I'm glad the recession is over - It was depressing me

March 26, 2009


Some see signs the worst is over for economy

Analysts say downturn isn't done

BY MARTIN CRUTSINGER
ASSOCIATED PRESS

WASHINGTON -- Glimmers of hope for the economy -- better home sales and higher demand for goods, plus optimism from the White House and a nearly 20% rally in stocks -- have some people wondering if the worst is over.

Not so fast, say many economists. Layoffs are mounting, and home prices are falling in an economy shrinking at an alarming rate. A recovery anytime soon doesn't seem likely.

"We may be seeing the end of the beginning of this recession, but it is not the beginning of the end of the downturn," said David Wyss, chief economist at Standard & Poor's in New York.

For now, in five key areas of the economy, there are signs of life and reasons to believe the worst is not yet over.

Durable goods

The good news: Orders for manufactured products expected to last at last three years, or durable goods, rose last month for the first time since July.

Reality check: Orders for durable goods are still below their levels of a year ago, and analysts say they will remain low because of weak demand here and overseas for cars and other big-ticket items.

New home sales

The good news: Sales of new homes rose 4.7% in February from a month earlier. And the government revised January's figures higher. It was the first monthly gain for new home sales since July.

Reality check: Developers still face competition from foreclosures, and there's still a mountain of unsold homes. The results from February were still the second-worst in records that have been kept since 1963. (January was the worst.)

Existing home sales

The good news: Sales of previously occupied homes went up 5.1% in February from the month before. Buyers took advantage of a market that pushed the median price down 16% from a year earlier. Mortgage rates are historically low, and a new $8,000 tax credit for first-time home buyers also could further lift sales.

Reality check: It's too early to proclaim a comeback for the beleaguered housing market. Sales of existing homes are still the lowest they've been in a more than a decade.

Retail sales

The good news: Shoppers bought a few more necessities in February, offering some hope for stores. Retail sales dipped 0.1%, and they rose in January. J.C. Penney and Target said their same-store sales were down, but not as sharply as expected.

Reality check: A lot of the retail industry's better performance is because of sales gains at Wal-Mart, where shoppers have hunted for discounts in the recession. Take out Wal-Mart Stores Inc., and same-store sales across the industry were down 4.3%, according to statistics kept by the International Council of Shopping Centers.

Wall Street

The good news: The stock market has finally caught a break. Major banks such as Citigroup and Bank of America have said they were profitable in January and February, and Wall Street embraced the details of the Obama administration's plan to relieve banks of toxic assets.

Reality check: Stocks could easily plummet again, especially if the banks are unable to show first-quarter profits or if the Obama plan doesn't entice investors to buy the toxic assets. And the Dow is roughly 6,500 points below its all-time high. Retirement funds look better compared with two weeks ago, but disastrous compared with almost anything else.

Additional Facts

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