Recovery coming?

Not if you read Tom Price's latest letter:

......The latest reason for a considered pause comes with publication of the most recent minutes from the US Federal Reserve. Fedspeak is a bureaucratic sedative at the best of times, but sometimes the dry-as-dust language is unable to conceal some real firecrackers. The minutes from the Open Market Committee of 22-23 June contain the following observation; it‟s interminable but bear with it:

“Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer-run path as characterized by sustainable rates of output growth, unemployment, and inflation consistent with participants‟ interpretation of the Federal Reserve‟s dual objectives [price stability and full employment]; most expected the convergence process to take no more than five or six years.”

Couched in such bland and soporific prolixity, the point of that sentence may initially pass most readers by. Here it is shorn of its anodyne length and fussy circumlocution:

The US economy may not recover until 2016.

And this from a committee that is preconditioned to be on the side of the optimists.

........The admittedly subjective assessment of the FOMC is not the only reason to be a little wary of the vigour of the apparent recovery:

The Baltic Dry Index, a measure of shipping costs and a plausible barometer for world trade, has fallen by almost 60% in its longest streak of successive declines for 9 years;

The Thomson Reuters / University of Michigan preliminary index of consumer sentiment fell from 76 in June to 66.5; consumer spending accounts for roughly 2/3 of US GDP;

The Philadelphia Fed‟s July index of new manufacturing orders fell from 9.0 to minus 4.3; The US workforce has contracted by 1 million over the past two months; US mortgage applications have fallen by 42% to a 13-year low.