The
economic activity in our country was higher than expected in June. Leading
economic indicators have been modestly improving over the past several months.
These are signs that more conditions are improving rather than worsening, which
suggests we may have seen the bottom of the recession. But, recovery will
be slow, so the bottom does not mean that a turnaround will be quick or broad.
Here is insight on recent economic activity:
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There are more plans to build homes, higher stock prices, and fewer people
filing first-time claims for jobless aid. A recent government report showed
construction of new U.S. homes in June rose to the highest level in seven
months. Recent data suggests stabilization and growth. Many analysts expect
reasonable economic growth in the fourth quarter.
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According to the National Association of Realtors, home sales rose to a
seasonally adjusted annual rate of 4.89 million in June—the highest level of
sales since last October—from a downwardly revised rate of 4.72 million the
previous month. The median sales price was $181,800 in June—down 15.4 percent
from $215,000 in June 2008 but up from $174,700 in May 2009.
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The interest rate spread is encouraging. The interest rate spread is the
difference between the yield on Treasury backed bonds and the federal funds
rate, the rate at which the Federal Reserve Banks lend short term money to
other banks, which is at a record low near zero. A large spread between the two
is viewed as positive because it provides Banks the incentives to borrow short
term funds and lend for long term periods, like 30 year mortgages.
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The unemployment rate has reached a 26-year high of 9.5 percent. It is
anticipated that the unemployment rate will continue to climb and reach 10
percent by the end of this year. Mass layoffs continue across many sectors, but
there has been a slowdown in the pace and concentration of job cuts.
Federal stimulus money should spur additional jobs in new fields like
energy and healthcare, which will boost our country's job market.
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Balancing the short-term and long-term needs of the country, regulators and
legislators are tackling the policies and practices within business and
government which led to the crisis and resulting recession. Additional
corporate regulation, tax law changes, and changes to major entitlement
programs are all subjects of great debate and in the news.
While it cannot come too soon, economic growth in this country is visible in
pockets. Look for early indicators like housing prices, fewer homes for
sale, and more people in restaurants and shopping malls as signs of progress.
