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The Globicus-qEcon US leading economic indexes may be peaking at high levels, suggesting the US economic recovery is steadily progressing in 2010. The overall leading economic index’ growth rate, a measure of future economic growth, was at 10.8 in January, near an 11.0 high in December. The short leading index' growth rate remained high at 11.0 in January, a tad below December’s 11.9 high. The long leading index' growth rate was at 10.7 in January, slightly below September’s 11.7 peak. Overall, the LEI numbers indicate the US economic expansion is intact for Q1-Q2 2010 and possibly for Q3 2010. Meanwhile, the coincident index' growth rate, a measure of current economic growth, has improved steadily and increased to -1.6 in December from -2.8 in November. US GDP expanded at a 5.7% annualized rate in Q4 2009, the second quarterly expansion and the fastest in six years, after growing at a 2.2% annualized pace in Q3, ending the longest stretch of declines since records began in 1947. The coincident number points to June 2009 as the trough of the great recession.  

The US has lost nearly 8.5 million jobs since the recession began in December 2007. The Globicus-qEcon US leading employment index signals positive employment growth in the beginning of 2010. Since bottoming in February 2009 at -11.0, the leading employment index’ growth rate had improved substantially, to 9.1 in January. However, sustainable positive job growth is unlikely to occur until several quarters after the end of the recession. In the 1990 recession it took over a year before positive job growth resumed, while in the 2001 recession it took even longer before employers expanded payrolls. The latest data from the Labor Department showed nonfarm payrolls declined 20K in January after a 150K drop in December. The unemployment rate fell to 9.7%, the lowest since August, from December’s 10.0%, indicating labor market conditions have improved. The high unemployment rate ensures that the Federal Reserve will maintain extremely low interest rates until H2 2010. Unfortunately, the Fed does not pay any attention to exchange rates and a continuing dollar appreciation would indicate too tight monetary policy. The US economy remains in a serious debt deflation; thus, tighter monetary policy would not be the right medicine as it would worsen the financial situation for creditors, increase deflationary pressures, depreciate risky assets and possibly end the economic recovery.