In spite of yesterday‘s news that the industrial production and capacity utilization took a nosedive, there seems to be a general feeling that things may have bottomed out, and it might be a turning point. In today’s NYT:
An unexpected rise in housing starts and a more moderate increase in wholesale prices offered some brighter economic news on Tuesday as the Federal Reserve’s Open Market Committee met to assess its policy course. [link]
In last month’s Economist:
MANY of the diehard optimists on Wall Street have been beaten to a pulp by now, but those still standing have fallen back on a nifty bit of calculus. The second derivative, they say, is turning positive. That means that although the economy is spiralling down, it is doing so more slowly.
Retail sales rose by 1% in January from December, the first monthly increase since June. Car sales fell in January but were stable to individual buyers, if not to corporate fleets…An index compiled by JPMorgan Chase finds that although economic news remains on balance worse than expected, the margin of awfulness has shrunk a bit; the firm’s analysts have marginally trimmed the risk of “a mini-depression”. …[And] thanks to huge policy stimulus by the authorities since October, yields on corporate bonds have edged lower, interbank rates have improved, and the money supply has surged. [link]
And in yesterday’s WSJ Real-Time Economics:
It is probably still too early to say that the U.S. manufacturing sector is approaching the bottom of this deep recession. However, the rate of decline of non-auto manufacturing output has slowed in the last couple of months—in the jargon of calculus, the second derivative has turned positive. This is a potentially good sign and, if it persists for the next few months, will signal that a trough is at hand. – Nariman Behravesh, IHS Global Insight [link]
Let’s not get too excited, though. Not everyone agrees on this:
“Many are interpreting the February data on starts and permits as signs that a bottom is forming in the housing market,” said Richard F. Moody, chief economist at Forward Capital, in a note to investors. “This is more a case of wishful thinking than a reflection of reality.”
And wholesale prices in the United States edged up a hair in February, but flatter energy prices and the continuing economic downturn kept any price increases to a minimum. [link]
And we still have a long way to go:
“We’re seeing some big declines in things like synthetic fibers, lumber, phosphates, organic chemicals — the things that are used to make these products are decreasing,” Anika Khan, an economist at Wachovia, said. “Further in the pipeline there’s going to be some more easing.”
Analysts said that those weaknesses suggested that deflation would remain a concern — if not a cause for panic — as the economy continues to contract. [link]
Not to mention jobless claims increasing, and other indicators still showing strong signs of a contraction. Still, small positive scraps in a universe of negativitiy are always nice to see.