Economists paint the glass half full
May 8, 2009 by admin
The national unemployment rate is now at 8.9% according to figures released this morning from the department of labor. For the month of April, there were over 500,000 jobs lost, bringing the total to well above five million since the economic downturn has begun. The staggering job losses are being received well by both economists and investors who are taking the glass is half full view of the recent numbers.
The total job losses are expected to eclipse the six million figure in the next few months with the full unemployment range expected to top out between 9.5 & 10.5%. The current rate of unemployment is at the highest level in the past twenty years. The reason surrounding the optimism is that the rate of job losses appears to be slowing down. The economy lost over 500k jobs for the month of April, but this is less than the 600k jobs lost in each of the previous two months, and leads many economists to believe that companies have slowed down with their job reductions. This optimism is being guided by other recent economic reports that are also indicating the beginning of an economic recovery.
The first stage of an economic recovery is setting a bottom of the decline. Most investors now believe that the March 9 lows for the stock market will be the clear bottom point. The stock market has rallied over 25% from this level. Retail sales for the month of April were up slightly and there is some optimism that the 2nd quarter GDP figure will show a large improvement over the last two quarters. The housing market is also beginning to show signs of an improvement. Inspired by record low mortgage rates this year and a large tax credit from the government, the pending home sales report, according to the national association of Realtors moved up over three percent last month.
The glass is half full view of the economic recovery could help to boost confidence with consumers and give a jolt to employers to begin hiring again. The economic challenges are likely to linger for the next 6-12 months as the market works to correct one of the worst recessions in history. The idea that it could have been worse is a principal that is fueling optimism and perhaps the beginning of a true economic recovery will be on the horizon. It will take some time for the economy to report positive GDP and employment growth, but the government remains committed through tax relief, the FOMC, job creation and economic stimulus to help guide the country out of the recession.