Positive Economic News

http://economix.blogs.nytimes.com/2010/12/14/three-good-economic-reports/?emc=eta1

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"Thinking is one thing no one has ever been able to tax." (Charles Kettering)

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Something positive is happening out there with the economy. Whether it's the Fed, the tax break "deal," or capital spending starting to leak out into markets, the "Business Roundtable" study released yesterday implies economic improvement now.

The Business Roundtable is made up of the CEOs of the largest Top 500 companies and has, over the past 50 years been at it's most powerful when advocating that the U.S. government act on issues of import.

The Roundtable released their current CEO survey yesterday with one of its most impressive findings indicating that 45% of those CEOs plan to hire within the next six months. That's the highest percentage from that group in 8 years.

60% of those CEOs plan to bump up capital spending and 80% expect sales growth.

This is the same group that told Fareed Zakaria at the beginning of 2010 that they were "holding back" capital spending because they were unsure of the regulatory and tax environment.

In addition, yesterday brought 3 other positive reports:

(1) Retail sales rose for the fifth consecutive month in November (with the October and September figures revised up sharply);
(2) The National Federation of Independent Business's small business optimism index also rose for the fourth consecutive month (and this is where most of the hiring takes place);
(3) The producer price index also increased more than expected, lessening concerns about "deflation."

Macroeconomic Advisers yesterday raised its forecast for gross domestic product growth in the fourth quarter to an annual rate of 3%. Credit Suisse raised it's fourth quarter GDP growth forecast a full percent from 2.2% to 3.2%. JP Morgan raised its forecast a full percentage point as well from 2.5% to 3.5%. A full percentage point for the quarter that we're in is significant.

According to one Deutsche Bank economist, employers have stretched the workweek for existing workers to its limit and now must add additional employees. Assuming productivity slows to levels consistent with the last four "recoveries," the U.S. economy could create anywhere from 2.5 to 3.9 million jobs in 2011. Assuming the standard quantitative axiom that it takes 125,000 jobs per month just to account for new entrants into the workforce from population growth (or, 1.5 million total for any new year), this data is still "additive" to the economy. To put that into perspective, the economy added (roughly) 950,000 jobs in 2010.

If one takes the high end of the job creation numbers above, the unemployment rate would be pushed down to 7.3% (from the almost 10% level it sits at now).

Coming out of a recession, it doesn't get any better than this. Let's hope that this positive news continues throughout the holiday season and jump starts 2011.