There are no major economic reports scheduled today and so a day of the data vacuum awaits. That offers an opportunity to review the latest numbers in the dismal science in search of clues about where we've been in recent history and where we might be going.
First up is the Philly Fed's Aruoba-Diebold-Scotti business conditions index. Its steady climb for much of this year through late-August suggested that the economy was rebounding, albeit off of severely low levels of commercial activity. More recently, the index slumped, although the latest albeit incomplete data hints at the possibility of an uptick in the weeks (months?) ahead, as the chart below shows.
Source: Philadelphia Federal Reserve
That mildly positive view jibes with the overall outlook of 41 economic forecasters surveyed by the Philly Fed. The economy will expand in each of the next five quarters, this survey advises. For the current quarter, the economists surveyed predicted that real growth in GDP will rise 2.7% in Q4. If so, that's down from the 3.5% rise reported in the initial estimate of GDP for Q3. All of which implies a slowing in the rebound but well short of sinking.
But as we've suspected for some time, the labor market will remain conspicuously MIA in the rebound for a while longer, which probably explains why the overall pace of growth is expected to weaken somewhat. Quoting from the Philly Fed's survey report,
Unemployment is now seen at an annual average of 9.3 percent in 2009 and 10 percent in 2010, before falling to 9.2 percent in 2011 and 8.3 percent in 2012. These estimates mark upward revisions from the forecasters' previous projection. Likewise, growth in jobs looks weaker. The forecasters see nonfarm payroll employment falling at a rate of 160,000 jobs per month this quarter and 35,000 jobs per month next quarter. Both estimates mark downward revisions from the previous survey. The forecasters see jobs beginning to grow in the second quarter of 2010. Over the second half of the year, jobs will grow at a rate of 150,000 per month.
The mildly rising headwinds relative to past months are also evident in our proprietary U.S.
