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THE PROS AND CONS OF THE RECENT ECONOMIC DEVELOPMENTS

There have been many important economic developments in recent months – many good and fewer bad.  In a recent research note Northern Trust nicely summarized the positive and negative developments in the last few months:

Positive developments:

  • Initial jobless claims show a distinct downward trend
  • Payroll employment continues to advance, albeit slower
  • Retails sales show widespread gains in November and the underlying trend is firming up
  • Net credit has risen in November, the third increase in the last five months
  • Higher Treasury market yields are a vote of confidence about the economy
  • Factory production has risen at a noticeable pace. Regional factory surveys in December were upbeat
  • Housing starts and permits for new single-family homes rose in November.
  • October Pending Home Sales Index posted a strong increase
  • The positive trend of the Index of Leading Economic Indicators supports forecasts of continued economic growth
  • The University of Michigan Consumer Sentiment Index rose in the early-December survey.


Negative developments:

  • The 9.8% unemployment rate is a major source of concern for policymakers
  • Sales of homes, both existing and new, declined in October and the elevated level of inventories combined with pressures from home foreclosures is holding down home prices
  • Auto sales held steady in November, after increasing in three out of the four months ended October

Source: Northern Trust

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