The rest of this series can be found here.

What Happens Next

The manufacturing sector of this country is improving faster than the rest of the economy, and in the macroeconomic sense, it is buying time for everything else to catch up. It, too, produces confusing economic data points, and it certainly won’t go straight up forever, but core capital goods data (riveting!) indicates that businesses will continue to invest strongly the rest of this year. In the aggregate, corporate profits right now are high – and increasing. This gives firms the ability to invest and hire. That will eventually improve job growth, which will, in turn, improve “consumer confidence” – a slightly more pleasant turn of phrase than “people will go to the mall,” but basically meaning the same thing.

Because the Federal Reserve will continue to keep interest rates very low, access to credit for small businesses will improve as banks earn their way out of their past sins. Once housing prices truly hit bottom, even more credit will flow. The recovery will then be able to sustain itself without being dependent on government stimulus. Then, we’ll be really growing. No training wheels or nothin’.

This will take time, though perhaps not as long as you might think. And it won’t be the kind of recovery that will knock your socks off. Again, job growth will probably be anemic, and housing will remain ugly for a few more quarters. But things should soon start to feel better than they do right now.