The U.S. Economic Recovery Strengthened in October

The economic recovery in the U.S. is finally starting to look real. A roundup of the October economic data released last month shows that most factors are broadly improving. The single, clear exception, however, is housing. The foreclosure problems that banks have on their hands forced that sector to take a step back in October, but most other parts of the economy were clearly headed in the right direction.

Here's our updated qualitative matrix of significant economic indicators (and our usual disclaimers can be found at the end of the post):

month in review 2010-10.png

As the note says, it's really hard to consider foreclosures this month, since any decline was probably more due to banks freezing their processes rather than fewer defaults.

On a superficial level, October looks a lot like September. Here's how the comparison breaks down:

month in review tally 2010-10.png

Around the same number of indicators improved and worsened. Yet, there's one key difference between the two months. Just one industry was responsible for almost all of the poor performance in October: housing. Three of the five worsening variables were related to residential real estate, while the other two were auto sales and durable goods orders. So actually, one interesting observation is that all five worsening indicators were related to big ticket purchases.

Meanwhile, everything else got better. And as the tallies above show, most factors got much better. There was only one "troubling" indicator, which was the stock market's performance. It got that grade because it improved, but the month's performance didn't match September's 9% return. Yet, the 4% increase in prices is pretty hard to complain about and probably isn't really all that troubling, despite the grade.

That just leaves the four "awful" verdicts, which again were almost entirely isolated to housing. At this point, it's hard to see how that single industry can prevent the economic recovery from heating up and creating more jobs, even though it's an important one. As business expands, banks fix their procedures, and more unemployed Americans find work, additional home sales will eventually follow. If the economy continues on this path, then we should start seeing renewed demand and more robust hiring before too long.


Disclaimers about the matrix:

  • This is by no means a completely exhaustive list, but it does take into account many important statistics.
  • It represents more of a qualitative summary, however, since it just considers directional movement from month-to-month, rates of change, and trends.
  • There is some overlap.


Also, here's a list of posts that covered some of these October indicators:

New Homes Lead Construction Expansion in October

Income, Spending, and Saving All Rose in October

New Home Sales Down 8.1% in October

Existing Home Sales Fell 2.2% in October

U.S. Economy Finally Adds Jobs in October, but Unemployment Rate Still 9.6%

ISM Shows Service Sector Improved in October

October Auto Sales Decline From September, but Rise From 2009

Consumer Confidence Remains Weak Going Into Midterms

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In