Do you think that the recession is coming to a close?

Question:

There are plenty of economic indicators pointing to a big “yes” but do YOU think the recession is coming to an end?

Answer:

I believe that it might be. Like the question poses, there are several economic indicators that are pointing to the recession ending, but there is a little doubt left. Of course after such a brief recession, there is some doubt whether or not the recession is coming to a close. However, most people are a bit more optimistic and are really looking forward to the recession ending.

Just like at a funeral, at the beginning of the recession people were mourning. The clothes told the story: people would be wearing black and other drab colors while going to work. It was like that for the past year, ever since the fall of Lehman Brothers. Now, that things are finally starting to perk up a bit, those who have jobs are starting to wear colorful clothes again.

Men’s ties are being seen as an economic indicator. Because men’s ties are a cheap way to change a wardrobe, it is typically the first thing that outwardly indicates that, not only are these guys going out and buying clothes, but they are buying bight colors again.

This is just one of the many economic indicators that have been noted in the past few months. Another, and funnier in my opinion, indicator was the underwear index. Men were going out and purchasing more underwear and that was supposedly an indicator that the economy was going to perk up a bit more.

Another indicator is piles of garbage outside restaurants. The piles indicate that people are eating out again, which is one of the signs that the economy (really) is picking up again. Anytime people have disposable income to go to a restaurant and eat it is a good sign for not only the restaurant but the overall economy as well.

While a lot of data was used to compile this information, of course, some of it could be misread messages. Men could be wearing bright colored ties because it’s warm outside and they want to reflect the weather. Restaurants are using promotions to bring people in the doors more now than ever. Men need underwear and if they haven’t bought any new undies since the fall of Lehman Brothers, then perhaps it is time for them to get some new underpants.

I would like for the recession to see an end as much as everyone else, but are we grasping at straws by putting money into studies like this one?

Source

What you can learn from this booklet

1. Common knowledge about the trading on Forex

1.1. Forex as a part of the global financial market – A brief history about the rise and development of Forex. The factors that caused Foreign Exchange Volume Growth on Forex (Exchange Rate Volatility, Business Internationalization, Increasing of Traders’ Sophistication, Developments in Telecommunications, Computer and Programming Development). The role of the U.S. Federal Reserve System and central banks of other G-7 countries on Forex.

1.2. Risks by the trading on Forex

1.3. Forex sectors – Spot Market, Forward Market, Futures Market, Currency Options

2. Major currencies and trade systems

2.1. Major currencies – The U.S. Dollar, The Euro, The Japanese Yen, The British Pound, The Swiss Franc

2.2. Trade systems on Forex – Trading with brokers, Direct dealing

3. Fundamental analysis by trading on Forex

3.1 Theories of exchange rate determination – Purchasing Power Parity, Theory of Elasticities, Modern monetary theories on exchange rate volatility

3.2. Indicators for the fundamental analysis – Economic indicators, The Gross National Product, The Gross Domestic Product, Consumption Spending, Investment Spending, Government Spending, Net Trading, Industrial sector indicators, Industrial Production, Capacity Utilization, Factory Orders, Durable Goods Orders, Business Inventories, Construction Data, Inflation Indicators, Producer Price Index, Consumer Price Index, Gross National Product Implicit Deflator, Gross Domestic Product Implicit Deflator, Commodity Research Bureau’s Futures Index, The Journal of Commerce Industrial Price, Balance of Payments, Merchandise Trade Balance, The U.S. – Japan Merchandise Trade Balance, Employment Indicators, Employment Cost Index, Consumer Spending, Indicators, Retail Sales, Consumer Sentiment, Auto Sales, Leading Indicators, Personal Income

3.3. Forex dependence on financial and sociopolitical factors – The Role of Financial Factors, Political Crises Influence

4. Technical analysis

4.1. The destination and fundamentals of technical analysis – Theory of Dow, Percent measures of prices reverse

4.2. Charts for the technical analysis – Kinds of prices and time units, Kinds of charts, Line Chart, Bar Chart, Candlestick Chart

4.3. Trends, Support and Resistance lines – Trend Line and Trade Channel, Lines of Support and Resistance

4.4. Trend Reversal patterns – Head-and-Shoulders, Inverted Head-and-Shoulders, Double Top, Double Bottom , Triple Top, Triple Bottom , Round Top, Round Bottom, Saucer, Inverted Saucer

4.5. Trend Continuation patterns – Flags, Pennants, Triangles, Wedges, Rectangles

4.6. Gaps – Common Gaps, Breakaway Gaps, Runaway Gaps, Exhaustion Gaps

4.7. Mathematical trading methods (Technical indicators) – Moving Averages, Envelops, Ballinger Bands, Average True Range, Median Price, Oscillators, Commodity Channel Index, Directional Movement Index, Stochastics, Moving Average Convergence-Divergence (MACD), Momentum, The Relative Strength Index (RSI), Rate of Change (ROC), Larry Williams’s %R, Indicators combination, Ichimoku Indicator

5. Fibonacci constants and Elliott wave theory

5.1. Fibonacci constants

5.2. Elliott wave theory

To download this e-book, or any of our current e-books, please visit the ebook page where you may choose the e-book(s) you wish to download. *Download an e-book by clicking on it’s title.*

The consumer confidence level has increased at a fairly steady rate for a couple of months, but the numbers that came out today were much higher than anticipated as far as the increase goes. The Conference Board’s Consumer Confidence Index has a 14.1 point surge; increasing to 54.9 for the month of April. Economists were expecting a Confidence Index of 42.3. This comes just months after February’s lowest level ever of 25.3.

The consumer confidence interval is determined by a mail survey of a sample of 5,000 households in the United States from May 1st to May 19th.

The confidence interval increase means that many people are feeling more optimistic about the future of the economy including unemployment numbers. However, it is likely that the unemployment rate will hit just above 9% in the next month or two. It is nice to see that people think that things are getting better even when there are is a lot of grim news coming from economic indicators.

Today when the consumer confidence index rose, so did stocks. The Dow Industrial Average rose over 200 points, or 2.4 percent today after the news about consumer confidence came out.

The consumer confidence index began falling in October, when it fell to 38.8. At the time, it was the lowest number that had ever been seen since the Conference Board started tracking the confidence index.

This, by no means, means that people will begin throwing their money away on expensive clothing or other things that have been deemed “unnecessary” in the past few months. What was once just something that may have been a splurge is now seen as frivolous and is possibly frowned upon in some social circles.

Another reason that people aren’t spending their money on those things is that there aren’t as many jobs going around anymore and that the actual wealth going around is much less than it was even a year ago. With people having less and less money, I am actually pretty surprised that the consumer confidence index has risen. Perhaps people are getting so tired of the current economy that they are being overly optimistic on the surveys that are being sent out.

I mean, even this news is coming out in a positive light following the news last week that housing prices has fallen in the sharpest decline in the first quarter of the year.

In my optimistic point of view, perhaps this is the beginning of some sort of economic increase. If you follow the stock market, commodities market, and other indicators, then perhaps things are starting to pick up.

There will be several recovery-based articles written here in the next few months. That way all the readers here can either learn more about what will be written here by this author in the next few months, what to look for as we recover, or receive a nice, basic refresher course in macroeconomics. Unfortunately, yesterday was not a day worth analyzing due to the full closure of the entire United States economy for Memorial Day. We will not have the closing report from Wall Street or anything until 4:00pm eastern time today.

Everybody knows that a recession is a general slowing of economic activity over a sustained period of time or portion of a business cycle, mostly if Gross Domestic Product (GDP) is down for two quarters. During a recession, many economic indicators will vary in the way they react, but all will fall relatively. This includes production as measured by Gross Domestic Product (GDP), employment (called joblessness during harsh economic times), investment spending, capacity utilization, household incomes and business profits. This is simply due to the fact that money begins circulating slower and there is less to go around. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation, all hoping cash flow will spur. A depression is really only characterized as a recession that lasts longer than a year or two.

Now for the things you may or may not be as privy to. As briefly mentioned in a previous article, the indicators to the longevity of a recession and the possibility of a recovery are leading, lagging, and coincident. Leading indicators are the economic indicators that actually send us spiraling into a recession or jacking back up into prosperity. Lagging indicators react slowly to economic changes, and are therefore worthless as far as prediction goes. They really are best at assessing the current status of a recession, for instance, jobless numbers that are still on an incline even though the worst is over. Coincident indicators are also used to assess current economic conditions but are understood to be simultaneous or sectional and not always related to the entire economy as a whole.

Leading indicators (as found in the Index of Leading Indicators) are:

1. Average number of initial applications for unemployment insurance
2. Number of manufacturers’ new orders for consumer goods and materials
3. Speed of delivery of new merchandise to vendors from suppliers
4. Amount of new orders for capital goods unrelated to defense
5. Amount of new building permits for residential buildings
6. The S&P 500 stock index
7. Inflation-adjusted money supply
8. Spread between long and short interest rates (the yield curve)
9. Consumer sentiment
10. Average weekly hours worked by manufacturing workers

Lagging Indicators (as found in the Index of Lagging Indicators) are:
1. The average duration of unemployment (inverted)
2. The value of outstanding commercial and industrial loans
3. The change in the Consumer Price Index for services
4. The change in labor cost per unit of output
5. The ratio of manufacturing and trade inventories to sales
6. The ratio of consumer credit outstanding to personal income
7. The average prime rate charged by banks

Coincident indicators (as found in the Index of Coincident Economic Indicators) are:
1. Number of employees on nonagricultural payrolls.
2. Personal income less transfer payments.
3. Industrial production.
4. Manufacturing and trade sales.

As the leading indicators begin to show favor, we can start planning on a good recovery. Now remember, a full, solid recovery requires total solidarity under the foundation we’re currently rebuilding. That means a slow, steady recovery with wavering totals and indexes is good. It means that we are building only on the confidence we currently have instead of trying to jumpstart the economy onto a foundation that just is not ready. This author will be following the growth and decline of the economy as it comes and goes, referring to this article to show where we are in the economy, giving the best investment advice from experts all over the country and from myself, relating it to your pockets and your news.

The United States is entering a much needed economic recovery. The worst of the recession is over. (Keep an eye out for articles this week detailing why that assertion is correct.) Unfortunately, the economic mood deteriorated last week as investors began to question whether the recent rally was premature. They were also warned about British government debt that raised concerns about how much money the U.S. government owes, mixed with the longstanding concern that we are borrowing entirely too much money from China and other countries.

As stocks rallied, starting in early March, investors were able to find signs of hope in reports that showed a still struggling economy. As the rally is slowing down, investors are rather uneasy going into this trading week, which will see through to two reports on April home sales and the latest assessment of consumer confidence. Combine that with a potential June 1 Chapter 11 bankruptcy filing by General Motors, and you have investors all over the country ‘sitting on pins and needles’.

What is scaring investors right now is the amount of jobless figures that are still going up. What investors fail to realize is that there are two kinds of economic indicators: leading and lagging. Leading indicators are economic actions that foretell an upward moving economy. Lagging indicators are economic actions that react slowly to economic changes, therefore leaving no predictive value. Jobless figures are a lagging indicator due to the fact that jobs are not created by most companies until capital is obtained or accounted for that support them.

Jobless figures are not going to go up until all the leading indicators, which are very strong right now, manifest themselves in the way of solid economic recovery. Economic recovery can and will not happen quickly because a strong recovery happens slowly as a solid foundation is formed under each step. The economy will waver a little with each rally followed by a short decline as that slow recovery has solidarity formed under it. You are also guaranteed to see a few more struggling businesses, especially in the financial market, hit Chapter 7 bankruptcy, liquidate, and be swallowed up by stronger businesses. When that occurs, there is nowhere to go but up because there are fewer weak businesses to slow down and weaken the recovery.

Major leading indicators squeezed out a gain last week. The Dow Jones industrial average rose 0.1 percent, while the Standard & Poor’s 500 index ended the week up 0.47 percent. The first test of ability to build on these gains comes Tuesday, when the Conference Board releases its May consumer confidence index which should provide some insight into consumers’ willingness to spend. Ron Weiner, president and chief executive of RDM Financial in Westport, Conn., says that while any positive news about consumers would be welcome, the market is likely to have just a short-term upward movement. “We want the consumer to be out there, we want them to spend,” Weiner said. “For the most part, however, we don’t see consumers going to pull us out of this economy because they are also paying down debt at the same time.” Investors are also concerned about retail due to the Commerce Department’s disappointing retail sales report for April, which took the market by surprise May 13 and sent stocks plunging.

Analysts say more stabilization in the housing industry is needed for a recovery to occur. A government report is also due this week on U.S. home prices during the first quarter of 2009. The housing data could be a big force in shaping investors’ attitudes. A housing recovery is crucial to helping boost consumer confidence and to allow banks to put aside some worries about eroding asset values.