Reading the headlines this morning gives signs of hope that the economy is on the rebound. Here are some examples:
- Stocks Recapture 9000 on Profit Surprise (WSJ). S&P 500 Erases Half Its Loss Since Lehman's Failure on Outlook for Profits (Bloomberg). The stocks markets are in the midst of a rally that is showing signs that the bottom may be behind us. However, the threats of a coming commercial real estate bust loom. Can the upturn in the business sector overpower the coming losses?
- Housing Starts Increase to Seven-Month High (Bloomberg). U.S. Mortgage Rates Up, But Housing Optimism Surfaces (CNBC). Economists React: Housing No Longer 'Weakest Link'? (WSJ) The mortgage crisis (among other things) got us into this mess. Foreclosures are still high and prices are still declining, but three months of increases in housing starts is giving some optimism that we are starting to see a rebound.
- Samsung, Hynix Rally as Intel Results Boost Hopes (CNBC). With the semiconductor chip and flat panel business returning to the black, discretionary spending could be returning to people's budgets. Positive results from the two top chip makers are a hopeful sign that the industry is bouncing back, but it hit the bottom so hard that it has no where else to go at this point.
- Ford Reports Surprise Second Quarter Profit (MSNBC). Ford Expects Profitability in 2011 Without Government Loans (BusinessWeek). The automakers defined the American economy for a generation. With its recent struggles the automakers are just hoping to survive. Now with Ford showing promise and a svelter GM out of bankruptcy, could the American auto industry actually recover?
All of this is of course balanced with a heavy dose of continuing negativity. And we will know more on July 31st when the Bureau of Economic Analysis releases its first estimate of second-quarter GDP, which is expected to provide some good news:
The report is expected to offer evidence that the worst recession since the 1930s is very nearly over, and that a return to growth in the current quarter is very likely.
A report that GDP increased in the second quarter could provide a good stimulus for the rally to continue. Perhaps we can look forward to good days ahead.