|
|
|
|
|
THE NORTHWEST ECONOMIC MAINLINE 06·08·2009
What to Watch This Week
- I plan to watch for information from Federal Reserve Chairman Ben Bernanke when the Beige Book details are released on Wednesday. The media targeted Chairman Bernanke last week as he was urging congress to implement action to curb further budget deficit. This week I assume that he will provide clearer perspective as to the current level of stabilization in the national economy and, hopefully, hint at not only stabilization but also signs of a recovery.
- Consumer sentiment, which has been critical and seemingly a leading indicator with regards to both stock market performance and economic figures, will be interesting to watch when it is released on Friday. Sentiment figures have been steadily increasing recently; however, few indicators, with the exception of pending homes sales, have shown that consumers are actually starting to spend again.
- To round out the week, look for developments in the GM and Chrysler saga, as well as information relating to initial unemployment claims and continued upward pressure in oil prices. I have been saying for months that the “pain at the pump” will return, but given recent numbers, this may occur earlier than even I anticipated! Happy driving, everyone!
What I Saw Last Week
- On Monday morning, 101 year-old General Motors (GM) officially announced its bankruptcy. The bankruptcy was the largest industrial failure and third largest bankruptcy in United States history. This was a historic event to say the least and one that many, including myself, saw coming quite some time ago. Early bankruptcy proceedings proved to be a positive step in the right direction for the prelaunch of a new GM. Reports have already surfaced of a Hummer sale, 16 parties potentially interested in Saturn, and three in Saab. It will be interesting to see if a new GM will be able to compete in the worldwide marketplace given the steps already taken.
- Factory orders rose 0.7 percent in April; the second increase in three months and non-farm employers cut 325,000 jobs from a revised 525,000 drop in April. Although still a high number of job losses, this was a figure that was welcomed by Wall Street and was far below our expectation of a drop of closer to 500,000. Other positive news emerged with the ISM (Institute of Supply Management) reporting that its Manufacturing Index came in at 42.8 in May, the highest since last September – a figure above 50 is a signal of an expanding economy. We are not out of the woods yet but these are increasingly optimistic signs.
- Pending home sales figures also surged in April; rising 6.7 percent and significantly exceeding analyst expectation. The increase was the largest since October 2001, and certainly caused many to question a bottoming in the nationwide market. • NWMLS statistics released on Thursday offered welcome news locally in that inventory levels are down significantly year-over-year and that buying activity in the market certainly appears to be on an upward climb! Let’s hope that May marks the beginning of a trend in our market!
- Other noteworthy headlines last week included an uptick in construction spending, but this was offset by less than favorable retail sales, oil prices climbing, consumer credit still on a considerable decline, and various financial companies offering stocks in an effort to rapidly repay their TARP obligations.
Quote/Link of the Week
- Last week there were a variety of different stories that had emerged that I found to be both counterintuitive to conventional wisdom and interesting to mull over. Here are two that I thought were interesting and noteworthy:
|
|
|
