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Glimmers of Economic Hope Amid Some Momentous Developments
May 26th, 2009 | 12 responses
On a day filled with the news of President Obama’s selection of Judge Sonia Sotomayor to be his Supreme Court nominee, California’s Supreme Court decision on same-sex marriage, and of North Korea’s launch of two more short-range missiles even after conducting an underground nuclear test on Monday, the U.S. economy received relatively little notice.
Yet it should have.
For the “glimmers of economic hope” continue to get brighter.
As usual, before proceeding, reader beware:
For professional and reliable economic and financial information and advice—albeit probably (very) depressing—please consult the real experts, here or elsewhere.
For rumors and “wishful” thinking on how our economy is failing, going to hell in a hand basket, please listen to Rush Limbaugh.
(By the way, Mr. Limbaugh today added the Supreme Court Justice nominee to his tired “I hope he or she fails” wish list.)
According to Bloomberg.com, “U.S. stocks jumped, sending benchmark indexes higher for the first time in five sessions, as the biggest gain in consumer confidence since 2003 spurred optimism the worst of the recession is over.”
The Dow Jones Industrial Average increased 196 points, or 2.4 percent, to 8,473. “Eleven stocks gained for each that fell on the New York Stock Exchange, the broadest rally since May 18.”
The Russell 2000 index of small companies rose 4.8 percent for the steepest advance since April 9.
The S&P 500 added 2.6 percent climbing to 910, representing a surge of 35 percent from a 12-year low on March 9 “on speculation the global recession is easing and as earnings at companies from Ford Motor Co. to Wells Fargo & Co. beat analyst estimates.”
What was behind all this good market news?
According to Bloomberg.com, “Confidence among U.S. consumers jumped in May by the most in six years, fueling speculation the economy will recover later this year.” “The 28-point jump in confidence over April and May is the biggest two-month rally since records began in 1967.”
According to MSNBC.com, “Investors watch the indicator for signs of whether consumers might start shopping more or making bigger purchases such as cars and homes. Spending by consumers makes up more than two-thirds of U.S. economic activity.”
According to the Wall Street Journal, “The Conference Board said its index of consumer confidence for May jumped to 54.9, the highest reading since September, from 40.8 in April. Expectations for economic activity over the next six months jumped to 72.3 from 51.0 in the prior month.”
Yes, continuing high unemployment and falling real estate values are still with us. But, according to Jim King, chief investment officer at National Penn Investors Trust Co., the improvement in consumer confidence surprised investors. With unemployment still high and expected to go higher, many market watchers thought the mood on Main Street would remain gloomy. “The consumer confidence figure is one that no one really pinned a lot of hopes on as going higher,” he said, according to Bloomberg.com.
And more fallout from the unexpected dramatic rise in consumer confidence, all according to Bloomberg.com:
* “Pent-up demand is increasing each passing day as reflected in these confidence numbers,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. “But there is a funny dynamic going on as people are waiting. The turn will come when there is a sense that we have passed the bottom,” which Behravesh said may happen as early as August.
* Americans’ spirits are lifting as stock prices rebound, mortgage rates fall and perceptions grow that the job market may not get much worse
* “We’re certainly moving in the right direction,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “We expect to have positive economic growth in the third quarter. The job declines will fade.”
* The confidence report showed the share of Americans planning to buy a car in the next six months rose to the highest level since April 2008, and those looking to purchase a large appliance rose to an eight-month high. The outlook for home purchases fell.
*The share of consumers who said more jobs will be available in the next six months climbed to 20 percent, the most in more than five years. The proportion of people who said they expect their incomes to rise over the next six months rose to 10.2 percent from 8.3 percent.
* “As far as consumers are concerned, the worst is now behind us,” Lynn Franco, director of the Conference Board’s consumer research center, said in a statement.
Not bad for a day when those “glimmers of economic hope” were overshadowed by so many other developments.
12 Responses to “Glimmers of Economic Hope Amid Some Momentous Developments”
Bloomberg search – GDP drop
U.S. Jobless Rate Likely to Pass Europe’s
A bunch of sheep in need of a good shearing. The unemployment rate is breaking records not seen since WWII, and damn near all of the major economies are seeing their GDP drop.
NABE Outlook: Recession End in Sight, but Subpar Recovery to Follow
Now let me translate their summary in plain English:
We are screwed and if Uncle Sam wasn't pumping money in the Economy like it was going out of style, it would crater (Make the Great Depression look like a walk in the park), on the bright side due to really high unemployment rates, we will be able to screw over our workforce with no problems.
German debts set to blow 'like a grenade'
And once more, it's time for the tax payers to bail out the Banksters…
Amusing how that free market thing works: heads private corporations win, tails tax payers lose.
http://www.nytimes.com/2009/05/27/business/economy/27home.html?_r=1>Home Prices Continued Their Decline in March
Things are looking up, the principal assets of most American households has only lost 19% of it's value in the last year. I am sure that the gains in the stock market will more than compensate for that 19% loss on that $300K house and that we will have people turning their houses into ATMs any second now…
Early retirement claims increase dramatically
Things are looking up, after all the DOW is up a couple of hundred points, I see glimmers of hope bursting all over the sky just like July 4th fireworks…
Thanks, Don Quijote. Great Stuff!
I guess I need to modify my Warning/Disclaimer at the top as follows:
“As usual, before proceeding, reader beware:
For professional and reliable economic and financial information and advice—albeit probably (very) depressing—please consult Don Quijote and the real experts, here or elsewhere.
For rumors and “wishful” thinking on how our economy is failing, going to hell in a hand basket, please listen to Rush Limbaugh.”
Dorian
Please continue to keep me straight, We certainly need a counter balance to any glimmers of economic hope
National Association for Business Economics: 90 percent of economists think recession ending in 2009
(But, what do they know!)
More than 90 percent of economists predict the recession will end this year, although the recovery is likely to be bumpy.
That assessment came from leading forecasters in a survey by the National Association for Business Economics to be released Wednesday. It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues.
About 74 percent of the forecasters expect the recession – which started in December 2007 and is the longest since World War II – to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year, and the remaining 7 percent believe the recession will end in the first quarter of 2010.
“While the overall tone remains soft, there are emerging signs that the economy is stabilizing,” said NABE president Chris Varvares, head of Macroeconomic Advisers. “The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines.”
One of the major forces that plunged the economy into a recession was the financial crisis that struck with force last fall and was the worst since the 1930s. Economists say recoveries after financial crises tend to be slower.
Read more: “National Association for Business Economics: 90 percent of economists think recession ending in 2009″ – http://www.nydailynews.com/money/2009/05/27/200…
Slumping Treasury bond prices send stocks lower
The day to day movement of the DOW is absolutely meaningless.
May 27:
The National Association of Realtors reported that existing home sales ticked up 2.9% last month to a seasonally adjusted annual rate of 4.68 million units compared to the revised rate of 4.55 million in March.
Dorian
Delinquent Mortgages, Foreclosures Hit Record High
“The day to day movement of the DOW is absolutely meaningless.”
Yeah, sure, just like today's “meaningless” upward movement of the Dow of 101 points; a meaningless movement that together with so many other meaningless movements has brought the Dow Industrial average up by a meaningless 1,775 points, or a meaningless 27 percent or so up from shortly after Obama inherited the Bush economic disaster
Meaningless, you say?
I can't wait for many more similar, meaningless DOW day-to-day movements,
We may even get all of our originaly invested assets back in this meaningless way.
We may even get ourselves out of this Bush-induced recession in this meaningless way.
Another absolutely meaningless day-to-day movement of the Dow today (95 points), after another meaningless movement yesterday.
Boy, I hope we'll continue to have many more of these meaningless movements of the Dow.
One day, these maningless movements, along with other meaningless glimmers of economic hope, may even get us out of the recession.
Four Bad Bears
The market is now down 48% from the peak. It bottomed out at 57% and since none of the underlying problems have been resolved, I would not hold my breath waiting for DOW 14000.