Thursday, August 27, 2009

Lifting Clouds

The Fall is usually a time of bleaker economic news than the rest of the year. Not so much this year:
Aug. 27 (Bloomberg) -- Fewer Americans filed claims for jobless benefits last week, another sign the economy is pulling out of the worst recession since the 1930s.

Applications fell by 10,000 to 570,000, a higher level than forecast, in the week ended Aug. 22 from a revised 580,000 the week before, Labor Department data showed today in Washington. The total number of people collecting unemployment insurance fell to the lowest level since April.

Companies’ staff cuts are easing as government stimulus measures help stabilize the housing and manufacturing industries. At the same time, a rebound in hiring will take longer to occur, restraining the consumer spending that accounts for about 70 percent of the economy.

[...]A separate report from the Commerce Department showed the U.S. economy contracted less than forecast in the second quarter as a jump in government spending and smaller cutbacks by consumers helped mitigate a record plunge in inventories.

I won't bore you with an analysis of that last paragraph. Suffice it to say that companies are running leaner operations than they had been, and the economy is starting to drift back towards growth.

The wildly successful Cash For Clunkers program, ended Monday but launched July 24, wasn't even a factor in the 2nd quarter, which means that the 3rd quarter will probably show a further slowing in the rate of recession, if not a turnaround.

New homes sales rose ten percent in July, which is an amazing leap when you factor in the thought that mortgage lending was nearly non-existent until the second TARP bailout enacted under President Obama. Still, sales are off 13.4% from July 2008. July 2009 was the fourth straight month to show a gain in new home sales.

That's not to say housing is out of the woods yet. Lending to builders is still tighter than a maiden aunt's ass which means new home construction, a vital component of the American economy, is moribund. What you're seeing is the sale of previously built homes that sat empty.

Still, things could be much worse and the economy could be in a lot worse shape than it is. Right now, things are still teetering on the precipice like a Keystone Kops clown car. We could still tumble.

But at least I have faith that this driver is not going to put the car back into gear and drive us off the cliff like the last President nearly did!