There are tangible data suggesting that the worst of the recession could be near, is here, or perhaps has passed, and many observers are clinging to these very mixed figures and trends with mix of desperation and optimism. Some took a positive consumer demand number in an otherwise dreadful first quarter advance GDP number of negative 6.1 percent as a “green shoot” of recovery. But personal consumption declined in March. Last Thursday’s initial jobless claims report was better than expected, but what will initial claims look like after those Pontiac assembly plants and dealerships are closed, and after the Chrysler cutbacks?
The housing market continues to spew conflicting data. Yes, the supply of unsold new homes is shrinking, but there’s still a sizeable inventory of unsold existing homes. Home prices continue to decline, although the pace shows tentative signs of slowing. Low prices and tax breaks may be supporting a modest rebound in sales here and here, but rising unemployment and foreclosures seem to be dimming the nascent turnaround.
April’s PMI index came in at 40.1 percent, up from 36.3 percent in March. As the Institute for Supply Management notes, a reading below 50 percent “indicates that [the manufacturing economy] is generally contracting.” Yet some economists were beaming about “glimmers,” despite the warning from the ISM that “the only manufacturing industry reporting growth in April is miscellaneous manufacturing.”
True, the Conference Board’s Consumer Confidence Index rose to 39.2 in April from 26.9 March, driven by improved short-term expectations. But a closer look reveals continued misgivings. In April those consumers “stating jobs ‘are hard to get’ decreased to 47.9 percent from 48.8 percent in March,” but consumers who said jobs were plentiful slipped to 4.5 percent from 4.7 percent. The board’s Expectations Index jumped to 49.5 percent from 30.2 percent, but it “still remains well below levels associated with strong economic growth,” according to Lynn Franco, director of the Conference Board Consumer Research Center.
Another poll released last week suggests that consumers are still cutting back. The University of Maryland/Rockbridge Associates’ Consumer Technology Pulse shows that 73 percent of consumers are reining in household spending, largely “postponing purchases of big ticket items. ”Seventy-eight percent “personally know someone who has lost a job;” 27 percent say the economy is experiencing a depression.