Economy Looking Better, Or Worse
When they get married they say, 'for better or for worse.' Well, now we have concluded that we have an economy that is 'for better or for worse.' What do we mean? Well, let's look at the news. In general, outside of the real estate market, the economic news has not been that bad. We had positive employment growth by the private sector last month and initial claims for unemployment are at their lowest levels in the past two months. Though each number was not particularly strong. Retail sales were a surprise on the strong side as it looks as though consumers have returned to the stores. The stock market has rallied during the first third of September, albeit through light Holiday trading.
On the other hand, if we look at the Fed's assessment of the economy known as the beige book, we can pull out this quote for some perspective: 'The economy grew at a sluggish pace through the summer months, and there are now ‘widespread signs' that activity is slowing, the Federal Reserve said in its latest snapshot of regional economic conditions.' So what are we saying: is the economy better or worse? The answer is, some of both. Real estate is actually the key. The real estate slowdown we experienced as the summer progressed is a hangover brought on by the end of the tax credit. The question is: will real estate sales start to grow in the 4th quarter as these residual affects wear off? If not, analysts expect real estate to drag the economy back down. If the real estate market is resilient, the answer will be 'for better,' not 'for worse.' Like marriages, the economy is a tough one to predict.