National trends show the economy is rebounding
The pattern gets clearer week after week – we are looking at a slow-motion housing recovery that is itself feeding into a broader economic recovery that should have us out of recession later this year.
Now that’s not to ignore the fact that there are markets in the country that still face very challenging economic dynamics, with no real turnaround in view yet on housing sales, prices and unemployment.
But the national numbers are telling us something important, and they increasingly look positive.
Take the last new home construction starts and permits reports. Newspapers or the network news may have said housing starts dropped again, but that was misleading.
The facts are that the Commerce Department found that apartment starts – new multifamily units – took a drop in April, but starts of new single-family homes were up by 3 percent, and permits for future construction of detached single-family homes jumped by nearly 4 percent.
That’s the second straight month of increases. Home builders themselves are seeing a turnaround – more shoppers in their models and showrooms, more contracts, fewer cancellations.
The latest survey of builder confidence, released last week by Wells Fargo and the National Association of Home Builders, found sentiment up again for the second straight month, so this is for real.
Consumer confidence in the economic outlook also continues to get better and better. The latest University of Michigan consumer sentiment poll took a three-point jump overall, and a 6 percent jump in terms of consumers’ expectations for economic improvements ahead.
There are other, less widely publicized signs that we’re digging out of the recession as well. For example, economists at Northwestern University say the fact that new weekly claims for unemployment insurance peaked last month, and have been dropping ever since. This is a sign that the national economy is past the worst.
Treasury Secretary Timothy Geithner told a congressional panel about other more technical indicators of growth ahead, such as narrowing spreads on corporate and municipal bonds, smaller risk premiums on short-term inter-bank loans and decreased credit protection costs at the largest U.S. banks.
Finally, consumer interest rates continue to be about as stimulative for economic expansion as they possibly could. Mortgage rates dropped last week by a tenth of a percent – 30-year fixed rate mortgages are at 4.7 percent with an average one point, and 15-year rates are at 4.4 percent.
Remember back to how you felt last September and October when the global financial system was falling apart?
Now think about how you feel about the economy today. It’s a refreshing comparison.