By Bonnie Erbe, Thomas Jefferson Street blog.
I'm beginning to hear the welcome sounds of an economy starting to rouse itself out of slumber. I'm not saying it's turned around yet, or anything close to that. I'm just sensing and hoping that bottom may have been struck, or that the slide is starting to slow. We may still be months, if not years, away from economic growth. But the speed of the crash seems to be slowing.
Anecdotally, the few friends I have in real estate say more resale housing contracts are going to closing. A person I met through work whose spouse is employed at a local Ford dealership says 21 cars (new and used) were sold last Saturday, which is a one-day high not reached by that dealership since about two years ago.
Then, of course, the question we all keep asking ourselves is, how much worse can it get? Every time I've given myself the freedom to ask, "Have we hit bottom yet?" some more lousy economic news comes out and it turns out we have not. At first I hoped former President Bush's fiscal injection into the banking system would free up credit. Well, that hope was pretty short-lived. Then I hoped Congress' passage of the Obama stimulus package would point the stock market looking north instead of south. Wrong again. President Obama is certainly not responsible for this economic mess—-it was handed to him by his predecessor. But neither has the market given his recovery plan anything approaching a thumb pointed skyward.
Some of his gaffes have verged on the unforgivable. President Obama's use of the term "catastrophe" in conjunction with the word, "economy" is one. His Treasury Secretary's poor performance before Congress is another. And then there was Fed Chairman Ben Bernanke's admission before the Senate today that the recovery could be a year or more off. He said: "This outlook for economic activity is subject to considerable uncertainty, and I believe that, overall, the downside risks probably outweigh those on the upside." Of course Bernanke's not an Obama appointee. Nonetheless, couldn't he have stopped at, "uncertainty?"
There are some positive signs that cannot be ignored. Home Depot's quarterly performance was much better than expected, sending the stock up sharply. Where Home Depot goes, so goes the construction trade. Irwin Kellner of MarketWatch.com notes some other positive trends:
- The Conference Board's index of leading economic indicators has risen for two months in a row.
- Producer prices have increased for two straight months.
- Consumer prices rose in January—the first monthly gain in six months.
- The Baltic Dry Index, which measures the cost of shipping key raw materials like copper, steel and iron, has more than doubled from its recent lows.
- Existing-home sales rose in December, and participants in our weekly survey think that another rise took place in January.
So is it soup yet? Have we hit bottom yet? Are we getting closer to the bottom? Let's all hope so.
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