Could This Be a Stealth Recovery?
Taking a 'glass is half-full' view of the economy
Saturday, August 11, 2012
The Great Recession ended in 2009 but in the last three years, economic growth has been minimal. For millions, it seems there has been no end to the recession.
After some encouraging signs early in the year, things appeared to slow down again, especially as gasoline prices rose toward $4 a gallon. With Europe on the brink of financial disaster and a “fiscal cliff” looming in the U.S., when automatic tax hikes and spending cuts are programmed to go into effect unless Congress acts, no one has suggested the economy is improving.
Still, if one looks hard enough, there are encouraging signs here and there. Last month's employment report surprised to the upside when 163,000 new jobs -- about twice as many as forecast -- were created. But economists pointed out we need a lot more jobs than that and the unemployment rate actually went up to 8.3 percent.
Still, there are indications that things actually may be getting better on the jobs front. This week the CEO of a jobs site, Simply Hired, told ConsumerAffairs' Daryl Nelson that job openings grew 4.5 percent month-over-month and more than twice as fast year-over-year.
The government's job openings report for June shows a similar encouraging trend. The Employment Trends Index was up 0.4 point, which makes the recent lackluster job creation numbers that much more puzzling.
“The lack of follow through on hiring after a strong couple of months early this year is not entirely due to real economic trends, otherwise we would not be seeing the underlying labor market indicators moving upward,” said economist Joel Naroff, of Naroff Economic Advisors, in Holland, Pa. “It has to do with psychology and that is where the policy makers come in.”
Naroff says the European Central Bank has to do a lot more than talking loudly. It has to come out with the big stick.
Miracle needed in Washington
“In the U.S., the unthinkable has to happen: politicians have to compromise as no one in Washington has the 'true' answer to the fiscal and economic issues facing the country,” he said. “I suspect that the ECB will act before Congress does and that does not bode well for a rebound in job gains over the course of the rest of the year. But these data argue that there is no reason to think the job payroll increase posted in July cannot be duplicated in the months to come.”
There are other signs that the economy might be slowly gathering momentum while no one is looking. Oil prices are headed higher again, and not just because of refinery problems in California and the Midwest. U.S. oil demand, after being slack for months, suddenly seems to be on the rise.
Home prices on the rise
There are increasing signs the housing market, the source of much of the nation's misery, may have bottomed. The latest data show home prices are on the rise again, even in some of the hardest hit markets. The flood of foreclosures forecast to hit the market hasn't materialized.
Then there is the stock market. The Dow Jones Industrial Average is up 952 points, or seven percent, since the start of the year. The rise has baffled many on Wall Street who argue it isn't supported by market fundamentals. Yet the market has a way to predicting the economy six months in the future.
A lot could still go wrong, but maybe it's not completely crazy to think that the economy could gain some traction in the coming months and it could be a while before anyone really notices.