I’m beginning to hear the welcome sounds of an economy starting to rouse itself out of slumber. I’m not saying it’s turned around yet, or anything close to that. I’m just sensing and hoping that bottom may have been struck, or that the slide is starting to slow. We may still be months, if not years, away from economic growth. But the speed of the crash seems to be slowing.
Anecdotally, the few friends I have in real estate say more resale housing contracts are going to closing. Loans are still being refused, but not as many as a month or more ago. A person I met through work whose spouse is employed at a local Ford dealership says 21 cars (new and used) were sold last Saturday, which is a one-day high not reached by that dealership since about two years ago.
Then, of course, the question we all keep asking ourselves is, how much worse can it get? Every time I’ve given myself the freedom to ask, "Have we hit bottom yet?" more lousy economic news emanates from some unexpected quarter and it turns out we have not hit bottom.
At first it appeared that former President George Bush’s fiscal injection into the banking system would free up the credit system that’s been frozen since last fall. Well, that hope was pretty short-lived. Then fingers stayed crossed that Congress’ passage of the Obama stimulus package would point the stock market north instead of south. Wrong again. President Obama is certainly not responsible for this economic mess — it was handed to him by his predecessor. But neither has the market given his recovery plan anything approaching a thumb pointed skyward. And that’s been a huge disappointment to millions of Americans.
Then too, some of his gaffes and those of his staff have verged on the unforgivable. Obama’s use of the term "catastrophe" in conjunction with the word, "economy" is one. His Treasury Secretary’s poor performance before Congress is another. And then there was Federal Reserve Board Chairman Ben Bernanke’s admission before Congress this week that the recovery could be a year or more off. He said, according to Reuters:
"This outlook for economic activity is subject to considerable uncertainty, and I believe that, overall, the downside risks probably outweigh those on the upside." Of course Bernanke’s not an Obama appointee. Nonetheless, since he now serves the current president, couldn’t he have stopped at, "uncertainty?"
For those who, like myself, have spent months in the doldrums, there are some positive signs that cannot be ignored. Home Depot’s quarterly performance, released this week, was much better than expected, sending the company’s stock up sharply. Where Home Depot goes, so goes the construction trade. Irwin Kellner of MarketWatch.com notes some other positive trends:
— The Conference Board’s index of leading economic indicators has risen for two months in a row.
— Producer prices have increased for two straight months.
— Consumer prices rose in January — the first monthly gain in six months.
— The Baltic Dry Index, which measures the cost of shipping key raw materials like copper, steel and iron, has more than doubled from its recent lows.
— Existing-home sales rose in December.
So is it soup yet? And why is it so important to determine precisely when growth bestows itself on our economy once again? If the slowdown is just about over now, it will have little or nothing to do with the efforts of the Obama administration. We already know the Bush administration doomed the economy with ridiculous spending levels and little by way of watchdog activity over the derivatives markets. But can we credit the current administration for the recovery? Too soon to know yet.
Have we hit bottom yet? Are we getting closer to the bottom? Let’s all hope so.
(Bonnie Erbe is a TV host and columnist. E-mail bonnieerbe(at)CompuServe.com.)