Split opinions on economy may be good
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Kai Ryssdal: We’ve mentioned more than once on this program that consumer spending accounts for something near 70 percent of the entire economy. So how we’re all collectively feeling about things is far from a trivial question. And with that in mind, I offer these data points. The International Monetary Fund is about to slap a new price tag on all those bad bank debts. The total could reach $4 trillion this year. There was a major survey out today showing corporate CEOs are as glum about the future as they have been since people started keeping track.
And yet, there’s a certain sense out there — validated by a New York Times/CBS News poll out today — that things are starting to turn around. As we try to figure out what to make of all these mixed signals, Marketplace’s Amy Scott reports the confusion might actually be a good thing.
AMY SCOTT: These days a glance at the business pages can give you a sort of mental whiplash. Take this sampling of headlines. “Muted Signs of Life in the Credit Markets.” Great. Then again, “After Recession, Recovery Will Take Years.” But hold on, “Outlook on Economy is Brightening, New Poll Finds.”
Lakshman Achuthan: Confusion, right? There’s a lot of confusion as to where we are in the business cycle.
Lakshman Achuthan studies recessions and recoveries at the Economic Cycle Research Institute. He says confusion is common at turning points in the economy. And he thinks we’re close. Yes, the big numbers, like jobs and foreclosures are still depressing. But he’s encouraged by indicators that predict future growth. Like factory orders. As well as more exotic data.
ACHUTHAN: Things that aren’t even traded, like tallow, which ends up being used as soap to clean dirty factories. And the way that factories get dirty is they get used. So if we see factory soap sales firming, we know something’s happening.
That’s right, your best gauge of the economy’s health could be the price of rendered beef fat, which has been rising since December by the way. It’s going to take more than that to convince Pierre Ellis. He’s a forecaster with Decision Economics. He’s says the credit market might be thawing. And demand for houses may be picking up. But he’s not ready to call a rebound.
PIERRE ELLIS: If you want to be optimistic, you can see some of those signs. Trouble is, things can easily turn for the worse again.
If Ellis sounds like he’s hedging, you can hardly blame him. As with the recession, we probably won’t know we’re in a recovery until it’s well underway.
In New York, I’m Amy Scott for Marketplace.
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