Processing the economic numbers
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Tess Vigeland: Economists had a lot of new numbers to chew on today. Some of them left a bitter aftertaste. The number of folks filing for unemployment benefits has hit a record high. Others seemed kinda sweet. An index used to forecast where the economy is heading rose last month. So how do you reconcile all that? Marketplace’s Nancy Marshall Genzer reports.
NANCY MARSHALL GENZER: Talk about doing the numbers. Today we got figures on unemployment claims, producer prices and the Conference Board’s index of leading economic indicators. Add them up and we should get a nice, clear economic picture, right? Not necessarily. The leading economic indicators index tries to forecast economic activity. It was up unexpectedly in January, by four tenths of a percent. But Credit Suisse economist Jonathan Basile says the index was skewed by the Fed pumping money into the economy.
JONATHAN BASILE: When you look within the bowels of this leading index it’s still unclear if this is a true bounce or more a reflection of this massive liquidity injection.
The index saw all that liquidity and said ‘eureka!’ Lots of cash is sloshing around But, actually, the money isn’t circulating. Banks are holding onto most of it. The producer price index numbers released today are also skewed, by higher energy prices. That leaves us with the unemployment numbers. Unfortunately, they don’t lie. The ranks of U.S. workers on unemployment surged 170,000 — a record high.
OSCAR GONZALEZ: The labor market is fairly weak, continues to be weak and will probably continue to be weak for the foreseeable future.
That prediction was easy for Oscar Gonzalez, an economist at John Hancock. The tricky part is putting all of today’s numbers together and making sense of them. Economist Carey Leahy of Decision Economics takes a stab at it.
CAREY LEAHY: Not everything is bad so I would think the economy is going to bottom in six months, so the economy won’t be doing well but it will not be falling six months from now.
Let’s hope he’s right. In Washington, I’m Nancy Marshall Genzer for Marketplace.
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