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Is the worst of the recession behind us?

Certainly the signals are mixed, but it’s refreshing to see there is definitely more positive than negative economic news these days. Take last week, for example. Federal Reserve Chairman Ben Bernanke told the House Budget Committee that the pace of economic contraction was slowing. A strong confirmation of that came in the report that new jobless claims were the lowest in months.

Even more encouraging evidence comes from the National Association of Manufacturers. NAM’s chief economist David Huether, said in his economic update: “Positive news continues to mount. Of the 11 major economic indicators that came out last week, only one deteriorated. Home prices continued to decline. Outside of that, it appears that a smoother ride is shaping up for manufacturers and the rest of the economy going forward. It is very likely that the worst of the recession is now behind us."

In other good news, while home prices continued downward, pending home sales in April posted the biggest monthly jump in nearly eight years! That’s a good indication that home sales are coming back to life. The index was reportedly 3.2 percent above last year’s levels, and it’s the third consecutive monthly increase. There’s more.

While the GM and Chrysler/Fiat soap operas drone on, and May new car sales were down 24 percent from a year ago, Ford reported May was its best month for new car sales since last May. Moreover, optimistically looking ahead, Ford said it is planning to increase auto production by 42,000 vehicles a month in the third quarter.

NMMA President Thom Dammrich concurs that the news is more encouraging. He points out that it’s important to understand our new boat sales aren’t likely to see dramatic improvement until home sales and new car sales improve. Happily, we’re seeing some signs that both are improving.

Finally, last week the SBA announced a new dealer floorplan lending program that provides a 75 percent SBA guarantee. NMMA, MRAA and NMBA all successfully pursued SBA in Washington to insure dealer floorplan financing was included in the new SBA loan program. This should make floorplan financing much more attractive to local bank. That, in turn, would be a huge positive for many dealers and, by extension, their manufacturers. 

Overall, then, this past week or so has been positively highlighted by increased sales in the housing market, improving consumer confidence, lower initial unemployment claims, increasing new orders for durable goods and a new SBA loan guarantee program, all noteworthy and heartening. They certainly lend credibility to those who predict we’ll see marked economic improvement in the second half of this year.

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