The Promised Land

The permabears will have to postpone their imminent recession yet again based on today's batch of US economic indicators, which suggests that our "rolling recession" is turning into a "rolling expansion."

The housing market seems to be recovering nicely from its recession, which started early last year. The manufacturing sector is showing signs of bottoming, while nondefense capital goods orders excluding aircraft rose to a record high in May. Consumer confidence is improving as job openings remain plentiful. Notwithstanding all these upbeat developments for the economy, regional surveys of prices paid and received remain disinflationary. It all supports our rolling-expansion-with-disinflation (REWD) scenario, which would confirm our rolling-recession-with-disinflation (RRWD) scenario since early last year. The stock and bond markets seem to share our optimism about the fundamentals.