Gluskin Sheff’s David Rosenberg has an interesting illustration of the various stages of the current economic recovery.
“I think the charts below speak for themselves, and why I like them is that they underscore my current stream of consciousness regarding the current business cycle, which is moving in stages,” wrote Rosenberg.
Stage 1 was driven by government stimulus. Stage 2 was fuelled by the manufacturing comeback with the ISM index nearing 60 in 2011. Stage 3 was all about the housing revival, “which is continuing for now but the recent rolling-over of the homebuilding stocks suggests a dose of caution is warranted.”
And that brings us to the American consumer.
“Stage 4 will have to be the consumer grabbing the torch or else the economy will stagnate or perhaps even contract in the coming year — this is the spoke in the wheel,” said Rosenberg. “The good news is that we are settling into payroll numbers of around +200K monthly, wages are beginning to show a pulse and consumer confidence has hit a cycle high.”
We’ll have to wait for the hard data to confirm the soft signals being sent by the confidence numbers before we can confirm that the consumer has grabbed the economic baton.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.