Normally Uncertain

Two months into the first quarter, one of the watchwords for the economy during the past year is living on in 2011. Anywhere you go and in seemingly everything you read, the word is uncertainty.

That is, no matter what the numbers show, no matter what economic activity is out there, enormous uncertainly remains about the direction of the economy. It’s hard to argue with that because, after all, there is always huge uncertainty about the economy out there.

But as the numbers start to pour in showing 2010 was a stellar year for many businesses and that this year is starting strongly, there’s a gap showing up between the cautions about the direction of the economy and the economy in which we’re actually living. The fact is, save for a couple of very important numbers, the global economy connected to trade in 2011 is strong and getting stronger.

The big exceptions are the intertwined employment and housing figures in the United States. The U.S. unemployment rate fell to its lowest level in nearly two years in February, but at 9 percent, it’s hardly at a level that breeds confidence.

And that’s where there is some danger from a kind of collective corporate shellshock from the greatest economic downturn in several generations. If a lack of confidence in the economic landscape leads to a lack of investment and an unwillingness to pull the trigger on hiring, then we may be in for uncertain times.

Yet there is growing willingness to invest in the future. Maersk Line owner A.P. Moller-Maersk last month announced orders for up to 30 vessels that are some 20 percent larger than any container ship on the water today. Yet the owner of the world’s largest container ship line also sounded restrained, even cautious, about the future while reporting a $5 billion profit in 2010, including $2.6 billion on that shipping business.

Still, we’re pretty certain those are remarkable numbers. And there is more certainty out there.

The Institute of Supply Management’s Purchasing Manager’s Index in February reached its highest level in nearly seven years. The 61.4 percent reading was 21 percentage points better than the 40.4 percent reading for the PMI less than two years ago.

Just as important, the New Orders Index measuring new orders to U.S. factories from customers hit 68 percent in February, a signal of strong confidence in the future. And broader global readings are just as good.

The JPMorgan Global Manufacturing PMI hit 57.8, its second-highest reading ever, behind only that of May 2004. Global manufacturing employment reached its highest level since the series was first compiled in 1998 and, JPMorgan said, “Employment in the U.S. rose to the greatest extent since January 1973.”

Transportation carriers certainly see the results. The American Trucking Associations’ seasonally adjusted Truck Tonnage Index grew 3.8 percent in January to its highest point since January 2008.

Uncertainty is normal, of course, and that may be the best description for the economy in 2011: normal uncertainty.

Paul Page is executive director of The Journal of Commerce. He can be contacted at 202-355-1170, or at Follow Paul Page on Twitter,

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