Chin Up in the Downswing

positive economic news during recession

Econ Wonks and Top Financiers Agree: Economy is Improving

May 06, 2009 07:00 PM
by Anne Szustek
Federal Reserve Chief Ben Bernanke; Janet Yellen, the head of the San Francisco Fed, and several chief executives—including new media darling JPMorgan Chase CEO Jamie Dimon—agree: the economy is on track to recovery.

Bernanke: “Economic activity to … turn up later this year”

“The recent data suggest that the pace of contraction may be slowing,” Federal Reserve Chief Ben Bernanke said to the Joint Economic Committee of Congress regarding the recessionary economy on Tuesday. Among the factors Bernanke underscored in his first positive forecast in six months were increases in consumer spending and the first faint signs of a rebound in the housing market. “We continue to expect economic activity to bottom out, then to turn up later this year,” he predicted.

However, unemployment will lag behind other economic indicators for a while, “because you have to get back everything you lost and then some,” as Joseph Lavorgna of Deutsche Bank Securities explained during an April Wall Street Journal survey of economists, who see the recession ending in September.

Yellen: “My views roughly accord with [Bernanke’s]”

Janet Yellen, the president of the San Francisco Federal Reserve, also sees an economic rebound by the end of 2009. Speaking Tuesday at the University of California’s Haas School of Business, she said that she sees the U.S. gross domestic product improving this year, with economic expansion continuing in 2010. “I think my views roughly accord with [Bernanke’s] … in his speech this morning,” Dow Jones Newswires quoted Yellen as saying. The San Francisco Fed head is a voting member of the Federal Open Market Committee, which sets interest rates.

Dimon: “[S]ome light at the end of the recessionary tunnel”

The Business Council, a group of dozens of corporate chief executives, gave the highest confidence rating to the economy since 2006. According to a private survey of 69 CEOs, the group’s confidence index went up to 50, nearly double the 25.9 reading in January. Some 25 percent of them predict that business conditions will improve over the coming six months, as compared to 9.4 percent in January. The United States and China are expected to lead the global economic recovery.

Approximately one-third of the Business Council members polled predict a better economic environment for business in the United States during the next six months. And 38 percent see two brighter future quarters for China, thanks in part to spending on infrastructure from the country’s 4 trillion yuan ($585 billion) stimulus package.

China’s spending also stands to benefit U.S. businesses. As the April 30 edition of Chin Up pointed out, Goodyear Tires and Rubber and machinery company Caterpillar have already seen some gains from China.

“In at least some regions of the world, the bottom may have been reached,” Jamie Dimon, the CEO of JPMorgan Chase, said in a Business Council statement. “Business Council members may finally see some light at the end of the recessionary tunnel.”

Dimon has been getting some votes of confidence in his own right. The CEO has been likened to Berkshire Hathaway chief Warren Buffett for the witty prose and insightful economic analysis doled out in his most recent letter to JPMorgan Chase shareholders.

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