Recovery yet? Navigating mixed signals

Published 5:00 am Sunday, April 19, 2009

In headlines and on the street, conflicting messages confront consumers: Is the economy still in decline or is it poised for recovery? Is the economy showing, as President Barack Obama described last week, “glimmers of hope”?

To be sure, economic news these days is mixed. For instance, the federal government reported Thursday that initial jobless claims, or the number of people filing for unemployment benefits for the first time, fell to 610,000 in the week ending April 11, a drop of 8 percent from the prior week’s count of 663,000.

At the same time, the government also announced Thursday that 6.02 million people were receiving unemployment benefits, the most on record.

On March 23, the National Association of Realtors said existing home sales in February rose 5.1 percent on a seasonally adjusted basis from January. March data is expected to be released this week. The association also reported earlier this month that its Pending Home Sales Index rose 2.1 percent in February from January. Locally, the median price for a single-family home in Bend rose in March to $221,000, an increase of 2.79 percent from February.

Yet, the private firm RealtyTrac reported Thursday that the number of foreclosure filings recorded nationwide in March was up 17 percent from February and 46 percent from March 2008.

And in the stock market, it’s the first earnings season of the year, with many companies, including financial giants such as Wells Fargo, Goldman Sachs and JPMorgan Chase, reporting profits that are down from the same period a year ago but that have beat analysts’ expectations.

Since its March 9 low of 6547.05, the Dow Jones Industrial Average has gained more than 24 percent, closing Friday at 8131.33.

Does it all add up to a bottom? We put the question to several business owners and financial professionals with finely tuned economic barometers to find out what they think.

Linda Zivney

Financial adviser and registered principal of Zivney Financial Group in Bend

“It depends on whether you are talking about the economy or the market. The consensus on the economy from the guys I listen to is we probably won’t see any positive (Gross Domestic Product) growth until the fourth quarter of this year or the first quarter of 2010. But the market tends to turn two to three quarters before that, but … we’re seeing lots of positive results from all the stimulus the Fed and the Treasury are pumping into the system. So the market is seeing that as a positive, because the market is a forward indicator, so it’s always going to turn first.”

Dennis Pahlisch

President of Pahlisch Homes in Bend

“I think the bottom is here. I see the market rallying here and there, and in past recessions I’ve been through, including the 1980s, when the market rallies, it’s generally one of the first out (along with) housing … and we’re starting to see that a little bit. Sales have picked up, and we’re starting about 25 units in Bend. I think we’ll see unemployment continue to (worsen) through the first quarter of 2010, (but) … I’ve been talking to people with jobs, and they feel the losses have already occurred, the cuts have all been made and they don’t feel more cuts are ahead. But how long we’re at the bottom is anybody’s guess. In my realm of peers, we’re seeing a recovery in the last quarter of 2009 but we’re going to drag along the bottom through summertime, I think.”

Jeff Robberson

Owner of Robberson Ford in Bend

“I’m feeling a glimmer of optimism. Some of the indicators we look at — one of the primary ones is Internet traffic, and we’re seeing an uptick there. And we’re seeing it’s not a huge uptick, but we’re seeing more people coming out and shopping. … It’s a really hard question. For auto sales, if you look at the last three major downturns, in the ’70s and ’80s, they lasted three years before sales started to come up, so we might not be at the bottom, but on the other hand, I feel that every day more cars are putting on more miles and are getting older.”

Tim Duy

University of Oregon economist and author of the Central Oregon Business Index. (Duy was specifically asked how unemployment relates to a bottom.)

“Unemployment is one of the last things to improve, so you can reach the ‘bottom’ but bounce around at relative low growth rates that don’t generate job growth, so I think there’s reason showing in recent economic data to be hopeful that you have reached it but … any talk about a bottom is premature when you talk about unemployment because it lags the cycle. The first thing is to hope the pace of layoffs is declining, (and) we’re seeing signs of that.”

Bill Valentine

Chartered financial analyst and owner of Valentine Ventures, a wealth management firm in Bend

“I think the market is recovering. We won’t go back to March 9, but I don’t believe the economy is recovering. The market can see 12 to 18 months ahead, and I think the market is on its way. But as for mixed signals, signals are always mixed. The consensus on the economy is uneven. It’s not hit bottom yet; there’s still some unresolved issues. It’s kind of like my kooky uncle — it’s got lots of issues.”

Good news Bad news

• Unemployment claims Down since early April

• Existing home sales Up 5.1% since January

• Stock market Up at least 24% since its lowest point, in Marche_SClB• Unemployment benefits Most on record

• Foreclosure filings Up 17% since February

• Bank earnings Better than expected, but down from 2008