Tax credit's effect? Sales, cost of existing homes see increases — April 10
So have we or haven't we? Hit bottom, that is. A flurry of recent headlines adds to the collage of mixed messages that color how we feel about the economy.
Last week, even as the Dow closed above 11,000 for the first time in 18 months and unemployment in Metro Orlando actually fell a half percentage point (though the statewide figure stayed essentially flat), we all felt worse than we had in months.
Consumer confidence fell in early April to its lowest level in five months, according to the Thomson Reuters/University of Michigan Surveys of Consumers released Friday.
The culprit? Blame it on your home.
Even as we watch our retirement accounts edge higher and sense an end to the long slide in the labor market, we won't be happy until house prices truly stabilize.
Our lingering hangover from all that champagne we popped while house values soared seems like it's here to stay. And now no one feels like celebrating, even though 2010 is shaping up to be a year of recovery.
So what needs to happen before we start to see a sharper image in the shape of an upward arrow from the patchwork of conflicting economic indicators?
UCF economist Sean Snaith says one of the biggest factors in real estate continues to be housing finance.
If we think we're getting a hodgepodge of signals, the banks are also getting what Snaith calls a "schizophrenic message."
"The government is saying, ‘Get out there and lend,' and then the regulators are saying, ‘Get your capital ratios up,' which is inconsistent with lending," Snaith said.
Because banks can still borrow money at what is effectively a zero interest rate and invest that money in risk-free government bonds, they don't have to lend to you or me to make good returns.
But when the Fed begins to raise interest rates, the banks will be forced to look at a little more "risky" activity and start lending again, Snaith said.
A lot of economists don't think that will happen until the end of the year or beyond because of the political pressure brought on by the still precarious the labor market.
Snaith is in the minority and thinks the Fed will act sooner.
"Around the middle of the year the Fed will start a very slow process of raising the [federal] funds rate, ending up at one and a quarter to one and a half at the end of the year," he said.
That could loosen up lending to a more normal level.
Until then, we'll be left standing back and squinting at the economic collage unable to see past the big red slash marks through our home prices.
The race to ‘Silicon Valley'
Last week the White House pushed a revised plan for NASA that includes turning the I-4 corridor into the "Silicon Valley of space." Welcome to the club, Florida.
" New Mexico sees itself as a Silicon Valley of space, a place where an industry cluster could develop, absorbing investment and throwing off jobs as it does," read a 2007 TIME article.
"With our workforce, research community and entrepreneurial culture, we believe Colorado can be the next Silicon Valley of space commerce," said Dr. Angel Abbud-Madrid, director of the Colorado School of Mines Center for Space Resources, also in 2007.
And just beating Florida to the punch? Harwell, England.
"A new research centre could help Harwell become the ‘Silicon Valley of space,' five years after the idea was first proposed," declared the Oxford Mail on March 26.
Beth Kassab can be reached at email@example.com or 407-420-5448. Read her blog at OrlandoSentinel.com/thebottomline.