September 15, 2010

By: James Swanson, CFA
MFS Chief Investment Strategist

Let's just place a finger on the pulse of the US and global economy. Here what's new:

• US August retail sales increased more than expected.
• US consumer spending and income rose.
• US unemployment went up in August. New job creation, while positive, is running below previous recoveries.
• US small business optimism is rising.
• US production is slowing but running at "expansionary levels."
• US commercial loans and small business loans have risen.
• Germany, the largest of the European countries, is showing strong growth.
• China's production increased unexpectedly.
• US wages and the average work week rose.
• Inflation measures remain above "deflation levels."
• US existing house prices hold firm or rise in most markets.
• Truck sales are rising.
• Rail loading is running ahead of last year.
• Credit markets around the world are indicating strength; some stress in southern European country debt exists.
• Air freight out of Frankfurt is rising.
• Commodity prices remain firm.
• Interest rates have gone up recently.
• Corporate cash flow and cash on balance sheets continue at high levels.
• US corporate spending, below previous expansions, is increasing.

As the third quarter of 2010 winds down, evidence is piling up that a secondary or "re-recession" along with deflation are not developing.

The views expressed are those of the author and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation, solicitation, or investment advice from the Advisor.