Yes, there has been good economic news since the first of the year; stronger-than-expected employment figures and upticks in manufacturing and services data. Stock markets worldwide have responded. Most bond yields, even in Europe, are down. The Federal Reserve has made it clear that low interest rates will continue for three more years.
Will it continue? Housing seems to have hit a bottom and many households have reduced their debt. However, personal consumption continues to lag and Europe not only has its debt problems, but also many of its economies are in recession. Here in the U.S., we have a budget debacle ahead of us and tax cuts expiring at year-end. And, of course, we need to watch out for black swans that may come from places like Iran. Time will tell what the remainder of 2012 will bring.
In the meantime, it’s valuable to put our current recovery in perspective. The New York Times ran a series of great charts this weekend comparing this recovery to those started in 1991 and 2001. It’s easy to see that private enterprise is providing the bounce. Government spending and hiring is down.
Private investment, not including housing, is now 17% higher that it was at the end of the downturn. But government spending, adjusted for inflation, is nearly 3 percent smaller than it was when the economy hit bottom. Residential investment, which really boosted the two earlier recoveries, is now substantially unchanged. While the housing industry is no longer a drag, it is also not a contributor to the recovery.
For more information: click here http://www.nytimes.com/interactive/2012/02/10/business/economy/off-the-charts-private-sector-leads-recovery.html