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Economy in Brief

OECD Sounds the All-Clear - Almost
by Robert Brusca October 9, 2009

OECD gets upbeat - The OECD is getting much more upbeat in its assessment of the world's leading economies. It now contends that they may now be recovering or growing after hitting the bottom of their respective economic recessions in 2009. Recovery is at hand, according to leading indicators released Friday by the Organization for Economic Cooperation and Development that is the newest development.

Good and somewhat surprising news - The OECD trend-restored leading indicators continue to point to a recovery for most developed economies. France and Italy - that have both posted three or more months of an index level above the key 100 mark - are now, in the OECD lexicon, experiencing "potential expansion." The Composite Leading Indicator for the OECD's 30 members rose for the sixth straight month in August to reach 99.2 from 97.7 in July that is very close to the 100 line that it must cross to be truly on the road to an optimistic result. "OECD composite leading indicators for August 2009 continue to point to a recovery in all major economies with CLIs for France and Italy pointing to expansion," the OECD said.

Who’d a’ thunk it? Italy and France lead - For now that is certainly a breath of fresh air. Various national sources have been showing the same sorts of results. The surprise is that Italy joins France as one of the recovery leaders. Italy’s consumer confidence measures have been moving up briskly but Italy is still having some difficulties and business confidence has recently slipped. In contest France continues to pump out good figures as public spending there has been effective in stopping the bleeding and turning things around.

...and the US is - Over 12-months the US is still seeing its OECD CLI drop but over three-months the US index is rising nearly as fast as the indicators for the e-Zone. Over six months the US is still doing well but it is several steps behind the e-Zone reading and others. The six month horizon is the assessment favored by the OECD.

A good report card for the global economy - For now it’s a good report card on a global economy that is making progress. The rise up from this recession’s relatively deep pit is at a strongly sloped gradient compared to past cycles. Despite all the pessimism about growth and growth prospects the OECD’s CLI’s look very upbeat indeed.

OECD Trend-restored leading Indicators
Growth progression SAAR
  3-Mos 6-Mos 12-Mos Yr-Ago
OECD 17.4% 12.9% -1.3% -5.2%
OECD 7 18.7% 13.2% -2.5% -5.7%
OECD Euro Area 19.7% 16.2% 1.8% -6.6%
OECD Japan 12.5% 6.8% -8.4% -4.1%
OECD US 19.3% 12.8% -3.5% -5.4%
Six month readings at 6-Mo Intervals:
  Recent six 6-Mos Ago 12-Mos Ago 18-Mos Ago
OECD 12.9% -13.8% -8.3% -2.1%
OECD 7 13.2% -15.9% -8.4% -3.0%
OECD Euro Area 16.2% -10.8% -10.5% -2.5%
OECD Japan 6.8% -21.5% -7.1% -0.9%
OECD US 12.8% -17.4% -7.2% -3.6%
Slowdowns indicated by BOLD RED
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