Friday, March 6, 2009

Amid the gloom - a glimmer

(UPDATED) Two reports out Thursday - February retail sales and jobless claims from last week.

They share two similarities: 1) the numbers in each, while not good, were not as bad as economists expected; and 2) most analysts proclaimed each wasn't really an indicator of improvement.

For retail sales - business at many merchants was not as bad as in January, thanks to Wal-Mart's gains far outpacing expectations. But many stores, especially at the higher end, still struggled.

For jobs - the number of new jobless claims and the total number of people receiving unemployment benefits both dropped more than expected last week. They remain at high levels, however, and combined with previous weeks will make for a dismal monthly report, coming today.

(Update, 9:15 a.m.: The Labor Department said this morning that employers cut 651,000 jobs last month, and the unemployment rate jumped to 8.1 percent. The readings were worse than consensus estimates, but many market participants had braced for even grimmer data. Stocks are expected to rise slightly in morning trading.)

Analysts have long speculated that indicators first need to become less bad before they begin to improve. Are we beginning to see the freefall become more of a tumble?

We asked UNC Charlotte economist Caroline Swartz if the economy is beginning to feel around for a bottom - and why seemingly encouraging news didn't encourage analysts Thursday.

"Each day, we scour the news for signs of hope of the economic recovery," she said. "It's hard to know. A recession isn't a V-shaped decline in the economy, straight to the bottom, and then a rebound straight up.

"The news that retail sales weren't as slow as expected doesn't tell us much. But fewer new unemployment claims is a good sign. On the road to recovery, there are many stops and starts, hopes and disappointments."

She pointed to The Conference Board index, which tracks a number of economic variables, including stock prices, new building permits and unemployment claims. Retail sales are not included.

The index's leading economic indicators increase a few months before the economy recovers, Swartz said. The leading indicators increased in December and January.

We'll know about February later this month, but: "For most of us," said Swartz, "one good sign is welcome at this point."

Your Morning Edge:

Central Piedmont Community College has rescheduled its "Resources for Changing Times" event, which was postponed because of snow Monday, to March 16. The free event offers workshops and resources from local businesses, agencies and schools.

Several former blue chip stocks, once the pride of the Dow, are now near a dollar, The New York Times reports.

The three biggest sports arenas/stadiums in history are about to open this year. Bad timing, says the Wall Street Journal.


Anonymous said...

We all need to turn in our cars, get bicycles, and pedal on over to the nearest "shovel ready jobs".

With the stress being on "SHOVEL" ready. The glut of jobs I hear being promised (repairing bridges and crumpled infrastructure) are construction jobs. How many of you that are out of work can still sling a shovel with the best of the illegals who also will be after these meager offerings?

What happens when that bridge is repaired? Obama strengthen welfare?
Turn into a drunk and just lay back (no worries) while he "handles" everything.

Yep, bicycles and some temp. "shovel jobs" and we will be a third world country before we know it!

I think those shovels would be better put to use shoveling out some "stuff" out of Washington!

Anonymous said...

I think Wal-Mart did so well because frankly it's cheaper to buy groceries at their super centers than at your local grocery store. I know I've been shopping there a lot more!

Vincent said...

Hello Peter,

As a believer "hybrid" free market capitalism, my personal take on this bizarrely interesting
yet almost normal business cycle, is that had the feds had the
kahonies to stay out of its way we would have more clear indicators of when the descent turns into stabilization, turns into upswing, turns into rebound.

I have eaten my fair share of beans for dinner in my lifetime, and am not afraid of doing it again, and would rather see the economic chips fall where they may, than be propped up at the expense of you I, and the proverbial future generations. If we know we are going to get kicked, hard, in the rear end, let's go ahead and take our lumps, America has always done its best and shined the most being fed a diet of wounds to tend, and heal than uncertainty to ponder.

It is a natural course of events for depressions, recessions etc to occur as a means of determining
an acceptable median line (prosperous, yet realistic growth patterns)from which to judge the ups and downs.

Capitalism is a machine lubricated for longevity by oversight, not outright government control.
I think all these bailouts, the stimulus package, in the long run will best be described in the future as having been a air bubbles in the blood stream, rather than an iv of healing solutions.

Anyone with a brain can see the proverbial "moral hazard", was the carbuncle that lanced itself in our housing, and financial markets. So indeed some form of regulation is required as the oversight, thus the hybrid reference.

Maybe other readers have insight onto what barometer said regulation would be based, I mean who’s to say that a person buying a home should be allowed, or not allowed to buy more home than their long term contract (read:ARM) suggest is a wise decision, or that some grand insurance company CEO should not have compensation the size of some unpronounceable third world country’s gdp?

In the meantime as a home remodeler, coming out the typically slow winter season, my phone has started ringing, people want things done fixed that I just kind of assumed they would not want addressed in this "economy". There was a wait at Antonio’s for dinner the other night, a brand new Chili’s is going up around the corner, I have noticed more people in Lowes and Home Depot yesterday, a Thursday, than the day before our little snow storm. Three of my friends, mind you mostly out of necessity, but fueled by incredible deals purchased cars last week. It is my honest observation, and opinion, none of that has anything to do with anything our new government has done to make such things happen.

Anonymous said...

To add to what Vincent said...

In the past week, we've had our chimney relined, installed new carpet, hired a painter and electrician. Instead of selling and moving, we are remodeling. The individuals we have hired have told me they've seen a definite increase in business just in the last few weeks.

Anonymous said...

+1 for Vincent. This guy knows what he is talking about.

Anonymous said...

I agree with Vincent. Washington is killing us. How do we stop the madness? I have written our senators and congressmen and they are trying or most of them, anyway.
Now the dems are raising their own take from the taxpayers. Should we write them and tell them how stupid they are? I guess they think they have "fixed" things so they will win the next election anyway.

Anonymous said...

Regarding Vincent's comments

I have zero problem with CEO's making a gazillion dollars as long as they are not being propped up by the gov. The minute they accept bailout $$$ the game changes. As for people being allowed to buy more home than they can afford, a little more regulation will not hurt. There's still ample money available for the credit-worthy and at good rates. Just no sense in giving high LTV loans to marginal borrowers in a declining market.

Anonymous said...

8:21 ANON You hit the nail on the head. You might want to add "build a windmill" to the jobs the current president is proposing.

You could take this whole trillion dollar stimulus package and put everyone back to work that has lost thier jobs over the last year. Give that money to the employers that have laid off ONLY if they bring back the laid off employees and THAT would stimulate the econony.

Also, the media needs to take some of the blame for this "sky is falling" mentality. Never know the media to be that truthful so why not just start printing that the economy is on a upswing. You would see a difference in attitudes, hiring and spending.