There's no question the recovery is taking longer than people thought. People thought the economy would pick up very quickly and that we would have a typical garden variety economic recovery. That's not the case, but the good news is it is a recovery. You can't ask for more than that.
Real new home sale prices and existing-home sale prices have been rising very sharply. When that starts to give way and we don't have the equity market picking up where housing left off, that's another reason the economic expansion will be gradual.
This report is certainly consistent with an economy that is trying to make a recovery, but a weak recovery. When you start to back out the volatile components, it's not all that weak. We're picking it up, but these numbers tell us the economy will come back slowly.
The unemployment rate is picking up, but it's picking up at a very slow pace,
We're starting to see the savings rate pick up from near historic levels, which is very encouraging. Though we don't expect Fed tightening to work overnight, we are starting to see some of the early results of the significant tightening we've seen to date.
Even though every investor out there is saying labor costs are picking up, companies have a way to be flexible. In theory, when the economy is doing well, profits do just fine even if labor costs increase.
Exports increased by such a small amount, it's not enough to tell me the inventory problem is going to go away. We need world economic growth to start picking up.