Tuesday, December 15, 2009

Economic Recovery: Good News / Bad News

Data released by the fed today suggest that the recovery, while slow, is starting to get some traction as industrial production rose 0.8 percent in November. The graphic above shows recent history. This is good news. However, data from New York state showed a strong contraction from recent trends in manufacturing. This is bad news.

Tempering that somewhat we much higher than expected producer price inflation. This can be written off as a energy cost created spike, but if it keeps up the fed will have to reconsider its loose monetary policy. That said, I don't think this by itself will cause that much concern in the Fed - the recovery is still much too weak. So this is not bad news yet, but could become bad if it keeps up.

All in all, more signs of an economy struggling to get real traction in the face of high unemployment and a still weak housing market. Graphics from the Reuters wire story.

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