Last week's flurry of good economic news gave rise to a little optimism in the real estate sector, something we haven't seen in quite some time. Maybe this is the start of something big.
For starters, Fed chairman Ben Bernanke said there are signs of a bottom in the housing market and that consumer spending had stabilized. These pieces of the economic puzzle are important because spending represents about 70 percent of our economy and because confidence plays such a large part in the home-buying decision.
And remember, these words of encouragement are from a man of few words, and his words are often intentionally vague. Atlanta Federal Reserve President Dennis Lockhart was slightly less enthusiastic, but unmistakably positive last week when he told a group on Jekyll Island that "conditions are now calmer, but it is too soon to breathe easy."
OK, no easy breathing yet!
New job losses were lower than expected, and well under the benchmark of 600,000 that some economists think signals a declining vs. a recovering economy. And consumer spending for the first quarter showed unexpected strength after a dismal fourth quarter last year.
And even though the stock market is largely unrelated to housing, the recent surge of 35 percent in the S&P 500 Index has boosted consumer confidence at all levels, reflecting Americans' belief that the economy is moving toward recovery.
On top of all this good news, I received the results of the RBC CASH Index. CASH is an acronym for Consumer Attitudes & Spending by Household. Here are the findings:
> The RBC Jobs Index saw a rise of 9.2 points in May to 54.4, compared with 45.2 last month. Ratings of 50 or better imply optimism. This is the second consecutive increase in the jobs index after six straight months of declines.
Interestingly, it seems that jobs confidence is improving even as overall unemployment is growing across the nation. Expectation of future employment showed the strongest improvement.
> The RBC Expectations Index showed that 36 percent of consumers believe the economy will be stronger next month, with 20 percent expecting it will continue to weaken.
> The Investment Index rose to 49.6, reflecting an improvement in respondents' personal financial conditions and growing comfort with investments and major spending, such as buying a house.
I am not an economist, and I won't try to predict the future, but economic conditions tend to run in cycles. And if that holds true for this recession, I think we're all about ready for this one to cycle its way right out of town.
Questions or comments? InsideAdvice@gmail.com
John Adams is a broker and investor. He answers real estate questions on radio station WGKA (920am) every Saturday at noon. For more real estate information or to make a comment, visit www.money99.com.
