Decision Analyst Index Jumps Four Points in April

May 15, 2009
Signals possible upward turn by fourth quarter of 2009

The Decision Analyst Economic Index jumped to 92 in April, a four-point increase from March. This is the first time the Index has been above 90 since February 2008. The Economic Index tends to be a leading indicator, usually anticipating changes in gross domestic product by 10 to 12 months.

“The U.S. Economic Index bottomed out in January and February 2009, and it increased significantly in March and April, rising to the highest level in the past year. This upturn in the U.S. Economic Index is signaling the beginning of a recovery by late 2009 or early 2010,” says Jerry W. Thomas, president/CEO of Decision Analyst.
“The relative flatness of the Index throughout all of 2008 indicates that the U.S. economy will bottom out soon, although the economy might bump along the bottom for some time. Decision Analyst continues to forecast that the U.S. recession is at or near the bottom, and will begin to turn upward by the fourth quarter of 2009,” says Thomas.

“Consumer confidence will grow slowly, month by month, and this will trigger increases in consumer spending later in 2009, despite rising unemployment for the balance of 2009 and into the first half of 2010. The growth of consumer spending will fuel a slow recovery.”
Thomas says record high and growing unemployment levels will continue to act as a drag on the U.S. economy, as will continuing credit issues, financial scandals, commercial mortgage defaults, credit card problems, and home mortgage defaults.

“All of these credit-related problems will take two to five years to resolve,” according to Thomas, “and will mean a long, slow recovery, not a rapid bounce back from the downturn.”

The middle of the U.S. appears to be weathering the recession better than the rest of the country. The West North Central and the West South Central divisions are doing better than the West Coast or the East Coast. The East North Central (i.e., automotive industry) appears to be suffering the greatest economic difficulties.

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