Track the Stimulus

Stimulus Metrics

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Figuring out whether the large amount of resources that the US government is throwing to get us out of our economic malaise will take time.  We should however be able to see signs of improvement on the different metrics that are important for the recovery to take shape.  We have selected a few of them, that will help guide us to whether we are on the right track to get the ailing patient to good health, or the patient is not responding to the treatment.

• Consumer Health
  
• Employment Metrics
• Personal Income and Consumption
• Savings
  
• Housing Statistics
  
• Sales and inventories
  
• Prices
• Foreclosures
• Mortgage Rates
  
• Industry Health Statistics
  
• GDP growth
• Manufacturing sector condition (ISM survey)
• Exports
• Stock Market Performance (Dow, S&P 500, Nasdaq)
• Financial Sector Health
  
• Loans (monthly reports by 20 largest banks)
  
• Interest spreads (Fed, ted-spreads, libor)

The consumer is the most important factor that will determine whether the country is on the path of recovery - employment may be a lagging indicator, but it is hard to see how a sustainable recovery can be had without the job market starting to see some signs of life.  It may be that a new "normal" for the unemployment rate will be at levels much higher than in the last decade, but until we reach a stable level, consumption will not return in a sustained form, and industry will continue suffering.

Industry needs to stop contracting for the labor market to stop shedding jobs and for business and consumer spending to make a comeback.

The financial sector is key to the recovery; without liquidity companies can not expand and individuals are limited to the amount of spending they can have access to.  Loan activity will tell us whether the banking system is providing the fuel needed for a recovery, and interest spreads will provide an indication on the level of affordability and distress of the system.