The economic data has been starting to look a little better lately. The Commerce Department reported yesterday that personal consumption was up in February (if only in nominal terms) for a second month in a row. Durable goods are also up and even the housing market showed some signs of life last month. But, as the FT observed in an editorial, it's far from time to break out the party hats:
Judging a recession is like walking down uneven stairs in the dark. We
do not know how far down we must still go, only how far we have come.
The end of the recession will not be clear until we are some way past
it.
...But it is important not to read too much into such statistical
movements. The world has rough edges. Investors and employers overreact
and under-adjust. Markets do not clear instantly. There will be jolts
and judders. On their own, even in the best of times, month-on-month
variations tell us little.
And they are almost certainly right. All indications are that unemployment will continue to rise -- we'll see how those personal consumption numbers look when unemployment hits 10%. Free Exchange gives us yet more to worry about with a chilling post on what can only be described as a spectacular drop in global trade:
Argentina's exports were down 35.8%. Canada's were off 34.6%. Chile's by
41.3%. China's were down 17.5%. Ecuador's fell by 47%. Germany's by
28.7%. France's by 30.7%. India's by 15.9%. South Korea's by 32.8%.
Malaysia's by 35.3%, etc. I could go on. I wonder—have there been such
widespread and large drops in exports in any other modern period? The
best estimates I have seen for trade declines in the Depression were of
a drop of between 50% and 66% in world trade, but my guess is that the
big drops were concentrated among a smaller number of large players
back then. For this year, the WTO is forecasting a 9% drop—a lot bigger than the 2% drop the World Bank was forecasting back in December. Hold on to your hats, this thing is far from over.
