RepoMan
December 20, 2010, 12:15pm
#1
I was waiting for some articles like this to start showing up. If we are seeing glimmers of this before 2010 is even over, it makes me darned optimistic for Obama’s 2012 prospects.
Politically, Mr Obama gambled in negotiating a deal with Republicans, but it worked. Democrats rent their garments and threw themselves from rooftops over his manoeuvres – “shameless capitulation” was one of the milder criticisms. In spite of the theatrics, the deal passed both houses of Congress with comfortable bipartisan majorities. The economy just had a lucky escape – not from unavoidable realities, but from the machinations of its elected representatives – and this follows other encouraging developments.jobless claims are down and stand at their lowest level since the summer of 2008. Most analysts expect the December employment report, due early next month, to make much better reading than November’s, which showed a rise in payrolls of less than 40,000 – consistent with rising, not falling, unemployment.
Housebuilding also shows signs of reviving . New housing starts rose 3.9 per cent in November, and new construction of single-family homes rose to a six-month high. To be sure, housing remains one of the strongest drags on the economy. The market is glutted with unsold homes. Something like a quarter of homes with mortgages are underwater, with debts exceeding the value of the property. Even with this modest pick-up, housing starts stand at barely half the normal rate. Still, it is movement in the right direction.
Consumer deleveraging – intimately connected with the housing market – continues and is probably the biggest risk confronting the economy. The ratio of household debt to after-tax income fell in the third quarter to 1.22, down from its peak of 1.35 in 2007, but has further to go. For years before 2000 the ratio was less than 1. The recent decline is partly due to restraint both by borrowers and lenders but also to defaults, which could yet surge. The administration’s fluctuating efforts to encourage mortgage modification have been a notable failure.
In spite of these continuing financial stresses, consumer confidence is slowly rising. The Conference Board index improved in October and again last month. Stronger consumer demand is crucial in its own right; it is also the only way to persuade companies to invest the cash they are currently hoarding. As with other measures, the uptick in confidence is a meagre rise from a low base. The economy is still weak, the recovery still tentative; but slow improvement is better than none.
[/LEFT]
Well, shit-for-brains Krugman is proclaiming that the “Zombies” have won. So yes, it is definitely time to start being optimistic about the economy.
