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The Economy: Some Bright Spots |
It's been tough out there and may even get worse, but we are starting to see some bright spots.
Manufacturing and business activity in parts of the United States improved in November, keeping the economy on track for recovery. In addition, the Federal Reserve Bank of Chicago said that the Midwest manufacturing index, which covers five Midwestern states, rose in October to its highest level since February, although it was still down as compared to a year ago.
The hottest economic news came from the Labor Department. The unemployment number that was posted last week, though still down 11,000, was the best we have seen in a very long time. The overall unemployment rate dropped to 10.0% in November from 10.2% the previous month. Losses for September and October were smaller than previously reported and the average workweek showed a gain in hours for the first time in several months.
The job losses in the current recession have been significantly greater than the recent previous recessions (see chart below), but it appears we are hitting bottom. Could we be poised for an increase?
 Another key positive fact is that households are reducing the debt. The chart below shows that the Household Debt to Disposable Personal Income Ratio has dropped considerably in the last twelve months. This is key because consumer spending, which drives 70% of our gross domestic product, has been constrained while households get their debts in order. Once that is brought in order, we can expect more consumer spending. 
Hopefully these bright spots provide optimism for the future.
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