Economic Update – The Economy’s Latest Buzz-Phrase: ‘Better Than Expected’
- May 19, 2009
“Better than expected” is the latest turn of phrase commonly used to describe lousy performance by companies that isn’t quite as lousy as analysts predicted, and as such the phrase might have a longer shelf-life than “green shoots.” Since lousy is the new normal, then “better than expected” is what Wall Street now rewards. Few industries have a more lousy new normal than retail. Take the do-it-yourself chain Lowe’s Cos., for example. DIY is a retail subset that took it particularly hard even before the Panic of 2008 last fall, since it’s a business that develops pneumonia whenever the housing industry sniffles. On Monday, Lowe’s reported that its fiscal first-quarter profits were down 22 percent from the same period a year ago, but that was “better than expected,” so its stock got a little boost. That little turn of phrase might also apply to homebuilding itself, with the National Association of Homebuilders reporting on Monday that single-family homebuilder confidence nudged upward in April to 16, up from 14 in March and single digits the month before that. The index–formally called the Housing Market Index–is one of those with a tipping point of 50, above which the industry’s outlook is good. So 16 is better than before, maybe even “better than expected,” but not a happy mood. “The fact that the May index continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke,” NAHB chief economist David Crowe said in a statement. Homebuilders expect to be helped by government action, particularly the $8,000 housing-purchase tax credit, and the fact that, under new rules announced last week, buyers can use that tax credit as part of their down payment. Later this week, the U.S. Department of Commerce is going to release housing-start numbers for April, and the industry has its figures crossed that its mild optimism is justified. Is it even possible to damage Donald Trump’s reputation? How many angels can dance on the head of a pin, or can be found in the Donald’s hair? These are well-nigh imponderable questions, but a judge may have to answer the first one if a defamation suit brought by Trump against the author and publisher of the 2006 book Trump Nation: The Art of Being the Donald goes forward. In the book, author Timothy O’Brien contended that Trump’s net worth is to be measured in millions of dollars, with an “m.” Trump and his lawyerly minions assert that his net worth is properly measured in the billions of dollars, with a “b,” and that to say otherwise disgraces the fine Trump name in an actionable way. The question on whether to dismiss the suit now rests with New Jersey Superior Court Judge Michele Fox. Sucker’s rally, part two, or the glimmerings of some real bull sentiment on Wall Street? Impossible to say, but in any case, the Dow Jones Industrial Average had a vigorous up day on Monday, gaining 235.44 points, or 2.85 percent. The S&P 500 likewise gained a sizable 3.04 percent, and the Nasdaq was up 3.11 percent.