We will find out soon enough - say, by the end of summer - whether headline writers in the mainstream financial media or those working at The Onion are correct in their assessment of the state of the U.S. economy. Here's an example of the former that appeared on the front page of Yahoo! yesterday for a few hours.
That SOLD sign is a compelling image for anyone thinking about the future. prices have been and continue to be at the center of our problems and their is near universal agreement that the economy won't improve until the housing market improves.
Just how does the story behind this compelling image figure that's happening?
Prepare to be underwhelmed.
8 Signs of Hope for the EconomyThey go on to talk about earnings, jobless claims, new orders, and credit markets arriving at no real conclusion other than the one stated in the title.
Are we on the brink of a rebound, or is it a false spring? Fortune looks at the evidence for an imminent recovery.
Is the economy looking up, or at least bottoming out? Lately there has been much talk about "glimmers of hope," in President Obama's words, and "green shoots," a phrase du jour used by the likes of Fed Chairman Ben Bernanke.
Meanwhile, many economists have warned about a false spring, pointing to numbers that are still getting worse, like the unemployment rate. Fortune takes a closer look at the upbeat news to assess whether how strong a case they make for an imminent recovery.
1. Housing Starts
The government reported that the overall number of housing starts fell in March, but those for single-family homes during the month came in unchanged from the February figure of 358,000.
IHS Global Insight noted that this suggests single-family home construction may be stabilizing and is "testing the bottom."
2. The Stock Market
The S&P 500 was up 9.4% in April, its biggest monthly rally since March 2000. The Wilshire 5000 Total Market Index ended the month at 8,962.96, up 849.85, or 10.48%. This is the best monthly return since December 1991, when the index was up 10.72%.
"The initiatives of the federal government and some of the improvements in the credit markets are making investors more confident," said Thomas Cowhey, chief investment strategist at Hirtle Callaghan.
3. Consumer Confidence
Preliminary figures for the Conference Board's Consumer Confidence Index showed a jump of more than 12 points during April, to 39.2. The reading, which measures consumer views on the economy, beat analyst expectations and was the highest so far in 2009.
Lynn Franco, director of the organization's research center, attributed the rise in confidence to "significant improvement in the short-term outlook."
4. Single-Family Home Prices
The S&P/Case-Shiller Home Price Indices showed that while 20-city and 10-city Composite Home Price figures declined through February 2009 (down 18.6% and 18.8%, respectively, from a year ago), for the first time in 16 months the annual decline did not set a new record.
While it signals that the market may be showing some stabilization, or at least what Chairman of the Index Committee David Blitzer called "deceleration in the rate of decline," Blitzer warned that we "need a few more months of data before we can determine if home prices are finally turning around."
Meanwhile, the Pending Home Sales Index rose for the second straight month in March and was up more than 1% over the year-ago figure. The index from the National Association of Realtors (NAR) increased 3.2% during the month, to 84.6%.
"This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit," wrote Lawrence Yun, the NAR chief economist.
It really is hard to be swayed by stabilization in housing starts at current levels as new home construction is at such freakishly low levels, some 25 percent below the all-time population-adjusted low of 1980.
As for the stock market predicting the recovery, an important related statistic might be something like, during the Great Depression, the stock market predicted 5 of the first zero recoveries (i.e., huge bear market rallies failed to produce an "economic" recovery).
Consumer confidence rebounding from all-time lows going back more than 40 years is a good thing, but by no means sufficient for a sustainable rebound, and annual home price declines that did not set a new record for the first time in 16 months is only an indication that the rate of change in home prices is improving - from an annual rate of -34 percent to -26 percent.
Quoting the Chief Economist at the National Association of Realtors harkens back to 2005.
Haven't we learned anything in the past four years.
No, the nation's leading satirical newspaper probably has it right in their take on things.
Nation Ready To Be Lied To About Economy AgainNathan Pletcher probably speaks for millions of Americans.
WASHINGTON—After nearly four months of frank, honest, and open dialogue about the failing economy, a weary U.S. populace announced this week that it is once again ready to be lied to about the current state of the financial system.
Tired of hearing the grim truth about their economic future, Americans demanded that the bald-faced lies resume immediately, particularly whenever politicians feel the need to divulge another terrifying problem with Wall Street, the housing market, or any one of a hundred other ticking time bombs everyone was better off not knowing about.
In addition, citizens are requesting that the phrase, "It will only get worse before it gets better," be permanently replaced with, "Things are going great. Enjoy yourselves."
"I thought I wanted a new era of transparency and accountability, but honestly, I just can't handle it," Ohio resident Nathan Pletcher said. "All I ever hear about now is how my retirement has been pushed back 15 years and how I won't be able to afford my daughter's tuition when she grows up."
"From now on, just tell me the bullshit I want to hear," Pletcher added. "Tell me my savings are okay, everybody has a job, and we're No. 1 again. Please, just lie to my face."
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