Wells Fargo Reports: Leading Indicators Still Signal Expansion

The U.S. recovery is still on track.  According to a Wells Fargo Economics Group report released today there was a 1.1 percent gain in Leading Economic Indicators in December, suggesting the economic recovery still has momentum heading into 2010.

• The largest positive contribution in Dec.came from the spread between the 10-year Treasury and the Fed Funds rate. The positive influence from the interest rate spread will likely continue. Wells Fargo expects the government to keep short-term rates historically low until the job market recovers in earnest. 

Signs of a Rebound in Housing, and Slowing in Layoffs

• Another major positive contribution came from some good news in a sector hurt worst in the recession: residential construction. Building permits jumped 11 percent in December to a 653K annual rate—the fastest pace of issuance since October 2008.
   
• Initial claims for unemployment insurance came down in December, a welcome sign the bulk of the layoffs are behind us & the job market may finally be poised for payroll growth in 2010.