Global Economy on the Rebound? Yet History Predicts a Flattening Out of Economic Growth – And This is OK.

Reason for Optimism: Panjiva's trade data reports a 7% increase in July 2009 over June 2009 in the number of global manufacturers shipping to the United States. 


However, before we hail the end of the decline, it should be noted that in July 2008, we experienced a similar uptick of 6% in global trade to the United States.  Thus–a suspicion of a seasonal impact is warranted. 

To compliment this in larger global economic terms, Paul Kedrosky's Infectious Greed has posted a familiar graph of the Four Bear Markets, in which the economic declines and recoveries of the major market fallouts of the last 100 yeras are depicted.  Kedrosky notes that the typical pattern after the "We're back!" bounce is a relative flattening out (except for the Great Depression) of economic growth. 


I tend to think this is not bad news.  We may not be rocketing back to the bull market of 2006, but flat means steady and stable.  Steady and stable means a return of investor and consumer confidence that conditions will be safe again, or at least more predictable, to…invest and consume.   Manufacturers can begin to create operating plans and hire on workers with relative confidence that they won't have to slash slash slash again in the immediate future.  They may even invest in new manufacturing equipment at good prices.  Investors can begin putting money into further product innovation and growth.  Retailers can begin taking chances on new product lines as excess inventory is finally depleted or liquidated.  Consumers can begin to spend their dollars on some of the latest innovations that will undoubtedly come out of this economic shake-up.