Economic reports on Tuesday hinted more at recovery than at a feared “double dip” recession.
The signs included a rise in consumer confidence and a Federal Deposit Insurance Corp. (FDIC) report showing improved health for America’s banks – an industry that plays a vital role in fueling overall economic growth. Also, a survey in the Midwest pointed to continued growth in the US manufacturing sector.
The reports come at a time of investor anxiety about whether the economic recovery might fade out this fall. A slowdown or dip back into recession is still possible, but Tuesday’s reports, along with some other recent indicators, provide hope for avoiding that dire outcome.
US stock indexes opened Tuesday on a down note, but then turned positive compared with their close on Monday as the economic reports came out.
Still, forecasters generally see a slow recovery ahead, not a robust environment for job creation. That outlook is shared by ordinary Americans, judging by the new survey of consumers.
The index of consumer confidence rose to 53.5 in August, up from 51.0 in July, the Conference Board reported. But the index remains well below normal. (It stood at 100 in 1985 and was above 100 before the recession.)
“Consumer confidence posted a modest gain in August, the result of an improvement in consumers’ short-term outlook,” said Lynn Franco, director of consumer research at the Conference Board, in releasing the the survey. “Consumers’ assessment of current conditions, however, was less favorable as employment concerns continue to weigh heavily on consumers’ attitudes.”
A reading of just how difficult the job market is now: According to the Conference Board survey, 45.7 percent of Americans say jobs are “hard to get,” while the percentage saying that jobs are “plentiful” stands at 3.8 percent. The latest monthly figures on job creation and unemployment are due from the Labor Department Friday.
In the FDIC report, the amount of loans that are noncurrent (90 days or more past due) declined in this year’s second quarter, for the first time since the first quarter of 2006. Banks also generally saw their profits rise, as they had to set aside less money to cover bad loans. A year before, the industry as a whole posted a net loss in the second quarter.
Banks still have challenges, but the trends bode well for an increasing capacity to lend. That in turn should help an economic recovery gain traction.
The good news for banks also reflects some progress by America’s households in finding better footing when it comes to borrowing. For example, the number of car loans that are 60 or more days past due declined in the second quarter, and the volume of new auto loans increased, the credit reporting agency TransUnion said on Monday.
In the manufacturing sector, the monthly index of activity by purchasing managers in the Chicago region came in at a level of 56.7 for August. A reading above 50 indicates expansion in factory activity.
Overall, the news on manufacturing is mixed: Indexes of activity have shown some recent deceleration in recent months, but they remain above 50. The Chicago regional report at least met forecasters’ expectations.