A key barometer of the US economic outlook rose sharply in December, and many economists said it was more evidence of a quick end to the recession.
The Conference Board said Tuesday its index of leading economic indicators -- a basket of economic data that signal activity in the coming months -- rose 1.2 percent in December after climbing 0.8 percent in November and 0.1 percent in October.
The December increase was the steepest rise since February 1996.
"The strong signal from the indicators means that the recession could soon be over," Conference Board economist Ken Goldstein said in a statement.
"Three successive monthly increases, each larger than the one before, bring the level of the leading series above the pre-recession peak," Goldstein said.
The main drivers of growth were successive cuts in short-term interest rates, strong growth in money supply, falling energy prices and retail discounting, he said.
Two other indexes used by the organization showed the economy has remained weak until now.
The US economy contracted at a 1.3 percent annual rate in the third quarter, and most analysts expect a similar decline to show up in the fourth-quarter report.
Analysts said the latest report, along with other data, suggests a recovery in the works for the US economy, which has been in recession since March.
"December's rise also was noteworthy in that it put the index level above its pre-recession peak for the first time," said David Orr, chief economist at Wachovia Securities.
"This is another small sign indicating that the worst for the economy is behind us," added Anthony Karydakis of Bank One.
Dick Rippe of Prudential Securities said other data have also pointed upward for the economy. "We think the economy is finally turning up," he said, citing recent retail sales data as well as consumer sentiment.
"The industrial sector, which has been the weakest part of the economy, now looks to be turning, as well," he added.
"Our conclusions are that these are very encouraging signs for the first quarter. We are comfortable with an above-consensus estimate of 2.6 percent growth in the first quarter after a fourth-quarter decline. We think the whole year will be a decent year, too. We think profits will recover with the economy."
Sung Won-sohn, chief economist for Wells Fargo, also sees economic winds shifting.
"Economic growth will find support from the lagged effect of lower interest rates, fiscal stimulus already in the pipeline and lower oil prices," he said.
"The recovery won't be V-shaped; this has been one of the mildest recessions, and there is less room for a bounceback."
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
A senior US military official yesterday warned his Chinese counterpart against Beijing’s “dangerous” moves in the South China Sea during the first talks of their kind between the commanders. Washington and Beijing remain at odds on issues from trade to the status of Taiwan and China’s increasingly assertive approach in disputed maritime regions, but they have sought to re-establish regular military-to-military talks in a bid to prevent flashpoint disputes from spinning out of control. Samuel Paparo, commander of the US Indo-Pacific Command, and Wu Yanan (吳亞男), head of the People’s Liberation Army (PLA) Southern Theater Command, talked via videoconference. Paparo “underscored the importance
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
RSS