U.S. Federal Reserve Chairman Ben Bernanke utilised the term “green shoots,” during a television news programme interview, to describe early symptoms of the U.S. recession easing on 15 March. That prognostication set off a global equities rally and sent business and consumer confidence surveys higher, albeit off record lows. But has the recession truly eased its grip on the U.S. economy?

Certainly few traders are looking for the besieged U.S. consumer to spend the world’s way out of the slump. In May, retail sales rose 0.5%, almost entirely on higher petrol prices but also pushed up by retail building materials; however, sales remain down −9.6% on a year/year basis and the savings rate has risen to a fifteen-year high of 6.9%, a clear indication of the U.S. consumers’ financial wariness.

Although declining housing prices and reduced wealth are contributing to the consumers’ malaise, the jobs scenario remains the single most depressing element in consumer confidence and is widely blamed for causing a five-point decline in the Conference Board’s release of 30 June (49.3 vs. 55.3 expected and 54.8 previous). In May, unemployment surged to 9.4% although “only” 345K jobs were lost. The June unemployment figures are scheduled for release 2 July at 12:30 PM GMT (10:30 PM Canberra time) and are expected to show a loss of 359K more jobs with the unemployment rate rising to 9.6%, which would not reassure job seekers or encourage spending.

One economic arena showing some signs of bottoming is wholesale trade. For months, wholesalers have been quietly drawing down overstocked inventories and while this process has weighed on manufacturing and industrial production, it is setting the stage for gains in new orders later in the year. That this admittedly arduous process is succeeding is evidenced by the 1.8% rise in durable goods orders in both April and May, and new orders in nondefense capital goods ex-aircraft, a barometer for business spending, although down −24.0% y/y, rose 4.8% m/m in May.

This rise in activity has stabilised regional manufacturing and industrial indicators although at very low levels, and while ISM national purchasing managers’ indices for May remain at contractionary levels (42.8 manufacturing, 44.0 services), they have risen from the staggeringly low readings of 4Q2008 (32.9 manufacturing December 2008, a ten-point improvement). The June manufacturing PMI is scheduled for release Wednesday, 1 July, 2:00 PM GMT (midnight 1–2 July Canberra time) and is expected to improve further to 44.0.

Another reflection of stabilisation has been the Conference Board’s leading indicator (LEI), which rose 1.2% in May, with gains in seven indicators offsetting declines in three. Meanwhile, the coincident index fell −0.2% with gains in two of four indicators, while the lagging index also fell −0.2% with no gains in seven indicators.

Indeed then the U.S. economy appears to have stabilised and Mr. Bernanke’s “green shoots” are not a mirage. However, it’s important to remember that stabilisation at a low level is not the same thing as economic growth and the financial sector in the U.S. remains fragile. The currency of the first nation out of the recessionary quagmire can be expected to appreciate versus the ones that remain behind, and forex traders are encouraged to watch for budding growth.