Economic Reasons to be Cheerful

The late British musician Ian Drury recorded a song called “Reasons to be Cheerful, Part 3,” and it was just a list of things that made him feel good about life. Given the current state of flux in the global economy, it is appropriate to make a similar list of positive factors that have emerged of late. One, of course, probably needn't sing through said list.

First of all, the National Association for Business Economics released a survey in which a full 90% of economists polled said they expect the recession to end in 2009. Moreover, 74% of them expect it to end in the third quarter. "While the overall tone remains soft, there are emerging signs that the economy is stabilizing," said NABE president Chris Varvares, head of Macroeconomic Advisers.

Another good piece of news is OPEC's decision this week not to cut production. Oil is going for around $63 a barrel, and the decision to keep supply as is suggests that OPEC's economists agree with those over at the NABE. Saudi Arabian Oil Minister Ali Naimi is on record as saying he thinks oil will reach $75 a barrel before the year is out based on increased demand from Asia.

Third, US consumer confidence is much higher than most had anticipated. The Conference Board's Consumer Confidence Index hit 54.9 in May, up radically from 40.8 in April and 25.3 in February. This is the highest level the index has shown in eight months. A score of 100 indicates a healthy economy, so there is room for improvement. Yet, that is exactly what consumers believe is going to happen. MSNBC reports, “The Present Situation Index, which measures how shoppers feel now about the economy, rose to 28.9 from 25.5 last month. But the Expectations Index, which measures shoppers’ outlook over the next six months, climbed to 72.3 from 51.0 in April.”

The housing market is even showing some signs of revival. Although prices continued to drop with first quarter 2009 showing a record decline, the month-over-month figures show a deceleration. Most encouraging, April's existing home sales rose 2.9%. Foreclosures and other distressed sales made up 45% of those transactions which is probably a sign that the market is working through a backlog of homes that are depressing the overall market price.

Finally, just as this is being posted, the US government has announced that first time jobless claims have unexpectedly dropped to 623,000. Although continuing claims have risen to 6.8 million, the lower first time claims figure suggests that layoffs are decelerating. Employment is always the last part of the economy to improve, but the 623,000 new claims could be a sign that even this indicator is prepared to turn around.

The country is still in recession, a firm hand in economic policy is required, and a bit of luck can't hurt. Nevertheless, there are reasons to be cheerful.

© Copyright 2009 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

Kensington Review Home