Conflicting Economic Numbers
Conflicting Economic Numbers
The stock market rally has many economists hopeful that the end of the recession is near, but the recent unemployment numbers may have dashed those hopes. According to Associated Press reports, the nation's unemployment rate jumped to 8.5 percent in March, the highest in 26 years. "It's an ugly report and April is going to be equally as bad," predicted Mark Zandi, chief economist at Moody's Economy.com.
The number of unemployed people climbed to 13.2 million in March and that doesn't include the number of people who are now working part-time due to having their hours cut. Economists predict that these trends in job loss and hours cut will continue for the rest of the year.
This seventeen-month long recession is the longest since World War II.
Some recent positive economic activity had given many hope that the end of this recession was in sight. U.S. factory orders rose in February, ending a six straight months of declines. Plus there were better-than-expected reports on construction spending and pending home sales. Last week a report showed that consumer spending, an extremely important economic indicator, also rose in February and January. The brightest sign of all is the stock market, with the Dow industrials over 8000 for the first time in a couple of months.
"Everyone is in a buying mood," said Eric Ross, director of research at brokerage Canaccord Adams. "Everyone is feeling good. ... A lot of this is simply confidence."
Yet, the layoffs continue. It doesn't look like everyone is in a hiring mood. Some economists say this is not a bad sign as jobs are one of the last sectors of the economy to recover. However, other analysts say that the economy won't recover until job losses stabilize. Construction, retail and factory jobs are cut at the rate of 100,000s per month and the unemployment rate is predicted to hit 10 percent before the end of 2009. According to the AP, economists say the job market may not get back to the normal 5 percent unemployment rate until 2013.
Fortunately, the news continues to be better in Texas, which actually had a drop in jobless claims. Companies like Valence Technologies Inc. are waiting to see what will happen with the stimulus money while making plans to build a $760 million battery manufacturing plant in Central Texas. According to the Austin-American Statesman, the Austin company has applied for a low-interest government loan from a program designed to encourage the development of next-generation autmobiles.
President Obama's stimulus package continues to offer a bright spot on the horizon for many hoping to take advantage of the $787 billion available for public works programs and other initiatives in the areas of energy and education. The package will also help ease some of the burden of unemployment claims on local governments, although Texas has signaled that it may refuse to accept money for temporary programs.
In other government efforts to help the ailing economy, the Federal Reserve has cut a key interest rate to nearly zero in an effort to jump-start lending, as well as other initiatives to inject billions of dollars into the financial system. Is the end near? It depends if the good news can continue to outpace the bad in this on going battle of conflicting economic numbers.
Ki has worked with Austin real estate for almost 10 years. He has sold to a variety of buyers. His site offers listings directly from Austin MLS along with a a mortgage widget.