Fool's gold

U.S. markets bounced boisterously Monday, although it might be argued manufacturing data yanked markets back into action.

Stock markets are typically sleepy during a holiday week with few shares trading hands and all but the most cursory government reports fueling the imaginations of the brokers still in town. If the week between Christmas and New Year's was a slow groan, Monday markets snapped back in place after the Institute for Supply Management said manufacturing grew for the fifth consecutive month in December.

Manufacturing can't go very far without towing jobs behind it. Even as the economic recovery has proven largely jobless so far, with factories trimmed down to minimal crews, there is only so much efficiency available before rebuilding inventory means hiring more workers. At that point a fresh cycle of growth could begin.

With the U.S. economy tethered to China, a trading partner worth $410 billion a year, it didn't hurt that the Chinese economy put on a head of steam in December, growing at the fastest rate since 2007, The New York Times reported Tuesday. India, in turn, said recently it was on track to import more oil than ever before, which puts pressure in oil prices, but sets the stage for growth in spending and influence there. "Strong growth in Asia reverberates around the world and helps U.S. exports," said Allen Sinai, chief global economist at Decision Economics.

"We're really coming back. The expansion is picking up the pace," he told the Times.

For every upbeat economist out there, however, there is a naysayer a legitimate cause for concern. The $787 billion U.S. stimulus spending package will wind down this year, leaving some to conclude the government has painted over the rust, rather than rebuild.

"You come back to the unfortunate reality that the underlying problems are still very much there. It's going to be a long grind," said Joshua Shapiro, chief United States economist at MFR Inc.

Underneath the RustOleum, what have we got? Much of the country's economic growth between 2003 and 2007 was due to the underlying strength of the real estate market, which turned out to be fool's gold.

Take away stimulus and assess the true value of U.S. economic expansion since 2002 and "what are you left with in terms of underlying growth? The answer is, not very much," said Stephen King, global chief economist at HSBC.

It still matters -- it may even matter more -- that U.S. manufacturing has turned in positive data for five months running. Unarguably manufacturing is a fundamental economic component that could spur hiring, which could, in turn, spur spending. Then, it could be said, the economy would be getting somewhere.

In international markets Tuesday, the Nikkei 225 in Japan rose 0.25 percent, while the Shanghai composite index added 1.18 percent. The Hang Seng index in Hong Kong rose 2.09 percent, while the Sensex in India rose 0.73 percent.

In Australia, the S&P/ASX 200 rose 0.98 percent.

In midday trading in Europe, the FTSE 100 in Britain added 0.4 percent, while the DAX 30 in Germany lost 0.12 percent. The CAC 40 in France rose 0.05 percent, while the pan-European DJ Stoxx 50 lost 0.11 percent.