Just Sniffles. Still No Fullblown Recession

A couple of days ago, I wrote about the GDP report that was released on Tuesday and about the fact that it still showed an economy that was expanding; not in recession (See My Blog Entry). Of more importance, this report was in direct contradiction to what some of our politicians would have you believe. That GDP report actually contained data that "looked backward" at the first quarter of the year (January through March).

This morning, we got a "more current" snapshot of what's happening in our economy with the Unemployment Report for the month of April (See Full Story). Like the GDP report, this report, too, was better than expected. If we were truly in some kind of disastrous recession, we should have seen some hefty job losses for April; probably, 100,000 or more jobs. Unfortunately for those politicians who continually want bad news, we only lost a meager 20,000 jobs in the month. In an economy a large as ours, that is an insignificant number. In fact, it was so statistically insignificant that the unemployment rate actually improved from 5.1 percent in March to the better rate of 5 percent in April.

This morning's numbers indicate an economy that is making some adjustments resulting from the credit/housing crisis by reflecting some small losses of jobs. However, it is possible that we might actually see another positive quarter when the next GDP report is released in July. I say this because those stimulus checks are just now starting to get into the hands of the American consumer (and, probably into the hands of some illegal aliens with false Social Security Numbers, too). This means that consumer spending should get a boost from this point forward as Americans start putting those checks to work. That spending, alone, should forestall any widespread job losses in this current quarter; and, just maybe, in the next quarter. At the same time, there has been a significant drop in interest rates and lending rates by the Federal Reserve over the last few months. This should start having an effect on business expansion and on available consumer credit for things like cars, major purchases (like appliances), credit cards, and, even, housing.

It is highly possible that this country won't ever see the "gloom and doom" that many Democrats seem to think we are in the midst of, right now (See this video from "Fox News Sunday" that was recorded in March with comments by Democrats Dodd and Schumer). That R-word (recession) may just have been averted by quick action that was taken by the Bush Administration and by our Federal Reserve. Certainly, our stock market thinks so. Thinking that the worst is over, the Dow Jones Industrial Average has moved from about 11,800 in March to 13,100 (today). That is a move of 1300 points in a month and a half. Not bad! It reflects an investment community that seems to sense an economy that is on the way up; not in the depths of recession. I'll say it again. ...Sorry, Democrats. No Recession, yet!