Is the US Recession Nearly Over?
The DJIA (Dow Jones Industrial Average) has put in a near 1000 point gain in the past two weeks.
The media, which has been beating an extremely pessimistic drum over the past 12-18 months, suddenly seems to be turning positive. Over the past few days, I've read articles on Bloomberg.com, Newsweek and the Wall Street Journal that predict that sunnier days are just around the corner for the US economy.
The US housing market, which many media outlets are now saying is "turning the corner", may or may not have bottomed.
Is this the end of the worst recession in 70 years?
Are brighter days finally on the horizon?
As always, there is a large jumble of data that needs to be descrambled before we can make an accurate prediction (or hope to make a prediction).
People will usually cite certain pieces of data while ignoring others as they formulate their views on the US economy.
Case in point - the housing market.
The media is making a very big deal over recently released US housing data. Many publications are declaring that the housing market is primed for a "comeback", and that a "bottom has been reached".
They cite home resale and new home construction numbers as the reasons for their boundless optimism.
Hey, I would love for this to be the case, but let's not ignore all of the data here.
There is still a massive glut of inventory on the market. Home prices are still way down year-over-year. This is typically a strong time of year for home sales. Foreclosures are still at ridiculously high levels. The federal homebuyers tax credit is also surely having an effect, and this won't be around forever.
Housing sales are up, but consumer confidence is down.
The media is turning positive, but unemployment numbers continue to ramp higher.
Some countries are declaring that their recession is over (Canada), but the United States seems to be deeply mired in their recession still.
The markets are up, but many people are still extremely reluctant to invest in the stock market, as their trust has been shattered over the past few years.
The point of this article?
Consider all of the data before reaching a conclusion about whether or not the recession is over. Sure, some data points are starting to improve, but there are also some horrible numbers as well.
This recession is going to come to an end eventually, but don't let the media fool you into thinking that the recovery is here before it actually is.
A meaningful recovery won't come until Americans start to feel optimistic about their futures once again.
That may be a long ways off.
Filed under: The Economic Meltdown