The leading indicator will surprise on the upside - surprisingly robust US economy
Alan Hersey
Oct. 18, 2006

New orders, jobless claims, money supply, average workweek, and stock prices – all point to a surprisingly robust US economy.

The market expects a 0.3% rise from prior month’s 0.2% drop. Some analysts believe, the leading indicator will come very robust in the 0.4 to 0.6 ranges on the upside.

Obviously, only one component will be weak – the building permits. All other component more than make up for it.

The quantitative models point much higher leading indicators as the housing slump ends in the next three to six months and building permits move higher.

The jobless claims are low. It is very low for any recession to start. Fortunately Government does have means to measure underemployment. That makes this component contribute heavily for the leading indicator. The new orders are actually booming. Money supply is at steady level. The Fed is pausing and is not drawing liquidity out of the system. The shortage in labor market is extending the average workweek. The stock market is in a genuine bull run for now.

The leading indicator says recession cannot start right now. However, stagflation is a concern.

The leading indicator will surprise on the upside - surprisingly robust US economy
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