All the words of economy experts add up to zilch

Add comment August 1st, 2009

Glimmers of economic hope have been dawning on the horizon, and they’ve prompted a flurry of news reports containing such words as “recovery,” “bottom,” “rebound” and “optimistic.”

Unquestionably, they’re a relief after nearly two years of unrelenting reports containing “plunged,” “plummeted,” “sales” and “stock market,” or “skyrocket,” “soar,” “unemployment” and “oil prices.”

Still, there are two important things to keep in mind when reading these reports:

1. Watch the clock.

2. They really don’t matter.

At least, as far as you and I are concerned.

If all politics is local, then the economy is more so. And such an elusive concept as economic recovery will only be recognized when we can actually see it — when the rising number of unemployed people in Winnebago and Boone counties head back to work, when the restaurants and retailers on East State Street or Illinois 251 are bustling again, when neighbors move in next door.

The word that must be included in those stories, of course, is “sustained.” And lately, it isn’t.

That’s why I remain bearish, despite the reports that retailers had stronger-than-expected sales gains in the late spring and early summer or that home sales saw a good month or two around the same time. Certainly it’s cheering news. But it’s also why watching the clock is important, for any number of reasons.

The time of year is a big factor, of course, because home and retail sales, even unemployment, tend to record improvements when the weather gets warmer: Consumers get out more, and companies take on seasonal workers.

Even more important, however, is that a month or two of increases does not signal any sort of recovery after such a prolonged contraction. It doesn’t even mean that the market has hit “a bottom.” It just means long-suffering retailers and Realtors may have seen a little — in some cases very little — relief.

Consider: Homebuilders in Belvidere and unincorporated Boone County saw the number of residential building permits grow 100 percent — 100 percent! — in June over the previous five months.

The number of building permits filed from January through May? Zero. The number in June? One.

Then again, it also was the first month that the number of building permits filed in Winnebago and Boone counties didn’t drop year over year.

Any signs of growth are hopeful. Just don’t fall into the trap of listening to economists who already insist that the economy is recovering.

In other words, we’ll know when the recession has ended. And it has nothing to do with the official “end” — remember, it was about this time last year that we learned we were actually in a recession, although most of us knew it well before any announcement was made.

Contact Business Editor Annette LaCross at alacross@rrstar.com or 815-987-1295.