Are we at the bottom yet?

A graphic illustration of hitting bottom

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KAI RYSSDAL: The actual number for economic growth last quarter was -5.5 percent. An improvement over the estimate we got a month ago, but still pretty much a failing grade.

As the search for that ever elusive economic bottom continues, we offer today on the broadcast a report card of sorts. Maybe a progress report is a better way to put it. How certain chunks of the economy are doing as they drift along. The place to start it seems is the place this recession began: housing.

And Nick Retsinas of Harvard's Joint Center for Housing Studies. Question one was pretty basic: Is housing at the bottom?

Nick Retsinas: I don't think so because in large measure our economy is still losing jobs. When we lose jobs people default on their mortgage. When they default on their mortgage, property is foreclosed upon. And as long as we have a growing number of foreclosures I think it's going to be difficult to have a stable market.

Alrighty then, question two: How is he going to know when housing gets there?

Restinas: One thing we'll know we've hit bottom is when prices stabilize and you don't have the free fall in prices that we're experiencing. I think the other way you'll know you're at the bottom, is when the market is dominated by willing buyers and willing sellers.

His point being that right now what we've got aren't willing sellers at all. They're either being forced to sell by the threat of foreclosure or they've just had enough of the joys of home ownership.

With that, on to manufacturing. There we're getting to the bottom, says industrial economist Tom Runiewicz of the forecasting firm Global Insight.

As to how we'll know when that actually happens, it starts in the blur of economic statistics we get every single month.

Tom Runiewicz: Durable goods orders and even non-durable goods orders when you take a look at it, because that's always the implication that manufacturing adjusts and manufacturers produces things according to the orders that are coming in. And we've seen some very sharp declines from year-ago levels the order basis. However, from January of this year we've kind of have flattened out.

We started with housing. It seems only fair to end with the banks.

Miller Tabak analyst Dan Greenhaus says, oh yeah, they've hit the bottom. And they're stuck there.

Dan Greenhaus: In this boarder sense, I think you can make a case that they've turned the corner with respect to the worst being behind us. Broadly speaking though, I think it's going to be a headwind for these banks as they continue to lose money, as more credit-worthy borrowers start defaulting on some of their loans

And not just mortgage loans, either. But car loans, credit cards, all the rest of them. We asked Greenhaus whether he thinks the overall economy has hit bottom itself. And he's not a big fan of the less-bad theory of recovery.

Greenhaus: The question is now what: We're off the lows and we know we're having stabilization, but where's the growth? You can only gain so much in terms of equity prices on less worse data. At some point you have to grow revenues and you have to grow earnings and we haven't seen that yet.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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