MacroScope

Economy signs: Some good news

September 9, 2010

A sign is pictured on Wall St. near the New York Stock Exchange in New York November 25, 2008. REUTERS/Lucas JacksonA look at the macroeconomic news and its impact on the mood of investors and the direction of the economy. Are we heading for a double-dip recession?

Jobless claims and trade data came in better than expected prompting some investor cheer today.

“We were expecting that things would slow down in the third quarter and start to pick up in the fourth quarter, but now it seems like the slowdown in the third quarter wasn’t as severe as we feared,” said David Sloan, an economist at 4CAST in New York.

On the housing front, homebuilders seem to be banking on a recovery and restocking land inventories. The move is partly out of shortage fears and because they see rivals doing it, said industry consultant John Burns.  But note everyone is buying into the recovery scenario, including Barry Ritholtz in The Big Picture.

“I do not believe that Housing has bottomed yet, but I suspect — hope is probably more accurate — that the worst of the collapse is over. I expect no sort of bounce back anytime soon; Housing is likely to see no real gains for the next few years, and might simply drift for as much as a decade (über housing bears think much longer),” writes Ritholtz.

The Fed’s Beige Book, released on Wednesday, suggested that while the recovery has been faltering, the economy may skirt a second recession.

“The economy continues to plod forward, neither gaining momentum nor lurching back into recession,” said Sal Guatieri, an economist for BMO Capital Markets in Toronto.

Taking a different angle on the Fed’s compilation of anecdotal reports, a WSJ article focuses on the uneven growth across the U.S. with manufacturing and farming heavy regions faring better than housing dependent areas.

Looking to the retail sector, Toys “R” Us will be opening up 600 “pop-up stores” in empty mall retail space to take advantage of holiday sales, the WSJ reports. Papered over, or boarded up stores are an ugly reminder of tough times but is a “pop-up stores” strategy a good or bad sign for the state of the economy?

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