Charts prove the bulls are back
The history of leading economic indicators shows the recovery is well on its way since the market lows.
Plenty of investors still believe the U.S. economy is still just one
shock away from another crash. But a hard look at the data shows that point of
view simply doesn't hold water.
Look at the latest bullish housing market data for March -- including stronger
permits and sales. Or check out the host of stocks raising dividends now that they're cash-rich
once more. The list goes on.
If you're still turning up your nose at talk of the recovery, there's probably
little that can be done to change your mind. But if anything will convince even
the bearish bear that things aren't so bad, it's a set of charts showing
strength in nearly all of the major economic indicators. Take a look:
This
first chart shows the performance of the Conference Board's Leading Economic
Indicators composite index. The darker line represents historical data all the
way back to 1959 while the lighter line represents our current LEI readings,
and the X axis represents time -- showing 12 months before the market bottom,
the trough marked as a dotted line and then another 12 months after the low
point:
As you can see, the LEI index may have been overly punished during the downturn
compared with historical trends, but the economy has bounced back dramatically
and is actually tracking a stronger ascent from the bottom than in decades
past.
Still not buying it? Well let's tackle the elephant in the room: Unemployment.
Despite recent improvements, some people are still focusing on the negative --
namely, the nearly 10% unemployment rate and or the so-called
"underemployment" rate that is around 17%. Clearly this is the labor
market is the biggest reason of doubt for bearish investors.
So check out the labor component of the leading economic indicators as a
separate chart. Remember, the lighter line is our current trend and the darker
line is historical trends for 12 months before and after the market
"trough" that is represented by the dotted line.

Labor's not looking so bad anymore, is it?
It's worth noting that the Leading Economic Indicators are not raw numbers. For
instance, just because the labor sentiment is improving at a faster rate than
historical LEI trends does not mean that actually jobless numbers are improving
at the same rate. In this case, the indicators are more of a measure of
psychology than true economic improvements.
But don't discount the power of improving sentiment. As consumers feel better
about spending and about job hunting and as businesses feel better about their
economic outlook, more money will be pumped into the marketplace and the
recovery will gain momentum.
These are just two charts that show the power of the recovery. Get a complete
look at data proving the recovery with 6 charts that prove the bull market is back here.
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