ANALYSIS OF ECONOMIC RECOVERY IS A LITTLE LIKE ALPHABET SOUP

The economic stimulus package, of which a considerable amount will be spent on improving the American infrastructure, will likely impact the sales of Volvo Group products in the U.S. We offer the commercial products that are needed for these projects, such as construction trucks, articulated haulers, excavators, road building machinery and buses, all represented under different brands like Volvo, Mack, Prevost or Nova Bus.
The question is have we measured the effect of the stimulus on our businesses and the economy?


We have recently seen some reassuring signs that the U.S. economy has stabilized and we are in recovery mode. This we can determine from certain key indicators over the last few months. For example, the unemployment figure has stabilized below 10%, GDP growth for 4th quarter 2009 was 5.7%, the Purchasing Managers Index (PMI) was at 56.5% for the month of February, indicating an increase for the sixth consecutive month, and U.S. exports are also increasing. We are definitely in economic recovery!

So another question to consider is how quickly will the U.S. market recover? There are many theories about this.

Some analysts have predicted a hockey stick effect (L) with moderately small steps toward recovery and a subsequent sharp increase in the market. There has also been talk about a V shaped recovery, however, most people have realized that this did not happen in the U.S. and is a more likely scenario in Asia. Those who are more practical have predicted a U shaped recovery curve; the economy went down, bottomed out, stabilized, and the market will eventually come back again over the course of the next couple of years.

Then there other analysts, who have a very well thought out idea of a different kind of recovery here in the United States. They anticipate a recovery curve shaped like a W. The idea is that the global market took a dramatic dive or free-fall during the financial crisis resulting in a dramatic, global economic downturn, followed by an initial recovery due to stimulus, which we experienced in Q4. Currently, however, the economy is slowing down again while certain indexes are pointing towards inflationary pressure. Under this economic climate, inflation is a major concern as consumer and producer prices are still high and continue the upward pressure while demand is still weak. The combination of possible high inflation with banks unwilling to lend money could bring about a second dip in the economy.

Regardless if the recovery is an L, V, U or W shaped upturn, I do feel that something is going on in the market place. The energy level is higher and the activity level has increased!
So let’s keep America rolling!