The forecast here that global economic momentum would revive in late 2011 in lagged response to faster real money supply expansion received support from data last week – see Thursday’s post. Monetary trends continue to suggest that consensus gloom is misplaced: six-month growth of real narrow money in the G7 and emerging “E7” economies was stable at 5.1% (i.e. 10.5% annualised) in October – the highest since August 2009.

As previously discussed, the positive signal from real money received provisional confirmation from an upturn in a proprietary leading indicator derived from the OECD’s country leading indices, which combine information on a range of forward-looking variables. Confidence in the forecast would be strengthened by a further rise in the indicator – an October reading will be available next Monday.

Global monetary strength conceals major divergences between countries and regions. Faster real narrow money growth in the US than the Eurozone has been reflected in recent economic and equity market outperformance. Monetary trends have also been weak in the E7 economies but are beginning to revive in response to central bank easing and a food-driven fall in inflation, hinting at better stock market performance in 2012.

Friday’s news that the US unemployment rate fell to a new recovery low of 8.6% in November was instantly dismissed by gloom-mongers as the result of discouraged workers leaving the labour force and an early Thanksgiving boost to hiring, to be reversed in December. The improvement, however, was confirmed by a parallel recovery low in the net percentage of respondents assessing jobs as hard to find in the November Conference Board consumer survey.

The gloomsters are in full chorus in the UK, where downbeat forecast revisions by the unproven Office for Budget Responsibility have fuelled fears of a “double dip” accompanied by soaring unemployment. Real money trends, however, were improving before QE2 was launched and will receive further support from slowing inflation – see previous post. Business surveys, though weak, have yet to suggest economic contraction while labour demand is holding up, judging from the tallies of online vacancies compiled by Monster and Reed.