Is the U.S. Economy Showing Signs of Recovery?

economy upA look at recent U.S. Economic news suggests that the Nation’s Economy is headed in that direction primarily due to the recent monetary liquidity inserted by the Fed. Does this mean the recession is over? No, but we may be close to bottoming out and the recovery may be achieved more quickly than previously projected.  A “V” shaped recovery is being talked about with a “bottoming out and quick uptick”.  Read on …

US Economy Could Recover Much Sooner than Expected
CNBC, Albert Bozzo, 4/9/09
A growing group of economists believe that the recession will not drag on as long as expected. These economists see a “V” shaped recovery similar to the 70’s and 80’s recoveries. The reasons for the optimism:
1. Easing of the credit crunch
2. Improvement in consumer spending
3. Better Auto Sales
4. Close to bottom out in housing market
5. Less grim job picture
Bottom line is that the recession isn’t over but the end is closer than many think. Some economists are projecting a flat or slight drop in the second quarter followed by sustained growth in the 3rd quarter.

“The velocity of downturn is lessening,”

says John J Castellani, chief economist and president of the Business Roundtable.

The Recovery Begins, Brian Wesbury, Robert Stein, 4/7/09.
As of Friday, April 3 the Dow Jones is up 22.5% in less than a month, the NASDAQ is up 27.8% and the S&P 500 is up 24.5%. What does this mean? According to Brian Wesbury and Robert Stein, economists at First Trust Advisors in Wheaton, Illinois, it means that the Economic Recovery has begun. Specifically, the economists state that,

“This sea of money is impossible for the economy to ignore”

referring to the vast liquidity that the Federal Reserve is providing. They also note that rising – 1. Home Sales. 2. Retail Sales. 3. Auto Sales. 4. Oil and other Commodity Prices. 5. CPI. 6. PPI. and 7. the Baltic Freight Index numbers all support the notion that the money is working its magic.

Housing Analysts Predict the Bottom is Near
Realtor Magazine, Daily Real Estate News, April 28, 2009

“The bottom of the housing decline is near,”

predicted analysts and home builders attending the National Association of Home Builders’ semiannual Construction Forecast Conference last week.  Observers generally agree that the feds efforts to shore up the housing market should take effect by the end of 2009 or early 2010.

Signs Point to Improving Economy
Realtor Magazine, Daily Real Estate News, April 17, 2009
Federal Reserve Bank of Atlanta, president, Dennis Lockhart stated,

“The economy is still very weak, but there are some encouraging signs that support cautious optimism”.

Economists point to several factors to indicate that the economy in general and the housing market specifically may be rebounding including:
1.  March home sales remained flat compared to January and February sales.
2.  Labor Department Claims were down the week ending April 11, 2009 and therefore some segments of the economy may be stabilizing.
3.  New home construction remains low because of the inventory glut, but the situation does not seem to be worsening.

Top Economists Say Recovery Has Begun
Realtor Magazine, Daily Real Estate News, April 7, 2009
Mark Zandi, chief economist of Moody’s says that economic recovery is about making people feel more confident. 

“Zandi evidenced increasing home sales and gains in the stock market are some promising signs that the worst is over and people will start spending again.”

He also notes that we are starting to see some pent up demand for goods.  However he warns that confidence is very fickle and can go from pessimism to a more balanced world view quickly. Robert Brusca of FAO Economics predicts strong growth in the labor market in the last half of the year and a quick recovery for the labor market. Joseph Carson, chief economist at AllianceBernstein, describes improving home sales, a rising stock market, and better than expected February and March retail sales as
good signs of a turnaround.

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