- The Washington Times - Thursday, February 19, 2009

Indications that the economy may start to improve later this year surfaced in a report Thursday showing a surprising leap in economic activity in January. It marked the second consecutive monthly increase of those economic indicators.

The Conference Board, a private group, attributed most of the 0.4 percent rise in its monthly index of economic indicators to a jump in the money supply, a result of the Federal Reserve increasing its lending and buying of securities.

The 0.4 percent jump marked the biggest rise since December 2006 and followed a revised increase of 0.2 percent in December 2008. Economists surveyed by Thomson Reuters did not expect an increase in January for the index, which predicts economic activity for the next three to six months based on 10 components. Employment is one of them.

The biggest drag on the index is unemployment. The New York-based Conference Board released its findings only hours after the Labor Department reported that 4.99 million Americans continue to receive jobless benefits and another 627,000 people filed for unemployment claims for the first time last week.

“It doesn’t mean we’ve turned the corner, but it does mean we’ve turned in that direction,” Ken Goldstein, an economist at the Conference Board, said of the economy in a phone interview with The Washington Times. “It’s lousy, but it’s less lousy than anything we’ve been looking at in the last six months.”

President Obama this week sought to address the nation’s worst economic meltdown in more than 70 years by signing into law a $787 billion stimulus package and producing a $275 billion plan to fix the housing crisis by helping 9 million people stay in their homes. They are in addition to the $700 billion authorized by Congress to help financial institutions.

In another report, inflation at the wholesale level shot up a surprising 0.8 percent in January, the biggest jump since July. The Labor Department attributed it to a 3.7 percent surge in energy and gasoline prices. Gas prices alone soared 15 percent, it said.

Economists had expected wholesale prices — the price before goods reach retailers — to rise a mere 0.2 percent after they had fallen 1.9 percent in December and 0.9 percent for all of last year.

“The momentum of the recession may start to back off this spring,” Mr. Goldstein said. “That’s a first step, and that will bring us to zero. It’ll take another year, year and a half until the economy is robust” and growing again.

A positive sign, he said, is housing starts, even though the Commerce Department reported Wednesday that builders started the fewest number of homes on a seasonably adjusted basis in January since it began keeping records in 1959. Builders broke ground on 466,000 houses and apartments last month, Commerce said.

But, Mr. Goldstein said, “housing starts are moving down at a slower pace. We’re getting a similar message [from other indicators] across the board.”

Other positives in the report included an index of consumer expectations, the spread in the interest rate and manufacturing orders for non-defense and consumer goods.

The Federal Reserve predicted in a document released Wednesday that there would be a “gradual” recovery in the second half of the year but expected the unemployment rate to increase from its present 7.6 to 8.8 percent.

About 11 million Americans are out of work, including 3.6 million who entered the jobless rolls since the recession began officially in December 2007. More than half a million people have been signing up for jobless benefits for each of the past few months.

“If we move down to 200,000 unemployed [a month], it’s better, but it’s still terrible,” Mr. Goldstein said.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide