anticipated," said Conference Board Chief Economist Ken Goldstein. "We might be out of recession already."
Also, the coincident-to-lagging ratio, used to pick turns in economic activity, rose to 112.5 in January from 112.3 in December and 111.8 in November.
"The signals are overwhelming," said economist Russell Sheldon at BMO Nesbitt Burns in Toronto. "This recession is over."
White House officials seem to agree. Treasury Secretary Paul O'Neill said the U.S. could see a "significant recovery" soon.
After falling following the Sept. 11 attack, the leading index has notched four big gains in a row.
"This was the biggest (one-month) move to the upside in 20 years," Sheldon said. "Practically everything is heading up now."
Meanwhile, the Philadelphia Federal Reserve's index of activity rose to 16.0 in February from 14.7 in January, its second straight gain and its highest reading in almost two years. That raises hopes that the factory-heavy mid-Atlantic region is picking up.
The Philly Fed index is a diffusion index, which gauges the difference between those reporting gains and declines in activity.
Good news abounded in the Philly Fed report. Shipments and new orders, the two most closely watched subindexes, both rose. And the delivery times subindex rose to 4.6, breaking a 20-month streak of negative readings.
The Philly Fed data tell the same story as the LEI, Sheldon says. "It's also forward-looking, it also made a big move in the last few months. You can't fight this," he said.
The smaller trade gap shows how weak the economy was in 2001. Exports rose $100 million in December. But imports plunged $3.1 billion.
For all 2001, the trade deficit dropped $29.4 billion to $346.3 billion. Exports fell $62 billion, but imports fell $91.4 billion. The 2001 gap was 3.4% of GDP, down from 2000's record 3.8%
BY DONALD H. GOLD
New data released Thursday show the economy may be bouncing back from recession.
The Index of Leading Economic Indicators rose 0.6% to 112.2 in January, The Conference Board said. That's the fourth straight monthly gain, boosting hopes the 11-month slump is ending.
Also, the Philadelphia Federal Reserve's regional business index for February notched a bigger gain than most analysts expected.
Separately, the nation's trade deficit narrowed to $25.3 billion in December, as exports rose and imports fell. For all 2001, the trade gap shrank for the first time in six years.
Analysts are scouring economic data for signs of growth. The Leading Economic Indicators index tracks 10 forward-looking gauges.
Of those, six lifted the index: a steeper yield curve, vendor performance, consumer expectations, jobless claims, building permits and money supply.
The four dragging factors were average weekly factory hours, stock prices, factory orders for nondefense capital goods and factory orders for consumer goods.
"The strong signal from the indicators is that the recession is ending and that the recovery could be more vigorous than earlier anticipated," said Conference Board Chief Economist Ken Goldstein. "We might be out of recession already."
Also, the coincident-to-lagging ratio, used to pick turns in economic activity, rose to 112.5 in January from 112.3 in December and 111.8 in November.
"The signals are overwhelming," said economist Russell Sheldon at BMO Nesbitt Burns in Toronto. "This recession is over."
White House officials seem to agree. Treasury Secretary Paul O'Neill said the U.S. could see a "significant recovery" soon.
After falling following the Sept. 11 attack, the leading index has notched four big gains in a row.
"This was the biggest (one-month) move to the upside in 20 years," Sheldon said. "Practically everything is heading up now."
Meanwhile, the Philadelphia Federal Reserve's index of activity rose to 16.0 in February from 14.7 in January, its second straight gain and its highest reading in almost two years. That raises hopes that the factory-heavy mid-Atlantic region is picking up.
The Philly Fed index is a diffusion index, which gauges the difference between those reporting gains and declines in activity.
Good news abounded in the Philly Fed report. Shipments and new orders, the two most closely watched subindexes, both rose. And the delivery times subindex rose to 4.6, breaking a 20-month streak of negative readings.
The Philly Fed data tell the same story as the LEI, Sheldon says. "It's also forward-looking, it also made a big move in the last few months. You can't fight this," he said.
The smaller trade gap shows how weak the economy was in 2001. Exports rose $100 million in December. But imports plunged $3.1 billion.
For all 2001, the trade deficit dropped $29.4 billion to $346.3 billion. Exports fell $62 billion, but imports fell $91.4 billion. The 2001 gap was 3.4% of GDP, down from 2000's record 3.8%
