'This Recovery Is Really Taking Hold'

×
Philadelphia skylineAn often little-noticed survey by the Federal Reserve in the Philadelphia region has given convincing evidence that America's manufacturing sector is strongly bouncing back from the recession. Not only are firms reporting booming activity, strong shipments of goods and more unfilled orders, but jobs are being created at the highest rate in 38 years.

The Philly Fed's survey, called the Business Outlook Survey of manufacturing activity, said its diffusion index, the broadest measure of manufacturing activity in the region, had increased from 19.3 in January to 35.9 in February. That's the highest reading since January 2004, almost three years before the start of the recession.

David Resler, chief economist for Nomura Securities International, says the report "represents another -- indeed arguably the most -- encouraging indicator from the manufacturing sector since well before the Great Recession began three years ago."

"Considerably Healthier"


While cautioning that some of the uptick could represent business that was lost during the winter storms in January coming back in February, Resler says the fact that employment was also up sharply indicates "that the economy has got some pretty decent momentum developing, and things are considerably healthier than they were a year ago."

Joel Naroff, an economist based in the Pennsylvania region, says when he speaks to local businesses, it soon becomes clear that what's happening is a broadening of the manufacturing base.

"The implication of this survey is that this recovery is really taking hold. We're ready to shift into the next level, where growth begins to accelerate," Naroff says. "I think this is a precursor for broader-based employment, and then, a few months after that we're likely to see consumer confidence go up enough that we get good demand."

Fewer Layoffs, More Hiring

Both Naroff and Resler believe the Philadelphia numbers reflect a national trend that will become evident when the Institute of Supply Management reports its national manufacturing survey data at the beginning of next month.

"There is more underlying demand in a wider variety of areas than we understand right now," Naroff says. "This is a truly broad-based recovery going on."

The employment index increased from 17.6 to 23.6, a rise of six points and the highest level the index has reached since May 1973. The number of firms indicating they were laying off workers declined, and the number of firms that were hiring workers increased modestly.

Those numbers were consistent with the jobless claims numbers reported Thursday, which showed a rise in claims from 385,000 to 410,000. Resler says the increase was likely due to a bounceback from the bad winter storms.

"The takeaway for me from the jobless claims numbers is that we are still in a gently falling trend of claims reflecting a moderately improving job market," says Resler.

Some 45.5% of respondents to the Philly Fed survey said business activity improved over the month, indicating that the recovery wasn't concentrated in any particular industry. Philadelphia isn't known for car manufacturing, for example, so the recent climb in auto sales doesn't account for the general increase in sentiment.

Deflation Defeated

The rising economic sentiment could have far-reaching implications for U.S. monetary policy. Last year, the Fed began buying $600 billion in government bonds in hopes of keeping falling inflation from becoming deflation, a deadly downward price spiral, and preventing the economy from entering a double-dip recession.

Both goals seem to have been achieved. Consumer prices went up 0.4% in January, or 0.2% if food and energy are excluded. That indicates deflation is no longer a significant worry.

Most economists now estimate the economy will grow by 3% to 3.5% this year, which is much stronger than was feared at the middle of last year when the Fed started talking about buying bonds in a program known as quantitative easing. Critics have maintained that Fed Chairman Ben Bernanke has stoked worldwide inflation, but raising inflation was part of Bernanke's goal and he says he can contain it.

Now that the economy appears to be gaining steam of its own, the time to shift from stoking inflation to containing it may be sooner than many people now expect.

Increase your money and finance knowledge from home

Asset Allocation

Learn the most important step in structuring an investment portfolio.

View Course »

Investing in Real Estate

Learn the basics of investing in real estate.

View Course »

Add a Comment

*0 / 3000 Character Maximum

655 Comments

Filter by:
Dereck

Major Fraud Alert


The entire Federal Banking System under FirstGov has been "Consumed" and "Levied" by way of a Maryland State Circuit/District Court Ruled “Appropriation and Garnishment” of all Future Earnings prior to and after 2004 against Bank Of America by way of the F.D.I.C. Regulations Prohibiting failing Banks from Merging with other failing Banks between the Dates of 08/04/08 and 10/09/09.

Bank of America violated the 21st Century Act: Final Amendments to Regulation CC Section: http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040726/attachment.pdf

seeking reimbursement of Credit, Loan, and Finance Balances as a "Bank Entity" and not a "Nonbank Consumer" as specified on Pages 85 and 86.

The person they sued through a LLC. Debt Collection Company and Law Firm was the "World Fortune Owner" who "Counterclaimed" and won.

Now all Contracts of any Corporations (Including Employment) under the "Controlling Interest" of any Investment Bank Worldwide are "Null and Void", and are also under the stipulated Rules and Regulations of an "Closely-held S Corporation rendering all Employed under Legal Actions against “Domination”, and also means that "No Corporation can hold Shares" officially making every Stock Exchange on the Planet a "Ponzi Scheme" by default.

Businesses owned by the States (Public Corporations) are being sold Stock Shares by Corporations also under the Federal Banking System in this Worldwide "Ponzi Scheme". The World Fortune Company Merrick Inc. Sweden is dissolving Millions and Billions of Dollars from "All Levels of Government"in the U.S. of Financing based upon Years of "negligent inaction" involving this case.

The Federal Government has already been forced to discontinue supplying the Financing States use to pay their debts, Persons in Government Offices may want to begin to take their jobs more seriously, these are different times from 10 Years ago and you will not be accepted civil servants here just because you say you are here to do the right thing.

May 29 2011 at 1:15 AM Report abuse rate up rate down Reply
rholtnumismatic

STOP REPORTING ALL THE LIES! AMERICAN PEOPLE ARE TO SMART TO TURN A BLIND EYE!
WE SENT A MESSAGE IN THE LAST ELECTION, WE WILL SEND AN EVEN STRONGER MESSAGE IN 2012. "YES WE CAN" STOP ILLEGAL IMMIGRATION, REPEAL OBAMACARE, BRING HOME OUR
TROOPS, THEY NEED TO HELP US IN OUR HOMELAND. PUT BACK THE MONEY IN THE LOCKBOX
FOR SOCIAL SECURITY AND MEDICARE. GET OFF THE SOCIALISTIC AGENDA AND GIVE US BACK
THE DEMOCRATIC PRINCIPLES THIS COUNTRY WAS FOUNDED ON! THIS COUNTRY USED TO SET AN EXAMPLE.

February 21 2011 at 9:14 AM Report abuse +2 rate up rate down Reply
scottee

The Fed needs to be audited and ended but first they need to put the dollar back on the gold standard to stop this economic free for all! to stop the printing and dilution of our dollar.

February 21 2011 at 8:06 AM Report abuse +3 rate up rate down Reply
marine1942

A survey bought by the Fed. What did you think it would say ?

February 21 2011 at 7:55 AM Report abuse +3 rate up rate down Reply
darinw40@mail.com

Start stockpiling food and weapons...this article is a bunch of bunk...the collapse is right around the corner

February 21 2011 at 6:30 AM Report abuse +3 rate up rate down Reply
1 reply to darinw40@mail.com's comment
pgile

wait, was that a piece of the sky i saw falling? did your dad have a fallout shelter in the back yard? maybe you can still dig it up and hide there.

February 21 2011 at 3:59 PM Report abuse rate up rate down Reply
jpc1108

This economic recovery(?) will be short lived, with EARS at the helm. He has shut down all oil exploration/production in the Gulf of Mexico and other ares of the U.S. Gas will rise to $3.50 plus which will kill this economy. His vision for the United States is a train wreck.

February 20 2011 at 8:34 AM Report abuse +2 rate up rate down Reply
1 reply to jpc1108's comment
weedpatchxlies

You are right on target!

February 20 2011 at 1:38 PM Report abuse +3 rate up rate down Reply
amato3035

THINGS IN PHILADELPHIA DON'T LOOK THAT GREAT. SCHOOLS CLOSING, PEOPLE MOVING
OUT OF PHILADELPHIA. WHEN YOU SAY "FED" WHAT "FED".

February 20 2011 at 8:25 AM Report abuse rate up rate down Reply
ebarnish

Why do our elected officials always have to go overboard when trying to make corrections? The deficit didn't become a mountain overnight and we can't get rid of it overnight either. The bureaucrats' arguments will only cause unbearable suffering for the common man.

February 20 2011 at 12:00 AM Report abuse -1 rate up rate down Reply
2 replies to ebarnish's comment
tj1108

We went from a managable debt to the real risk of the dollar collapsing by accelerating our rise of debt by a factor of 4.

February 20 2011 at 6:44 AM Report abuse +2 rate up rate down Reply
Trevor

And a $60 billion budget cut represents less than 2% of this years budget....hardly "getting rid of it overnight".

February 20 2011 at 9:43 PM Report abuse rate up rate down Reply
ebarnish

But now if the GOP has its way, thousands of teachers and others in government will lose their jobs because of budget cutting---and there goes $ that is helping the economical recovery. Government workers won't be able to spend, therefore no income for businesses, therefore no $ for employees' paychecks--More layoffs---and so we're back into recession and maybe even depression. I used to vote Republican sometimes. NO MORE!!!!

February 19 2011 at 11:50 PM Report abuse -4 rate up rate down Reply
5 replies to ebarnish's comment
bevbtook

The media has not given exposure to the work that has been done in the past two years, bringing the economy back from the brink.It has been a hard battle fought, for the American people, economic stability of the business community and the middle class.The jobs will come when businesses support the American people by investing the profits in jobs that will sustain the economy and continue to move the economy forward.It is time for American businessses to bring to the table the opportunites that are being sent out of this country and allow the American worker a chance to come back from the brink as the economy shows a rise.We are all in this together,that is how we WIN.

February 19 2011 at 11:16 PM Report abuse +1 rate up rate down Reply
2 replies to bevbtook's comment
tj1108

.Businesses dont hire until they have work for those hired. To hire people before you have work for them is bankruptsy. Govt $$ dosent create jobs. It creats so few but each govt $$ job is a burden on the private sector.
WE are broke. 40 cents of every dollar our Govt spends is borrowed, printed or comes out of thin air. The interest on our debt is over 350 billion and if drastic changes arent made will be bigger than our defense budget (850 billion) by 2018. The world will collapse our dollar before we get there.

February 20 2011 at 6:52 AM Report abuse +2 rate up rate down Reply
darinw40@mail.com

Companies are just stockpiling cash right now and buying back their own stock, like Tj1108 said, Companies will not hire if no sales....we have no money for purchases except for survival needs

February 21 2011 at 6:39 AM Report abuse rate up rate down Reply