1 Boring Old Man

Hope Builds for the Economy As Positive Reports Pile Up
By Neil Irwin
Washington Post
July 24, 2009

^{Companies that a few months ago were too fearful even to project their future earnings are now seeing glimmers of hope in the year ahead. The rate of home sales has risen for three straight months. And the number of people drawing unemployment insurance benefits has fallen back to April levels, having receded for the third straight week.}

^{All those recent signals sent the stock market surging Thursday as investors sensed that the recession could be in its waning days. Many suspect that even if no recovery is imminent, the steep economic decline has either already ended or will soon.}

^{That confidence drove the stock market, as measured by the Standard & Poor’s 500-stock index, up 2.3 percent Thursday — continuing a rally that has driven the broad measure up 44 percent since March 9 and 11 percent in the past two weeks. The Dow Jones industrial average has gained 39 percent since March 9 and closed above 9000 for the first time since January. European markets rose by a similar amount on Thursday, and Asian markets opened up in early trading Friday.}

^{"It’s a lot easier to argue now that the recession is fading," said Joel L. Naroff, president of Naroff Economic Advisors. "We can be more comfortable now that the recession is winding down and should be over within the next few months." The cheery mood on Wall Street notwithstanding, the latest data are hardly evidence of a new boom on the way.}

^{Sales of existing homes rose 3.6 percent in June, the National Association of Realtors reported on Thursday, to an annual rate of 4.9 million homes sold. While that level is very low by historical standards, it is the third straight month of increase — a sign that housing may no longer be a net drain on economic growth. "One month is nice, two months opens eyes, and three months is a trend," said Naroff.}

^{Home prices are still falling, however, and it could take some time for the bloated inventories of homes for sale — 3.8 million of them, a 9.4-month supply — to come back into a more normal range. A six-month supply would be typical.}

^{Similarly, the job market remains in terrible shape, but the pace of layoffs appears to be abating. The Labor Department said Thursday that 6.2 million Americans were receiving unemployment insurance benefits, continuing a decline in that measure of joblessness. Some 554,000 people filed new claims for jobless benefits, high by any conventional standard but remaining below 600,000 for the third straight week and down substantially from the 674,000 such filings in the last week of March.}

^{The continued weakness in the labor market is among the greatest continuing threats to the economy, analysts said, an argument that Federal Reserve Chairman Ben S. Bernanke made in congressional testimony this week. Even as companies begin cranking up production to replace depleted inventories, Americans who are out of work — or fear they may become so — could be disinclined to spend money…}

When it’s all said and done, however, it all hinges on the economy. They can yell and scream all they want to, but the fulcrum will be placed by the job situation and people’s personal economic status – all the rest is much ado about nothing. Health Reform is also key. Right now, an outrageous number of Americans have no real access to health care – even many of the insured. And the Lobbies are pouring gajillions into trying to defeat health care reform [to their own shame].