Thomas Oliver: Spring brings signs of hope

By Thomas Oliver

The Atlanta Journal-Constitution

My economist email pen pals are encouraged by recent signs and wonders, not the least of which is the continuing uptick in consumer spending.

As everyone knows, consumers frolicking in malls are the keys to our good fortunes.

“Retail sales and personal consumption expenditures have been surprisingly strong so far this year,” Mark Vitner, of Wells Fargo Securities, writes me.

“One of the most encouraging developments is the strength we are seeing in spending for discretionary items,” Vitner says.

Retail sales were particularly strong in March. Yes, retailers benefited from Easter sales and warmer weather etc., but this is the third consecutive month of stronger than expected sales. Some cite frugal fatigue. Yes, it means what it implies.

My personal gauge is Apple Computers. If they sell a gazillion non-essential iPads, then the consumer is back, and back to creating a new segment of e-commerce that will fuel even more spending.

The warm weather is also a factor. It has been a long, cold winter for almost everyone west of the Atlantic and this side of the equator.

Georgia’s beaches were packed this past Spring Break week with cabin fever patients.

These are good signs, though some will say that consumers spending willy-nilly is what caused our recent troubles. But the Financial Panic of 2008 wasn’t so much brought on by consumers spending too much as it was by the fanciful bookkeeping of our financial institutions.

My pen pals even see encouraging signs amid the persistent unemployment numbers.

“With the March employment report, payrolls have grown three of the last five months,” emails Roger Tutterow, a Mercer University professor.

Jeff Rosensweig, of Emory’s Goizueta Business School, added that last month’s job report showed increases in key industries, not just healthcare and education.

Both Rosenweig and Tutterow also noted the positive increases in our manufacturing sector – new orders and employment.

The Emory professor notes this also bodes well for our exports.

Two drawbacks to the recovery are increasing gas prices and interest rates. During the recession we'll be boring our grandchildren about, the price of oil dropped precipitously as demand fell like a rock.

With recovery underway, demand, particularly in robust economies like China and India, is taking off.

Ergo, the price of gas is trending higher and higher. (Yeah, yeah, I know, it’s the speculators. But isn’t it funny how they can’t raise the price when there’s lessening demand....). “With oil near $87 a barrel, we will likely see $3.50 a gallon gasoline this summer,” Vitner writes. “I do not think the economy can withstand prices much higher than that.”

Long-term interest rates will lead to 6 percent mortgage rates, Vitner predicts, which will make a housing recovery more difficult.

“Locally, I am encouraged by the pick-up in office leasing activity, which tells me that job growth is picking up in the Atlanta area,” Vitner concluded his email.

Plenty of negatives persist. But for this brief moment, let us hold tight to some hope.

Thomas Oliver writes the Sunday business column. He can be reached at toliver.writeright@gmail.com