“Eye on the Economy” with Adam Perrotta
- May 14, 2009
The nation’s economic data has turned from a seemingly endless parade of bad news, to more of a mixed bag as of late, with some positive (or relatively positive) readings sprinkled in among the doom-and-gloom. The dichotomy is of course providing optimists and pessimists alike with plenty of grist for their respective mills. We’ll try to keep a clear-eyed view of things.
April saw retail sales continue their slump as consumers kept their purse strings tight on non-essential purchases. According to a Commerce Department report, retail sales sagged 0.4 percent during the month; but for those apt to look on the bright side, the rate of decline was considerably slower than March, during which sales sunk 1.3 percent. Still though, most economists deemed the report cause for concern–no strange words over the past year or so.
Treasury Secretary Tim Geithner plans to head to China later this month, for discussions on strengthening relations between the two nations. The Secretary will depart on May 30th for Beijing, in the Obama administration’s most direct overture yet to that nation. Considering China’s status as both one of our largest trading partners as well as one of the biggest holders of American debt, here’s hoping Geithner makes a good impression.
The job market got some bad news and some good news last week. The bad news was that unemployment hit a 25-year high in April, but the—relatively—good news was that monthly job losses fell to their lowest level in six months. The Labor Department said Friday that employers cut 539,000 jobs during April, down from nearly 700,000 in March and the best figure since last October. But the Labor Department also said unemployment rose to 8.9 percent in April, up from 8.5 percent in March and the highest level since September 1983. Since the beginning of 2008, the economy has shed 5.7 million, and some economists are projecting job losses to continue into 2010.
And speaking of record highs, the single-family home market continues to take major lumps, as the rate of foreclosures spiked to a new peak in April. One in every 374 homes in America was foreclosed upon last month, according to industry monitor RealtyTrac. This far this year, foreclosures are up 32 percent from this time in 2008. RealtyTrac predicts another three to six months until the market picks up again. It’s a pretty good indicator of how bad things have gotten that that prediction seems like cause for celebration.
Meanwhile, consumer borrowing plunged in March, falling a record $11.1 billion according to the Federal Reserve. Borrowing dropped 5.2 percent from February to a total of $2.55 trillion—it was the biggest percentage drop since December 1990. Non-revolving credit, which is typically taken out for big ticket items including cars and college educations, fell 4.2 percent, while revolving borrowing on credit cards dropped 6.8 percent.
Despite the slow state of consumer borrowing, there are plenty of other indicators out there that the economy might be putting the worst behind it. And these reports are pushing oil prices higher. Light sweet crude has ticked up of late toward $60 a barrel, prices not seen since last November. Since closing at $33.98 a barrel on February 12, oil is up nearly 75 percent, but remains well off the sky-high price it reached last summer.
Finally, the financial meltdown claimed its latest victim last week when Westsound Bank in Bremerton, Washington, was closed by regulators, marking the 33rd bank to fail this year. The closing will cost the FDIC some $108 million in deposit insurance. Another Washington State institution, Kitsap Bank, will assume Westsound’s deposits and take over the nine branches of the failed bank.
(Adam Perrotta is a news writer with Commercial Property News, MHN's sister publication. He can be reached a tAdam.Perrotta@nielsen.com )