Weather Forecast


Light at end of recession tunnel

It's nowhere near the time for celebrating in the streets, but there are signs the economy might be beginning a painfully slow recovery. At the very least, most economists and other observers think a recessionary bottom has been reached in most economic sectors, the exception being unemployment.

We'll see. Agreement among economists is elusive. They tend to couch their forecasts in conditional terms. Their reading of statistical data sometimes generates analyses colored by political ideologies. So even when a majority seems to be detecting good trends among economic indicators, their conclusions should be taken with the proverbial grain of salt.

That being said, a new survey of professional forecasters released by the National Association of Business Economists strongly suggests the economic downturn will end by the third quarter of this year. That means a turnaround should be noticeable by late summer or early fall, the NABE said.

The association expects recovery to be more moderate than in previous recessions because job losses will continue and recovery in the housing sector will be very slow. But none of the economists surveyed said the recession, now in its 18th month, would extend beyond the first three months of 2010.

There are other hopeful signs:

• The U.S. index of leading economic indicators posted its biggest gain in four years last month because of renewed consumer confidence and rising stock prices.

• The cost of living decreased by the most in 50 years, which is seen as another boost for consumer confidence.

• There are indications that the federal stimulus, especially as it relates to shovel-ready construction projects, is working as advertised.

• Frozen credit markets have thawed, stimulated in part by historically low interest rates, in part by pent-up demand and in part by the infusion of federal dollars into the financial system.

• The Federal Reserve's latest survey of regional economies found many districts beginning to stabilize.

• With the exceptions of Florida, Arizona and California, housing sales and new construction are showing upticks.

On the dark side:

• The economies of developed industrial nations continue to slide at alarming rates. Those nations are important U.S. trading partners, so their economic conditions affect the U.S. economy.

• The big unknown on the economic horizon is the estimated $814 billion in commercial real estate loans expected to mature in 2011.

• Jobless claims have leveled off, but they are still setting weekly records. Some 6.7 million people are claiming unemployment insurance, and that's before factoring in fallout from the General Motors bankruptcy.

Again, it's too soon to declare the economic downturn is over. The U.S. and its global trading partners are still in recession, some deeper than others. But indicators that usually point the way either up or down seem to be pointing up for the first time in months. No cheering yet, but certainly some cause for muted optimism.

-- The Forum