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Its Getting Brighter, Really, Its Getting
BrighterTales from the Recovery of 2009

• Dr. Chris Kuehl
• Managing Director
• Armada Corporate Intelligence
• Chief Economist
• National Association of Credit Managers

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The Recession of 2008-2009 has Ended (sort of)

• Investor confidence has returned hit 10,000
  again for the first time in a year
• CMI has been rising since February and is almost
  at 50
• PMI data has started to trend upward and is
  finally over 50
• Housing has started to climb back to
  respectability new homes are up and so are
  existing home sales
• Durable goods orders climbed on the back of
  automotive and aviation (but it may be short
  lived)
• Consumer activity showing some signs of life (but
  there is a long way to go). Retail numbers look
  better than before

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There is Still Much to Worry About

• Unemployment rates are at 9.8 - just shy of the
  double digit level that had been predicted
• Commercial property is the next big issue for
  banks could be a multi-billion dollar problem
• Commodities demand has started to increase and
  that is starting to put pressure on inflation
• Government efforts are a mixed bag at best. The
  stimulus package has been limited, cash for
  clunkers was too little and perhaps too late,
  the health care reform effort could be very
  expensive.

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Jobless Data

• Overall rate of unemployment up to 9.8 - is that
  really significant?
• Joblessness as lagging economic indicator
• Divergence between job sectors college educated
  and skilled workers at 4.7 while high school
  grads are at 17 and growing
• Huge regional disparities Michigan at 15 and
  North Dakota at 4.3, Iowa at 6.8
• Sector differences job shortages in health care
  and energy while bottom drops out of construction
  and automotive

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How Bad Was This Last Recession?

• Comparable to recessions in the last three
  decades not necessarily the worst but some
  unique issues
• Fundamentally a bank led crisis and one that will
  not end without a bank recovery
• Worst quarters were in 2008 Q4 and 2009 Q1 more
  hope for Q3 and Q4 of 2009
• Factors that play into global recovery consumer
  attitude, banks, foreign trade, stimulus plans
  and the threat of inflation

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Six Things to Keep People Awake at Night

• Interest rate policy when do they go back up?
• The return of the oil and commodities bubbles.
• The recession ending while providing something
  else to worry about inflation.
• Struggles to pay major deficit may provoke new
  tax efforts.
• Consumer attitudes are improving but performance
  isnt
• States are in real trouble

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Forecasts

• Interest rates will remain very low until 2010
  but when they jump they will jump fast
• Oil prices will remain low through the early part
  of 2010 but will start to spike consistently by
  early spring up to between 90 and 120 per
  barrel

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Forecasts

• Inflation will start with commodity demand but
  will not be provoked by labor demand until 2011
• Consumer demand will not manifest this year and
  will be weak until mid 2010
• Trade will provide biggest boost to US economy in
  the next 12 to 18 months

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Four Trends Coming Out of the Recession

• The rise of giganomics. More people functioning
  as collection of skills available to hire
  multiple employers and multiple opportunities
• Expanded role of government will cure be worse
  than the disease when it comes to financial
  community deficits will loom as next big
  problem
• The new frugality. Will it last? What will
  people really be frugal with?
• US no longer the economic center of the universe
  Asia rising but so is Europe and Latin America

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Contact Information ckuehl_at_armadaci.com

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