Are we headed toward economic recovery? There is good news and bad news.
Good news: Unemployment rates dropped last month from 9.5 to 9.4 percent. President Obama said that this was a positive sign that the recession had bottomed out.
Bad News: 247,000 jobs disappeared from the economy in July. Although that was fewer than expected, Economist Nigel Gault has predicted that the economy will continue to lose jobs through the end of the year, and expects employment to reach a low of 10.3 percent.
Good news: Federal reserve chairman Ben Bernanke said on August 21st that the global economy is beginning to emerge from recession after “aggressive” action by world central banks and governments.
Bad news: This is contrary to the opinion of Harvard Economist Martin Feldstein, who thinks there is a danger that the economy will slip later this year, or the beginning of next.
Good news: Home sales are up 7.2% last month.
Bad news: The national median price of an existing single family home dropped last month, which is the first decline since March. Foreclosure rates are still through the roof, with fixed rate mortgages making up 1 out of 3.
Good news: The Cash for Clunkers program seems to have been a success. Auto sales are up 2.4 percent.
Bad news: When you take away car shoppers, retail sales are down 0.6%. Americans are buying cars, but are not willing to open their wallets for much else. No one can predict what will happen when the Clunker program ends.
Good news: The Dow is up 42% from its low point in March.
Bad News: The stock market rising does not necessarily mean that the economy is improving. In 1929, after the crash, the market shot up 48% over the next 9 months, and then continued to spiral down for most of the next 10 years.
Good news: On August 7th, President Obama said “I’m convinced that we can see a light at the end of the tunnel. We have pulled the economy back from the brink.”
Bad news: In 1932, Presidential candidate Roosevelt ran for President with the song “Happy Days are Here Again” and promised that he would make everything better if elected. Even with New Deal Programs, per capita GDP did not reach pre-crash levels until 1939 – 6 years after he took office.
Obama and his administration want to take credit for all the good news.
All Americans hope that he is right, and things get better soon.
Back in February, the President told the country that without stimulus, employment would drop as low as 9 percent, but with passage of the massive spending package, it would only reach about 8 percent. So far, his prediction skills have not shown to be accurate.
For the time being, prudent Americans should take all economic forecasts with a grain of salt, and make sure we take care of our families and ourselves.
The President may want to jump in front of a camera when there are positive things to say, but he should be prepared to take credit for both the good news, and the bad.
Now for the realistic news:
We may be in this for the long haul.