A bevy of decent economic news this morning wasn't enough to send stocks much higher, so perhaps the market is a little tired of rising. After resting, it may have the strength to continue its ascent, especially if the economy keeps showing signs of a gradual recovery, as it did today.

The economic data released this morning centered on three key items:

  • New jobless claims were an adjusted 384,000 for the week ended October 11, the lowest since February and lower than estimates. A number above 400,000 is considered to signal a weak job market.

  • Inventory levels at U.S. corporations declined more than expected, falling 0.4% in August, the largest drop since December 2001. A large decline in auto inventories helped. In a weak economy, inventory levels increase because customers are buying less. Increasing inventory levels can lead to a danger of deflation as producers lower prices to sell product. The decline in August inventories calms those fears.

  • The Consumer Price Index, which is eyed for inflationary or deflationary signs, rose 0.3% in Sept., a tick above the 0.2% estimate. This increase also calmed deflationary fears, while not being strong enough to stoke fears of inflation. Higher gasoline prices added to the gain, but excluding food and energy, consumer prices rose only 0.1%. (This also augurs that the Federal Reserve won't raise interest rates soon.)

History has shown that, typically, the more gradual an economic recovery, the longer and better its "quality." If this is the case, then the economy's slow recovery after the 2000-2002 bear market, if a recovery is indeed what it's been, could be a good sign that we're in for a steady cyclical economic upturn. If history is a guide, such a recovery could, with luck (and barring attacks, wars, etc.), expand for years.