ISM

Yes, I think we have a nice L shaped economy with modest GDP growth and modestly improving employment, so far mostly evidenced by the increased hours worked that you’ve been pointing out. Acceleration happens when/if some aspect of private sector credit growth takes off.

If euro solvency risks are indeed fading, it should be back to an ok market for stocks (which could have a large one time shift upwards to reflect the reduced euro risk), and low rates from the Fed until something changes.

Like Japan, the budget deficit may be large enough to keep it all from collapsing but not enough for the kind of growth that would trigger higher rates from the Fed.

Karim writes:

Data off recent peaks but still firmly in expansion territory:
Anecdotes mixed:

• “Component lead times are increasing sharply.” (Computer & Electronic Products)
• “Market had begun to change, but it is now declining again.” (Wood Products)
• “BP oil spill will impact business conditions over the next few months.” (Fabricated Metal Products)
• “The economy continues to be sluggish, with orders 8 percent to 10 percent below last year.” (Nonmetallic Mineral Products)
• “Retail sales are strong for both the domestic and international markets.” (Food, Beverage & Tobacco Products)

	June	May
Index	56.2	59.7
Prices paid	57.0	77.5
Production	61.4	66.6
New Orders	58.5	65.7
Inventories	45.8	45.6
Employment	57.8	59.8
Exports orders	56.0	62.0
Imports	56.5	56.5