Spokane7
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January 26, 2010 in Business
Poised for recovery, economy is lurching forward
Americans are feeling better about the economy, home prices are on the rise and companies are forecasting a brighter 2010.
While no one doubts the economy has a long way to go to come back from the punishing recession, the reports Tuesday were signs of progress for a recovery that has proceeded in fits and starts.
“We’re definitely moving in the right direction,” said Scott Hoyt, senior director of consumer economics at Moody’s Economy.com. “But on the other hand, we’re moving there from a very low point. And we’re still at a very low point.”
Consumer confidence rose in January for the third straight month, the Conference Board said Tuesday. People said they felt better about the economy and were more willing to buy big-ticket items like cars and refrigerators.
The group’s consumer confidence index now stands at its highest level since the financial meltdown in September 2008. But at 55.9, it’s a far cry from readings of 90 or higher that indicate an economy on solid footing.
Consumer sentiment, a gauge of Americans’ willingness to spend money on everything from Valentine’s cards to vacations, is closely watched by experts because personal spending fuels 70 percent of the U.S. economy.
“Confidence remains incredibly depressed,” Capital Economics analyst Paul Dales wrote in a research note. “This all suggests the legacy of the recession will live long in the mindset of consumers.”
Still, there are unmistakable signs of progress.
Home prices rose slightly in November, the sixth straight month of increases, according to Standard & Poor’s and Case-Shiller. Fourteen of the 20 cities in their survey notched gains from October to November. Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money.
Corporate America appears more optimistic these days, too. Delta Air Lines says demand for business travel is picking up. Johnson & Johnson says more people are buying its Aveeno and Neutrogena skin-care products.
Apple recorded its most profitable quarter ever, selling twice as many iPhones from October to December than it did before and one-third more Macintosh computers. And Corning said Tuesday its quarterly profit almost tripled on surging sales of glass for flat-screen televisions and computers.
Auto sales, which suffered a terrible year in 2009, are expected to climb in 2010. That means brighter outlooks for industries that supply chemicals for paint and steel for frames and ship cars and trucks around the U.S.
It’s all encouraging news to people like Steve Rynish, who, for the first time in weeks, decided on Tuesday to go out for lunch. The insurance claims adjustor reined in his spending in the downturn, brown-bagging it sometimes five days a week.
His health insurance premiums are rising and his 401(k) is still shrunken, but Rynish says he sees signs the picture is improving.
“It feels like things have reached a point and they’re hanging there,” said Rynish, 54, of Milwaukee, who stopped by a TJMaxx to pick up a rug for his house on his way to grab a bite. “I’d like to see more people back to work.”
It’s those fears — about job security more than anything — that may prevent a more vigorous recovery.
In December, unemployment lingered at 10 percent, just shy of the 26-year high reached in October. And many experts expect that figure to worsen before improving later this year.
“The most important thing to consumers is the availability of jobs,” said Wells Fargo economist Mark Vitner. “And on that front there has been very little progress.”
People who feel more secure about their jobs feel more comfortable spending money, fueling the nation’s economic engine. To sustain a strong rebound, the economy will need people to spend more and companies to hire more.
Most economists predict the nation’s economic growth strengthened in the October-December quarter, to an annual pace of 4.5 to 5 percent. The government’s first estimate of the gross domestic product for the fourth quarter comes Friday.
Much of the growth probably came from government efforts to support the housing industry and broader economy, as well as rebuilding of inventories by manufacturers. As that activity fades, growth is expected to slow in the first half of this year.
Even though the economy continues to lose more jobs that it gains, Zane Laing of Portland, Ore., said she’s still feeling rosier. She’s seeing more customers buying clothes at the Gap store where she works.
“It’s inspiring me personally,” the 31-year-old said. “I feel like I’m OK in my job.”
© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Northwest wheat 
lewis8457 on January 26 at 9:14 a.m.
How can any private sector worker feel comfortable spending their hard earned money after losing most of their 401K?
I think the Fed is going to find the consumers are going to be a bit cautious in the coming months.
Orange on January 26 at 11:18 a.m.
5000 households speaking for the nations confidence in the economy isn’t what I call an accurate assumption of how we feel.
Albert on January 26 at 4:11 p.m.
This article by AP is shocking and loaded with political-speak. Take a look around AP and get the proverbial wake up call. Housing prices are falling, foreclosures are soaring, the “true” unemployment rate is ABOVE 25% (12% as reported by those who qualify for “benefits” and another projected 13%++ of those who are unemployed and run out of benefits), and retail sales are flat - at best. Where in the world did you obtain this “making us feel good” garbage? It well appears that with the State of the Union coming up tomorrow that we are all to supposed to feel warm, comfy, and good about your purported junkola? My unemployed friends and neighbors might disagree with your flaky findings. We are tired of “mis-speak”, i.e. lies by the news media, political based surveys, and ongoing inaccuracies over people’s misery.
westside on January 26 at 5:05 p.m.
These PR postings on the AP are all part of the make them “feel good, warm and fuzzy BS” that Obama lets out to the media….ya Spokane is lurching forward….lol
leekinny on January 26 at 6:35 p.m.
In September of ‘08, before we knew who the president would be, there were real fears we would slip into another Great Depression. That was stopped.
For those who didn’t succumb to fear, made wise choices and sat tight, their investments have been bouncing back.
Jobs will come when the banks begin lending and business begins pouring money into their American owned assets and workforce.
threeandfour on January 26 at 9:36 p.m.
More smoke and mirrors from our politicians.
I would gauge our economy on the increasing number of homeless people and the increasing deficits.
Dad once said, if you find yourself in a hole, then quit digging.
Albert on January 26 at 9:43 p.m.
Hello leekinny? hold on to your stock in GM?, or Saturn?, or Pontiac, Buick, or Papa John’s, or maybe a stable bank like Washington Mutual, or ???? Time to get a hold on reality and get your head out of the mis-speak agenda. Wake up good friend Titanic is taking on some water and you have a bucket in your hand. Last week alone 9 banks failed, we have an ever-growing national debt and the UN is now minting a “suitable” international currency, i.e. one world currency, to replace the valueless dollar. .Oh dah