Turning this economic ship around

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Take a look at these three charts.

Bloomberg’s commodities index of indices:

Signs of stabilization

Commodities, or commodity futures, are investments in the future value of things like rice, gold, oil, cattle, and other tangible goods.

Baltic Dry Index:

Signs of stabilization

The Baltic Dry Index is an index of costs to ship things on cargo ships. As BDI goes up, the price to ship something goes up. Unlike most investment metrics which are based on future value, BDI measures what it costs now to ship something. BDI is important because you don’t buy shipping if you’re not moving stuff to sell.

New Jobless Claims:

Signs of stabilization

This is the number of new unemployment claims, measured weekly.

All of these charts show stabilization in the economy – arresting the freefall. Is it because of sound economic policies, stimulus, or the natural course of time and the business cycle? Hard to say. Certainly anyone promoting their own interests will claim that they’re the key influencer, but I suspect it’s all of the above with an emphasis on natural market dynamics. Even the largest forest fire eventually runs out of things to burn and snuffs itself out in time.

Once the fire has passed, it’s time for the forest to regrow. Small, tentative steps at first, little sproutlings and seeds, but regrowth always happens.

I still think there’s other parts of the forest just catching fire now – commercial real estate, credit cards and last-resort consumer credit, etc. – that will burn for some time to come. That said, there is cause for optimism, however cautious. Be on the lookout for areas of regrowth that you can partake in and carefully wade in.

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Comments

3 responses to “Turning this economic ship around”

  1. While I think this is probably a plateau before the other sections of the forest have their turn to reset and contract, I think the things we will get out of this recession is a re-establishment of base priorities. People are figuring out what is really important, and what is just silly in their lives, and have to come to terms with the difference between want and need, which is a good lesson for all of us.

  2. While I think this is probably a plateau before the other sections of the forest have their turn to reset and contract, I think the things we will get out of this recession is a re-establishment of base priorities. People are figuring out what is really important, and what is just silly in their lives, and have to come to terms with the difference between want and need, which is a good lesson for all of us.

  3. While I think this is probably a plateau before the other sections of the forest have their turn to reset and contract, I think the things we will get out of this recession is a re-establishment of base priorities. People are figuring out what is really important, and what is just silly in their lives, and have to come to terms with the difference between want and need, which is a good lesson for all of us.

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