Tuesday, May 26, 2009
Mixed signals on the economy: is it a rebound or are we headed for a double dip recession?
I spend an inordinate amount of time looking for signs of an economic rebound, but with each day's passing, the picture seems to become less clear. The stock market seems to want to rebound, but most analysts think a "correction" is overdue. The consumer confidence data is looking better, yet retailers report dismal results. Then there are days like today when everything looks dark. Consider:
* ... DOUBLE-DIP RECESSION? CNBC reported today that the U.S. economy "appears destined for several years of weak growth and high unemployment," leaving it vulnerable to a "recession relapse." From the story:
"When you remove the government stimulus, what the private sector can generate in terms of growth feels like a recession," said Jeffrey Rosenberg, head of global credit strategy at Band of America Securities Merrill Lynch in New York.
"Rosenberg thinks the U.S. Economy may trudge along at a sluggish growth rate somewhere in the range of 0.5 percent to 1.5 percent while banks recover from the credit crisis, which could take another three years.
"This is a much darker outlook than the one put forward by President Barack Obama's administration in its latest budget projections, which show economic growth bouncing back to 3.2 percent next year and hitting 4.6 percent by 2012."
* ... MORE HOUSING WOES: Prices of homes in March fell a sharp 18.7 percent from a year ago, yet more bad news. Standard and Poor's Case-Shiller Home Price Indices showed housing stuck in a slump in the worst downturn since the Great Depression. Locally, folks like Realtor Mary Christenson report an uptick in sales, even if prices are still dropping. That's good news in that it burns through inventory, but the Case-Shiller data shows we have a long way to go.
* ... BAKERSFIELD BLUES: Another list is out showing the percentage of homes in a market that have "negative equity," and Bakersfield is ranked at No. 13. This means that 39 percent of the mortgages locally are upside down. Just amazing. Here's the list:
1) Las Vegas
7) Fort Pierce, Fla.
11) El Centro
12) Yuba City