When it comes to gauging the direction of the economy, most of us think “inside the box,” expecting things to continue the way they have been going. But signs have begun to indicate that our economic condition may be on the mend, with the possibility of better times ahead.
It’s no sure bet at this point, but recent unemployment reports show the nation finally heading on a steady upward trajectory that could mean the worst of this deep recession is behind us. In addition, a key component of the downturn – housing sales – may also have turned around based on the latest numbers. The fact is, this week’s reports contained some “unmitigated good news” for the American economy, according to Felix Salmon of The Daily Beast:
“The cheer is spread all over this report. The broadest measure of underemployment, U-6, fell sharply to 15.2 percent, again a new three-year low, and down two full percentage points in two years. The unemployment figures more generally are now beginning to look as though they’re in a downward trend, rather than every good month being offset with a subsequent disappointment. I’m not worried about an economy falling below stall speed anymore—there’s a world of difference between this report and the gruesome one we were initially presented with four months ago. Back then, it seemed like nothing could get Americans back to work: now, with political gridlock as far as the eye can see through 2012, it seems that America has got used to nothing and is has worked out how to grow anyway.”
The non-farm payroll job increase released last week hit 200,000 – exceeding the consensus expectation of 155,000 new jobs. And the unemployment rate hit 8.5 percent — the lowest number since February 2009.
But not all is rosy according to Zero Hedge, an online publication, which notes:
“the unemployment rate trickery still continues, with labor force participation (prior revised), now at a 27 year low of 64%, and the labor force itself declined by 50K from 153,937 to 153,887. In fact, persons not in the labor force have increased by 7.5 million since January 2007! Bottom line – dropping out of labor statistics is the new killing it.”
Real estate news, while mostly positive, also demonstrates the mixed-bag nature of America’s economic recovery. Reuters reported on December 29 that “[p]ending sales of existing homes surged to a 1-1/2 year high in November,” but a local real estate agent I spoke to this weekend told me that the marketplace still has some large gaps.
“In my market, higher cost homes [in the million plus category] are selling well, although bumping along at very low prices. The same is true for homes priced below $400,000. But in the large swath of homes between those two ends, sales are flat-lined,” he told me. Homes in the mid-priced category represent the majority of properties for sale in most markets. Also, because the statistics cover pending sales vs. actual sales, the numbers are subject to revision based on the ability of buyers to get mortgage approval.
Concerns also exist over the highly unstable European economic mess, which seems to careen almost day-by-day from settled to unsettled. While the Euro crisis could affect the American economy, the fact that Europe is a relatively small trading partner with the United States somewhat ameliorates the potential impact on our economy.
Hence, it may be time to allow a glimmer of positivity into our thinking about the economy. And although it’s still too early to breathe a full-blown sigh of relief, the economic news could have a substantive impact on the political environment. Every upward tick works in the favor of the Obama administration and undermines Republican arguments that the president’s stewardship of the economy has been disastrous. Whether the good news continues, and whether it’s in time to help the president’s popularity, remains to be seen.