We've officially entered the murky area of the recession. • National unemployment figures released Friday showed the free fall of job cuts has slowed. Yet, we're still hovering at a record number of long-term unemployed, more of whom are exhausting their insurance benefits every week. • As we trudge through the 17th month of the downturn, economists in coming weeks and months will grapple with that oft-heard query: Have we seen the bottom? • Don't look for a clear answer. • It's the period in this economic cycle during which economists cement their reputation as multi-limbed creatures; they're constantly saying, "On the other hand … " • The only thing most agree on is that any recovery, once it starts, will likely be slow and gradual. • Here's ammunition to use at cocktail parties (or layoff parties) to build your own case for where the economy is headed.
Recovery on the horizon
1 The employment free fall has stopped. Based on past downturns, unemployment tends to continue rising after a recession ends. But the pace of rising joblessness has slowed considerably. New jobless claims nationally this week fell to their lowest level since January. In March, Florida's unemployment ticked up a mere tenth of a percentage point, from 9.6 percent to 9.7 percent.
2 The stock market is up nearly 30 percent from its March low. Despite concerns this is merely a bear market rally, investors appear eager to jump back in, shrugging off bad news. Look at a week ago: Fears over a pandemic flu were peaking and Bank of America shareholders forced Ken Lewis to give up his role as chairman, yet the Dow rose almost 2 percent that week.
3 More consumers in Florida think the worst is past based on a surge in consumer confidence. Thinking just might make it so. Confident consumers are starting to spend again, albeit frugally. Discount retailers like Wal-Mart reported better-than-expected sales in April.
4 Businesses slashed inventories almost 3 percent last quarter. That leaves them lean, flexible and poised to spend quickly to restock warehouses.
5 Nine of the 19 financial institutions enduring the federal government's "stress test" don't need any new capital.
Bigger slump ahead
1 Office and retail developers are struggling. Federal Reserve officials call the depth of the commercial real estate downturn the single biggest determinant of whether the recession rolls into 2010.
2 Companies may not be firing as many, but they're not aggressively hiring again. About 2.4 million Americans are collecting federal emergency unemployment compensation, but many are on their final installment. An estimated 1.5 million will have run out of benefits between March and August 2009.
3 The drop in home prices may be gradually bottoming out, but Florida is expected to lag most states. According to Zillow, 21 percent of the home mortgages taken out this year in the Tampa Bay area are already underwater with borrowers owing more than what their homes are worth.
4 The debt monster is alive and well. Consumers fell past due and defaulted on their credit cards at record rates last month, the second consecutive monthly high. According to Fitch Ratings, chargeoffs are up 44 percent year over year and up 18 percent just since the beginning of this year.
5 The federal government's long-awaited "stress test" indicated the country's largest banks collectively need another $75 billion to handle potential losses. The two biggest banks operating in Florida — Bank of America and Wells Fargo — could use a combined $47.6 billion, regulators say.