The Ceridian-UCLA Pulse of Commerce Index (PCI), issued by the UCLA Anderson School of Management and Ceridian Corporation, rose 1.0-percent in June on a seasonally and workday adjusted basis, a welcome rebound following declines in the previous two months. Despite the stronger performance in June, the economy continues to remain in idle with the PCI remaining below its level at the end of the first quarter.
"Over the past year the U.S. economy has been in 'she loves me, she loves me not' mode," said Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. "Bad news has been alternating with good, leaving investors and forecasters nervous and unable to identify sustainable trends."
" The PCI has had five positive and seven negative months in the last year, registering a tepid 2.0-percent increase year over year," Leamer continued. " Over the same time period, GDP and payrolls have shown wobbly growth, failing to drive a real recovery or reduction in the unemployment rate. This month's one-percent increase in the PCI could be the start of a positive trend, but a one-month spike does not make a trend, particularly in light of the many false starts experienced over the last year. Until there is enough data to declare a new trend, expect more of the same, somewhat disappointing result - persistent, wobbly uncertain growth."
The drivers behind persistent uncertain growth over the past year are clear. The glimmerings of a recovery experienced in both the PCI and in the GDP during the second half of 2009 and the first half of 2010 were driven mostly by the replenishment of inventories. When the inventory restocking was complete, neither new job creation nor consumer spending on big ticket items were robust enough to sustain a steady economic recovery.
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