Economic Growth

From: Orange County Register

http://economy.freedomblogging.com/2010/02/10/ucla-economy-not-so-hot/26677/

All PostsUCLA: economy not so hot
February 10th, 2010, 1:00 am · 12 Comments · posted by Mary Ann Milbourn
Hopes that the strong U.S. growth in the last three months of 2009 was the beginning of a recovery dimmed today with release of a new UCLA economic indicator that suggests a pullback in January.

The new Ceridian-UCLA Pulse of Commerce Index, based on a three-month moving average, grew 3.3% in January, down from 14.6% in the previous month.

UCLA economist Edward Leamer, who worked with Ceridian data to create the index, said it didn't bode well for a strong recovery.

"Don't put your party hats on anytime soon," he said.

Unless the economy bounces back with 15% growth in February and March, Leamer said December's optimism about the strength of the recovery may be misplaced.

Leamer noted that even if the U.S. is able to sustain the index's fourth quarter growth rate of 7.3%, it will take until the third quarter of 2011 to return to the last peak in the second quarter of 2008.

The new index is based on a real-time analysis of diesel fuel consumption at 7,000 truck stops across the country. Unlike other measures, Leamer said using Ceridian's up-to-the-minute database of diesel purchases gives a real-time picture of what is going on in the economy as opposed to other indexes which are based on surveys or dated information.

Leamer said using truck diesel sales has historically proven to be a strong indicator of the gross domestic product. For instance, he said that if the indicator had been available in the second quarter of 2008, when the index turned down but the GDP was still positive, he would have known the economy was headed for serious economic trouble.(Click on chart to enlarge.)



"The Pulse of Commerce Index that crisscrosses the country is like the arteries and the goods being trucked are the lifeblood," Leamer said.

The good news is that the index signaled "all clear" in the second quarter of 2009 indicating the GDP growth in the following two quarters.