For months we’ve been told it’s coming. The anointing was a foregone conclusion. Experts predicted it would be a fact by March 31st. Hundreds of articles reaching to thousands of column inches have confirmed it. All the signs were in place, said the Associated Press, and “sixty-one percent of the public” believed it was a done deal. But, despite all the prognostications, the long-awaited event hasn’t materialized. Now, signs indicate it may never happen.
No, we are not talking about the fall of Hillary Clinton, though that too has been regarded as a fait accompli, never more so than during the few days since Barack Obama’s landslide victory in South Carolina. But the long-predicted phenomenon we’re pondering is as reluctant to appear as Hillary is to disappear. And now, we are going to go way out on a limb to be among the first to say — there will not be a recession in the foreseeable future! The economy has bottomed out and a recovery will be underway by the end of the second quarter! You read it here first; when it happens, give praise and send money.
A steady string of announcements, tucked away in the far reaches of Business Sections and News Briefs, reward the diligent researcher with hope-filled economic news. On March 28th, Reuters reported “U.S. personal income rose more than expected in February…” On May 2nd, Reuters published a similar report for personal spending: “…personal spending in March was stronger than expected.”
Appearing in almost every news account of positive economic activity are phrases like “more than expected,” “stronger than expected,” “surprising,” and the like. Having printed so much economic negativity, journalists are stunned when their own predictions are proved false. Typical is this Business Section piece from the Los Angeles Times, published on April Fools Day. “The U.S. Stock market in the first quarter suffered its heaviest losses in more than five years, but the surprise to many investors may be that things weren’t a lot worse…most key stock indexes finished the period down 10% or less.” Chicken Little is lost for words when the sky doesn’t fall. Oh by the way, the Dow Jones closed today more than 500 points higher than the close of April 1st.
Back to the good news. The Californian declared on May 6th that “Data showing an unexpected expansion in the service sector in April raised hopes…” The Associated Press reported yesterday that Treasury Secretary Henry Paulson is optimistic about the crippling mortgage situation. “The worst of the nation’s credit crisis may have passed,” said Secretary Paulson. Just today the Associated Press announced that last week’s jobless claims fell “more than expected.” Also today the Los Angeles Times revealed that “shoppers pushed retail sales to their highest level in more than a year last month.” The headline is typical of “yes there will be a recession” true believers. The banner reads, “Retailers’ gains don’t ease fears.” Well, not for Michelle Obama at least.
Perhaps the clearest indication that a rebound is near is found by comparing job losses for the last three months. February job losses came in at 83,000 and March losses totaled 81,000, according the Los Angeles Times. However, the April employment report showed a loss of 20,000 jobs, much better than the forecast loss of 75,000 to 85,000 positions. I’ll bet you a dollar to a dime the jobs report for May is positive. Any takers?
The mortgage/housing debacle has been the single overwhelming drag on the economy, and light at the end of that very dark tunnel will trigger a sudden economic rebound. Here’s why. Tens of thousands of home-buyers, speculators, and investors have been sitting on the sidelines waiting to determine the best time to buy. Very recently, bank owned homes have been the target of aggressive buying, and short sales have accelerated as well. Government sponsored efforts to stem the flood of foreclosures is beginning to have an effect. These factors, plus the always increasing demand for housing, will turn the housing market around faster than you can say “biased reporting.”
The first report of home-price increases will initiate a feverish buying spree, propelling property values back up toward their 2005 levels and spurring the rest of the economy. An investment banker told me recently that after months of virtually no activity, his firm has processed dozens of transactions within the last few weeks. Once the summer buying season hits, talk of a recession may finally be laid to rest — until the next presidential election.
There ought to be a law.
Posted by Jerry Pomeroy in Campaign 2008, Media