Positive economic news emerging; economists temper the optimism

A flood of potentially positive economic news hit the business wires Monday, suggesting Americans are more optimistic about the future of the economy.

However, one economist says trend reports and surveys don’t always match up with economic reality.

ONLINE JOBS DATA
The Conference Board reported Monday (Aug. 31) that online job demand is up 300,000 nationwide, with some of the larger metro areas showing “stable trends” after about two years of losses.

In the South, online advertised vacancies rose by 60,800 in August. In Arkansas, the online increase was just 500, and Oklahoma fell by 2,400.

“The August increase is good news showing what we hope will be a continued improvement in job demand this fall,” Gad Levanon, senior economist at The Conference Board, said in a statement.

The online report helped support The Conference Board’s August Consumer Confidence Index which was up, reflecting a belief among consumers that jobs were becoming easier to find.

“While all of this is good news, the gap between the number of unemployed and the number of advertised vacancies still remains at about 11 million, with over four unemployed for every online advertised job vacancy,” Levanon said.

CREDIT CARDS
A Monday report from Fitch said “U.S. consumer credit quality showed signs of life” with fewer credit card chargeoffs in asset-backed securities rated by Fitch. While Fitch noted that credit card delinquencies “stabilized further,” the industry isn’t in the clear.

“We still need to see some measurable improvement in the delinquency and personal bankruptcy figures and the employment situation overall before chargeoffs revert to more historical norms,” Managing Director Michael Dean said in a statement.

Fitch did note that its monthly payment rate index is improving.

RESTAURANTS
The National Restaurant Association also reported Monday that its national index in July was 98.1, up 0.3% over June and the first increase in three months. However, the index has remained below 100 (an index below 100 indicates overall contraction) for 22 consecutive months.

“Although restaurant operators continue to report soft same-store sales and customer traffic levels, they are more optimistic about improving conditions in the months ahead,” said Hudson Riehle, senior vice president of Research and Information Services for the association. "Restaurant operators reported a positive six-month economic outlook, and the proportion expecting higher sales rose to its highest level in three months.”

Restaurant operators are more optimistic about the economy, according to the association, with 32% expecting economic conditions to improve in six months, up from 24% in June.

MARKET INDICATOR
The Dow Jones Economic Sentiment Indicator (ESI) reached its highest level in a year rising to 35.5 in August, the sixth consecutive monthly increase, according to Dow Jones Newswires.

“In addition to the ESI’s positive trend, we’ve seen several months of positive movement in the Leading Economic Index and industrial production which have in the past signaled a move to economic growth,” Dow Jones Newswires columnist Alen Mattich said in a statement. “The continued improvement of the ESI coupled with the gains of other leading indicators is a sign that the U.S. economy continues to steer a course towards recovery.”

PERSPECTIVE
Jeff Collins, an economist with Springdale-based Streetsmart Data and primary author of The Compass report produced by The City Wire and sponsored by Benefit Bank, said the reports collectively do indicate a trend.

However, Collins said trends do not always translate into economic reality.

“It’s one thing for people to tell us they feel better about their economic situation, it’s another thing for them to act on that behavior,” Collins explained.

He said employment data and retail sales figures — often gleaned from sales tax collections — are better measures of consumer sentiment. Unfortunately, employment and sales tax information hints at a few more months of economic pain for the Fort Smith metro area.

Greg Kaza, executive director of the Arkansas Policy Foundation, agreed with Collins’ assessment. He reminded that employment in Arkansas peaked in February 2008 at roughly 1.2 million, compared to July employment of 1.17 million.

“The big issue (to watch) is when the losses for the entire labor market will end,” Kaza said.

Despite all the positive reports, the broad markets were all down in Monday trading. The Dow Jones Industrial Average fell 47.92 points (down 0.5%), the NASDAQ was down 19.71 (0.97%), and the S&P 500 was down 8.31 (0.81%).