Rising Philadelphia Fed data for April signal start of cyclical manufacturing upturn within a large secular deflationary downturn
Peter Oberois
Apr. 19, 2007

The Philadelphia Fed data is encouraging. The improved April data over March shows the start of manufacturing recovery. The stock market however is overbought and extremely over priced. What is quality of this manufacturing recovery?

The answer depends on the larger picture. The manufacturing recession started in 2006 initially triggered by the housing slump. The housing recession has at least ten more years to unwind. The manufacturing recession started thirty years back when Japanese carmakers made in roads and toppled the big three in early eighties.

Overall the emerging economies are experiencing the last leg of the manufacturing bubble that started in 2001 after the dot com bubble burst in year 2000. The current manufacturing recovery is temporary and short lived. It is part of a nine-month cycle within a secular one hundred eighty year big cycle. After some more ‘breathing data’, the manufacturing GDP will register clear negative growth. The effect will spill over into Asia and Europe, which will eventually register even larger negative growth.

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After some more ‘breathing data’, the manufacturing GDP will register clear negative growth. The effect will spill over into Asia and Europe, which will eventually register even larger negative growth.
READ MORE>>

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