Americans aren’t much for dwelling on negatives. As other countries, especially in Asia, reeled from financial crises in the late 1990s, optimism in this country approached a 30-year high. But in recent months, the news media have worn down the good mood, creating a trance-like gloom fed by corporate layoffs and a bear market on Wall Street. The result has been a dip in consumer confidence to a low not seen since mid-1996. A fresh measurement occurs Tuesday, and economist Lynn Reaser is looking for the March index to show further weakness, in the range of the 106.8 reading a month earlier. “Consumers are still anxious, especially when they see headlines about layoffs and the troubles on Wall Street. They see that the economic slowdown has extended beyond the auto sector to technology and even to the travel industry,” said Reaser, of Bank of America Securities in St. Louis. “The good news is that Americans still are buying new homes, and car sales are exceeding expectations.” Her bottom line: Consumer behavior hasn’t caught up with the negative assessments given to surveyors.
HOME SALES
CONSTRUCTION FIRM
The housing sector is on center stage Monday, with reports on both new- and existing-home sales for February. Construction has refused to crack, and both figures should continue to indicate strength, even as other economic sectors display weakness. Other reports due out: February orders for durable goods Tuesday, a final revision of fourth-quarter gross domestic product Thursday, and February personal income and spending Friday.
EARNINGS
NO RECOVERY YET
This week marks the end of 2001’s first quarter, as well as a merciful conclusion to warnings about corporate earnings. But that means only two weeks before the big wave of actual results. Chicago investment manager Marshall Front believes it will take nearly another six months until year-over-year profit comparisons begin to improve, but it won’t take that long for stock prices to recover. “The Fed will continue to ease monetary policy until there is clear evidence that economic recovery is under way,” said Front, of Front Barnett Associates. “The Fed is providing plenty of liquidity, by boosting the money supply. There also is a boom in refinancing of home mortgages. We should see the recovery in corporate earnings by the third quarter, with clear improvement in year-over-year results before the end of the year.”
EQUITIES
SNAPBACK MISSING
The stock market’s skyride has featured barrel rolls and plenty of loop-the-loops, followed by double-dips and triple-dips. But investors keep asking: When do we get the neck-snapping ascent? Chicago economist Brian Wesbury says the trip to the top could take a while. “A recession has arrived. Industrial production is down 5.2 percent in the last six months at an annualized rate, while durable goods new orders are down 8 percent,” said Wesbury, of Griffin, Kubik, Stephens & Thompson. He said tax cuts and more interest reductions are in the cards.
