Off the roller coaster?

I’m shocked to see that it’s been 3 months since I last posted. Yes, I’ve been busy, what with a fairly time consuming project with the Census Bureau to work on census coverage measurement and the renewal of thrice-a-week rugby coaching on the staff of my alma mater, but 3 months!

In the time since we last spoke, the National Bureau of Economic Research Business Cycle Dating Committee declared that June 2009 marked the trough of the recession. As readers of this blog know, NBER were very close to the truth; most likely there is no significant statistical or substantive difference between April and June. And so much for my nascent career as a BCD watcher.

Since NBER’s announcement, the economy went into a truly frightening stall. In the July 5 post, I was upset by a 9.9 index point drop in the Good News Index (GNI). Imagine how I would have felt if I had been paying attention the next month as the index fell by 33 points or the month after that as the 3-month moving average of the index dangled just fractions of a point above 50.

In September and October, the GNI moved back to the three-quarters to two-thirds range and the moving average came back to 63 and change in October. As I frantically worked to catch up on the index, I was heartened to see that there seems to be a growing flicker of life in the housing and related sectors, but less sanguine about the strength of the consumption-dependent sectors as consumers and lenders continue to restructure their revolving credit accounts.

The popping and only very slow reflation of what might be termed a conspicuous “consumption bubble” is a cycle that has been under-analyzed. How long will it be before a critical mass of consumers is willing to say, “I want that, and I’m willing to borrow to get it!”?