Growth rate improves. That’s the latest word on the Greater Grand Rapids economy, according to the data collected in the last two weeks of March 2010. New orders, our index of business improvement, advanced to +20, up from +6. In a similar move, the production surged to +30, up nicely from +8. The purchasing offices remained modestly busy, and our index of purchases edged up to +17 from +14. Just as last month, our best news came from the employment index, which jumped to +17 from +9. Indeed, 25 percent of the respondents reported adding staff over this past month. All in all, our greater Grand Rapids statistics have now been positive for a full year.

A look at our individual industries provides some additional insight. First, the Toyota fiasco is now pretty much behind us, and local auto parts producers are now back on track. Two of our local office furniture firms reported modestly better business conditions. For our industrial distributors, with one exception, all were positive for the month. For our capital equipment firms, conditions remain modestly negative.

At the national level, the April 1 press release from the Institute for Supply Management, our parent organization, shows a similar pattern. For March, the index rose to +30 from +21. Similarly, ISM’s index of production rose to +25 from +18. It was good to see that the index of employment held its own at +11, down from +12. ISM’s composite index rose to 59.6, up from 56.5. The author noted that this is the best overall report since July.

The international report from J.P. Morgan’s Global Manufacturing report released April 1 is equally bullish. The March index of new orders rose to 58.7, up from 57.2. The reports from Germany, France, Italy, China, India, Austria, the Netherlands, the U.K. and the Eurozone were especially strong. However, the employment indexes in Japan, the U.K. and the Eurozone were all weaker. JPM’s Global Manufacturing Index rose to a 70-month high of 56.7, up from 55.4.

Looking at auto sales, it was a very strong month, although some of the stellar performance can be attributed to liberal price and financing incentives. Sales were up 40 percent at Ford, 21 percent at General Motors, 41 at Toyota, 22 at Honda, 43 at Nissan and 46 at Subaru. Although Chrysler sales fell by 8 percent, the overall positive automotive report is some of the best Michigan can hope for.

This month’s big economic news, of course, is the passage of the health care bill. Short run, there will be very little economic impact as a result of the passage. Most of the impact of the bill, good or bad, does not take effect for quite some time. Western Europe, where government-run health care has been the norm for more than 50 years, applauded the move because it will level the playing field. However, our major creditors such as China are less enthusiastic because of the addition to our huge debt load.

The consumer market remains far less robust. One factor is the low levels of consumer confidence that have been reported from both the Conference Board and the University of Michigan. Indeed, despite the improvement in some key indexes like unemployment, the stock market and growth in the industrial sector, the mood among consumers remains negative.

Several factors are to blame for the low consumer confidence numbers. First, despite the improvement in the stock market over the past year, almost everyone’s 401(k) is well below the peak level of a few years ago. Second, the number of people in the so-called “long-term unemployed” category is at a 70-year high, which is particularly troubling for manufacturing states like Michigan. Third, for many people, their biggest asset is their home, and home values in almost every area of the county have fallen considerably since 2006. The drop in home values has resulted in 25 percent of all homes in the country now being “inverted in equity,” meaning that more is owed on them than their current market value. At 2.7 percent, the percentage of homes vacant or for sale is more than one percentage point above the 50-year average. Last but not least, the partisan mood of Washington has polarized many people.

The situation for industrial inflation continues to worsen. For greater Grand Rapids, we logged an index of +42. At ISM, the national index rose to +35. What’s even worse is that the list of commodities reported “up” in price continues to grow, and now includes many big ticket items like steel, plastic resins, aluminum, nickel, zinc, and corrugated. Copper recently rose to a 20-month high. Despite the housing slump, plywood and other building materials are rising in price, primarily because of worldwide demand.

Part of this inflation surge can be attributed to the worldwide recovery from the recession. As we have noted previously, the severity of this recession resulted in some resource-producing firms going broke or dropping out of the market altogether, leaving fewer suppliers to meet the resurgence of demand.

A more ominous cause of this new wave of industrial inflation may be the return of commodity speculation. With fixed interest rates of all kinds now yielding record low returns, money managers and hedge fund directors may again begin gravitating toward commodity speculation as a means of raising the performance of their portfolios.

Almost from the time that the recovery began, there has been talk about the possibility of a double-dip recession. Whereas a double dip is possible, it is not probable. However, growth throughout the summer will be inhibited by a weak construction sector, higher interest rates, the end of the $8,000 home incentive and low consumer confidence. Furthermore, we are still dependent on China as well as other creditor nations to continue to buy our ever-growing treasury debt. If we get into any kind of a currency war or trade war with China, this could start to generate a second down leg to the recession.

Brian G. Long, CPM, is director of Supply Chain Management Research, Seidman College of Business, Grand Valley State University.