More evidence that the economy might be slowing faster than many presume. In addition to last week’s very weak ECRI data the latest data from UCLA’s Ceridian Index shows that the economic recovery is weaker than suspected:
“With the release of April’s figures, the Ceridian-UCLA Pulse of Commerce Index™ (PCI) by UCLA Anderson School of Management is showing flat, overall performance during the first four months of 2010. The PCI in April fell 0.3 percent, suggesting the economic recovery may have stalled, although an uptick in consumer spending could continue to drive a slow but steady recovery. Year-over-year growth of 6.5 percent in the PCI marks the fifth straight month of steady increase at “better than normal” levels. However, year-over-year growth of 10 to 15 percent in the PCI is required to drive down the unemployment rate.”
“While the economy continues to climb year-over-year, the PCI indicates that expectations in the market for a robust recovery may be too optimistic. The PCI closely tracks the Federal Reserve’s monthly Industrial Production index, and with each PCI release comes a lowering of expectations for Industrial Production growth. The PCI now indicates Industrial Production to grow by 0.4 percent in April when the Federal Reserve releases its report on May 14. Last month, the PCI suggested an April growth rate of 0.6 percent, and in March, PCI anticipated an April increase of 0.85 percent.
“The latest PCI numbers are disappointing and cast considerable doubt on the strength of the recovery and the strength of GDP numbers for 2010,” said Ed Leamer, the PCI’s chief economist. “The next two months will tell if the first quarter’s healthy consumer spending will help lift the PCI and propel stronger GDP growth for the year.”