OUR VIEW: Optimism just might be justified
Friday, February 17, 2012 7:00 AM
One can certainly have doubts about the reported improvement in the national unemployment rate. Everyone knows that the government’s official number is significantly lower than the “real” rate, which includes those Americans who are working part time or have given up the search altogether.
It’s a bit of a farce, basing our hope or despair on changes of a tenth of a percent in a number that isn’t accurate in the first place.
But there are plenty of other numbers that support optimism about the economy.
The Institute of Supply Management (ISM), for example, provided a lot of good news in its January report. Its PMI (originally known as the Purchasing Managers Index) reading came in at 54.1, one point above the February number. “A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy,” according to the report.
The result “indicates growth for the 32nd consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 30th consecutive month,” the organization said.
Furthermore, the new orders index increased, “reflecting the 33rd consecutive month of growth” in that important category.
This is encouraging stuff. The ISM claims that, based on past results, the PMI figure predicts “a 3.9 percent increase in real gross domestic product on an annualized basis.”
The housing sector is crucial, of course, and that’s not going to turn on a dime. However, National Association of Home Builders Chief Economist David Crowe recently predicted that U.S. sales of new homes and single-family home construction will improve this year compared to 2011 – when they hit record lows.
Everyone hopes to buy into stocks just before they soar, or open a business just as a craze for the resulting product sweeps the nation.
With optimism, though, it doesn’t hurt to get in a little too soon. This might be a good time.
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