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Overwhelming evidence has been gathering recently that a widespread economic recovery is underway in both the U.S. and around the world. Here are ten major economic factors that indicate that the U.S. economy has emerged from the Great Recession and entered a period of solid and sustained economic expansion:
1. Railroad freight traffic is increasing "“ According to the Association of American Railroads, "Freight traffic on U.S. railroads is continuing to show solid signs of recovery with carload freight volume hitting its highest level since November 2008 during the week ended March 27, 2010. U.S. railroads originated 293,114 carloads during the week, up 16.5 percent from the comparable week in 2009, and the highest weekly carload total since the week of November 29, 2008."
2. Restaurant activity is improving "“ "Driven by a solid improvement in restaurant operators’ outlook, the National Restaurant Association’s comprehensive index of restaurant activity rose to its highest level in 27 months in February. The association’s Restaurant Performance Index, a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry, stood at 99.0 in February, up 0.7 percent from January and its strongest level since November 2007."
3. The millionaires are back "“ The number of U.S. households with a net worth of $1 million or more increased by 16 percent in 2009 to 7.8 million, up from 6.7 million in 2008, according to the Spectrem Group.
4. Jobs, jobs, and more jobs "“ a) The American Staffing Association reported recently that temporary employment in March 2010 was 15 percent higher than the same month last year, b) the Bureau of Labor Statistics employment report last week showed significant improvements in March for both temporary jobs and manufacturing overtime hours, which are both leading economic indicators of broader employment gains (more information here), c) the Monster Employment Index for March showed a 6 percent increase in online hiring, and, most importantly, d) private-sector employment increased by 1.1 million jobs in the first three months of 2010 (this has largely gone unreported).
5. The manufacturing sector is showing V-shaped signs of growth "“ a) The ISM Manufacturing Index reached a six-year high in March, b) March auto sales increased 30 percent from the February 2009 low, c) industrial production increased in February by 1.7 percent, the largest annual increase since January 2008, and d) new orders for manufactured durable goods registered the highest annual increase in March since September 2006.
6. International air travel has rebounded "“ February international air traffic increased significantly compared to the previous year, according to the International Air Transport Association. Compared to February 2009, international passenger traffic was up this year by 9.5 percent and cargo demand by 26.5 percent.
7. Strong global shipping demand "“ The global economic boom is gaining so much momentum that a new problem has arisen recently"”a shortage of container ships (see recent news stories here, here, here, and here). Here's one report of the situation: "Packed containers are piling up at Asian ports as strong demand from the U.S. and Europe causes a lack of supply of ships. Shipping companies had purposefully idled capacity during the economic downturn, then started to bring it back recently. Yet they didn’t do it fast enough to keep up with the robust pick-up in demand from the West.”
8. A global stock market rally is under way "“ The MSCI World Stock Market Index has reached new 18-month highs almost every day for the last two weeks, the MSCI Emerging Markets Index is at the highest level since the summer of 2008, and the U.S. market (S&P 500) has increased 42 percent over the last year and is at the highest level since September 2008.
9. Real estate recoveries in some of the hardest-hit markets - Even in many of the markets that were hit hardest by real estate foreclosures, strong recoveries are under way. For example, Florida home sales have increased year-to-year for the past 18 months, Phoenix February 2010 home sales were the highest for that month in four years, and Las Vegas homes sales increased year-over-year in February for the 18th consecutive month and recorded the highest February sales level since 2006.
10. Market indicators of risk are back to pre-recession levels "“ All three of the major market indicators of stock market, financial, and credit risk"”the CBOE Stock Market Volatility Index (VIX), the Bloomberg U.S. Financial Conditions Index (BFCIUS), and the TED Spread (TEDSP)"”have returned to their pre-recession 2007 levels.
The consensus of most economists is that the Great Recession ended sometime around June 2009. In that case, we are now nine months into an economic recovery, and the economic data and reports summarized here all point to a recovery that is real and sustainable. While this rebound may not be quite as strong as other post-recession expansions of the past by some measures, there is at least now unmistakable evidence that the recession ended last year, the U.S. and world economies and financial markets have recovered and are gaining momentum almost daily, and there are no signs on the economic horizon of a double-dip recession. We've come a long way in the last year.
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