Which end is in sight?

My absences grow longer, if not fonder. There hasn’t been much to excite any business cycle observer since my post at the end of last October. Despite some menacing feints, the economy has not slipped back into recession, but neither has it moved into a broad pattern of growth. The stubborn laggards are in housing and its related employment categories. The hesitant leaders are in factory production and its related utilization and productivity statistics.

As of August good news is outweighing bad by (very) roughly a 2-to-one margin. In my judgment, in really strong economy the ratio would be 4 (or more)-to- one. In our proprietary labor market index, there has been no sustained movement above a feeble upward trend that started at the end of 2009 and became evident in the moving averages in the first quarter of 2010. As of August, the labor market average was fractionally below its 6-month trailing moving average.

The economy’s stubborn insistence on sideways has caused me to wonder if there are deeper forces than the business cycle at work. A very thoughtful book by Robert D. Atkinson I recently reviewed for Monthly Labor Review (http://www.bls.gov/opub/mlr/2011/06/bookrevs.htm) is an interesting exploration of how longer waves of innovation affect the economy. My question is wheter or not we are at the fading end of the wave driven by the “entrepreneurial, knowledge-based” economy.

Earlier long waves have ended in tenacious recessions at intervals of about 50 years. By that timetable, the train is going off the rails a little early, but the computer revolution has speeded just about everything up, so why not its own long wave? Just thoughts.