Economic Data Show Glimmer Of Hope

The deep and painful global recession appears to be easing. Asian countries are reporting solid growth. Europe is doing better, and many economists believe the U.S. economy is no longer contracting. But consumer sentiment is still weak, and another unexpected blow could send the economy into a double-dip recession.

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MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

ROBERT SIEGEL, host:

And I'm Robert Siegel.

Recently, there has been a feeling of - if not optimism, at least some relief about the economy. Unemployment stopped going up, at least for July; average wages started growing a bit. And when the Wall Street Journal recently surveyed economists, a majority said the recession is over.

BLOCK: Not so fast. Today, stock markets fell hard in the U.S. and around the world. We're joined now by NPR's Adam Davidson of our Planet Money team, who has been trying to make some sense of the economic news. Adam, hey, how you doing?

ADAM DAVIDSON: Hi, Melissa. Doing great.

BLOCK: Where would you say we are right now? Out of recession, into recovery, somewhere stuck in the middle?

DAVIDSON: Well, the economic data is really, really confusing. It reminds me of last year, you know, the last - unfortunately, the last year or so it's been pretty clear we're in a lousy, lousy case. We're at least - we're back to where it's not quite clear how lousy we are. There seems to be a couple stories emerging from the U.S. economic data. There is what seems to be the early days of an industrial recovery. For people who don't work in manufacturing, it probably doesn't seem obvious, but factories are humming again, at least a little bit, at least humming more than they were before.

We're seeing more production, more big factories turning out goods. But the rest of the economy - retail sales, us consumers actually going out and buying stuff - that is still falling off. And until that comes back, we're not out of this thing.

BLOCK: Okay. And meanwhile, around the world, what's going on? Let's start first with Asia. What's going on there?

DAVIDSON: Well, Japan just peaked out of recession. They actually grew. I think a lot of people thought they would lag far behind us, but they did grow by a tiny bit. The big powerhouses of growth are China and Indonesia. They're really actually doing quite well, not as well as they were two, three years ago. But they really are growing. And they seem to be pulling Asia with them. And there are these interesting pockets of good news around the world. Latin America has some nice pockets, Brazil, Peru. When Germany just announced to, I think, everyone's surprise, including the Germans, that they had positive growth in the last quarter. France is doing even better than Germany. Poland's doing okay. Everywhere I've described is surrounded by other countries doing very, very poorly though.

BLOCK: Doing very poorly. Well, that's interesting because we heard all the talk that this was a global recession all around the world, everybody feeling it everywhere. Would the same thing not apply in terms of recovery? In another words, would not everybody be lifted up at the same time?

DAVIDSON: You're exactly right. When this started, if you remember last September, October and to December, it just crashed and everybody felt it all over the world. That is not the case with the recovery. I think we're going to see countries maybe months, even years apart in their recovery. One thing that's interesting is, on average, poorer countries, emerging countries are doing better than the rich countries, than we are. That's very unusual. And we are going to see neighbors, you know, doing much better than the neighbors right next door.

BLOCK: Well, there are lots of ways, obviously, to measure where we are economically. What sort of indicators would you be looking out for, particularly to see if things are headed in the right direction?

DAVIDSON: I think that what matters at the end of the day, not just in the U.S. but around the world, is the U.S. consumer. China needs us to start buying again, so does France and Germany, so does Canada and Brazil and certainly, so does the U.S. economy. Now obviously, we don't want to go back to the borrowing tons of money from overseas and buying houses we can't afford and filling it with junk we don't need. But it's a simple fact: If the U.S. consumer does not get out and start shopping, then our economy and the world economy will not fully recover.

So really, at the end of the day, forget the data, look at yourself, look at your neighbors, look at the store - that's where you're going to see the future of the global economy. How we feel about the economy is going to determine how the economy does.

BLOCK: Okay, Adam, thanks a lot.

DAVIDSON: Thank you, Melissa.

BLOCK: That's Adam Davidson of NPR's Planet Money team. You can find a lot more economic news at the Planet Money blog and podcast. That's at npr.org.

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