Trucking turnaround still tied up

The economy seems to have leaned on the accelerator in the second half of December, but there's still no sign it will shift into passing gear.

So says Ed Leamer, director of the UCLA Anderson Forecast and the chief economist for the Ceridian-UCLA Pulse of Commerce Index, which tracks real-time diesel fuel consumption data for trucking.

The PCI rose 2.4% in December to a 2010 high, UCLA and Ceridian said. The surge corresponds to a surge in retail activity around the holidays, particularly in the week between Christmas and New Year's. The index is a useful proxy for tracking industrial production and gross domestic product trends, UCLA and Ceridian say.

But Leamer cautions against seeing signs of an incipient recovery in the latest data, even if Wall Street is selling the economic expansion story for all it's worth. Economists at Goldman Sachs and other big firms have stepped up their estimates of 2011 and 2012 growth in recent weeks, based on sightings of stronger-than-expected consumer spending, among other things.

Leamer notes the weak jobs report Friday and says those banking on a strong rebound should keep an eye on two hard-hit employment sectors.

"The PCI numbers are perfectly timed to the mood elevation that happened at month-end," said Leamer. "But everyone should keep in mind we're not going to get a real recovery without seeing a comeback in manufacturing and construction jobs."

There is no such comeback as yet. Manufacturing added 10,000 jobs in December after shedding a total of 12,000 the previous two months. Construction shed jobs for the second month in a row, dropping 16,000 positions.

So what next? Leamer says the economic debate has "wisely abandoned" two particularly dim scenarios for the economy, the double-dip recession that was so popular last summer and the 2% growth "new normal" dead horse that Pimco's Bill Gross has been beating for the better part of two years.

But the remaining possibilities – a 3% expansion with high unemployment, and a 5%-6% growth clip with joblessness falling steadily – seem heavily weighted to the former outcome. Not that it pays to sit around thinking about it every minute of the day, alas.

"You have to be wary of tracking every little tick," he said. "This last month was pretty good, but on a quarter on quarter basis we're still looking flat out there."