Monday, July 21, 2003

Positive economic news from The Conference Board today?
A key U.S. economic forecasting gauge rose in June for the third consecutive month, suggesting the economy should pick up in the second half of 2003, a private research firm said on Monday.

The Conference Board said the index of leading indicators rose 0.1 percent in June, slightly below expectations of Wall Street economists, who had forecast it to rise 0.2 percent.

"After a weak first half, the leading economic indicators are suggesting a better economic performance in the second half of 2003," Conference Board chief economist Ken Goldstein said in a statement.
You know it's a slow news day when this is the leading wire story on the economy. A 0.1% rise isn't exactly news of much of anything but stagnation, after all. Is this really cause for (muted) celebration??

Compared to the May figures of +1.1%, the June report is nothing. Moreover, of the ten leading indicators which make up the overall index, only four rose in June and these four don't exactly speak well of the US economy.

The main reason for the overall rise in the index is a 0.17% increase in stock prices and the money supply! Initial weekly unemployment claims fell slightly (thus the index rose 0.4%) and building permits rose even more slightly (the index rose 0.2%). With rising mortgage rates, building permits are sure to level off or fall for July, and unemployment is certainly not going to be falling significantly any time soon. All the other six indicators were either flat or negative.

So we should feel good about another stock market bubble and Greenspan's loose monetary policy in isolation?? All it takes is a little digging to reveal the sad truth behind the numbers.

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