From stocks to housing figures, economic indicators are hinting that a recovery may be underway. MoneyWatch's Sumi Das talks to editor-at-large Jill Schlesinger about what the numbers really tell us about the nation's financial health.
>> President Barack Obama: For the very first time we're beginning to see glimmers of hope.
>> Interviewer: In a recent speech, President Obama said quote "We are beginning to see glimmers of hope." March was certainly a better month for Wall Street and housing sales are starting to see some traction. But what does this all mean exactly? Moneywatch.com Editor at Large Jill Schlesinger is here to help us read the economic tea leaf. Jill thanks for being with us.
>> Jill Schlesinger: Thanks for having me.
>> Interviewer: Okay, so let's take the stock market for example. Is this an indicator of an eminent recovery? Is it truly a green shoot or is it a false positive?
>> Jill Schlesinger: Well first of all, with the stock market we know is a forward looking indicator. People buy stocks in anticipation of what they think companies can earn in the future so by its very nature, it is forward looking. And that's why often that as we come out of a recession the stock market will rise probably about 6 months before the economic data confirms that we're actually out of a recession. That being said, there are often many false starts in an economic recovery and people, well they can get emotional especially when it comes to the stock market. So we may see the stock market run up and it could be a false step or bear market trap. We see the market come back down, but once the sustained buying occurs chances are we have turned a corner although we'll only know that looking back in retrospect.
>> Interviewer: In addition to the financial industry, the housing sector has taken a big hit, but the number of homes sold is starting to rise a little bit and housing starts have leveled off. So how can those figures be used to measure the health of the economy?
>> Jill Schlesinger: The crisis really started ground zero was in housing. And so we saw that big collapse in housing. That actually started happening prior to the stock market falling so that's kind of an interesting fact. Now we're starting to see the news get less bad. We had huge price volatility on the downside. We saw people had 500 thousand dollar homes that were selling for 250 thousand dollars. Really big changes. We're not seeing that same rate of decrease anymore. However, just because things are kind of leveling off doesn't mean it's actually much better. People are still having a very hard time selling their homes unless they're willing to just hit the first bidder that comes along. So housing is going to take a long time to correct and get back to a normal measure of activity and some even think we have another 10 to 15 percent to go on the downside price wise before we start seeing a true recovery in housing.
>> Interviewer: Finally, let's talk about jobs. Americans are still getting laid off. Unemployment rose to 8 and a half percent in March. We know that the labor market lags behind in the economy if there's going to be a turn around, but how can President Obama claim to see glimmers of hope when there are more than 13 million people out of work?
>> Jill Schlesinger: You can understand how someone who is out of work who hears that speech just wants to throw their head through the window.
>> Interviewer: Exactly.
>> Jill Schlesinger: And you know, it's a very frustrating time but again economic theory tells us that we will come out of the recession and yet the unemployment rate will continue to rise. So sort of a crazy making idea, but here's why. When you're a company and times are really tough, you -- first thing you do is you slash workers. The money you save on compensation and benefits falls straight to the bottom line. As we come out of the recovery, employers don't reemploy and start hiring until it's confirmed that we're really out of the woods.
>> Interviewer: They're cautious.
>> Jill Schlesinger: Exactly and you can understand why.
>> Interviewer: Of course.
>> Jill Schlesinger: As we come out of this terrible recession, what we are going to see is there will be jobs that are created but don't be surprised if the unemployment rate rises from today's level of 8 and a half percent up to maybe 10 percent and yet the economy maybe actually fully out of recession. This is normal part of the economic cycle: doesn't make you feel better if you don't have a job but it is to be expected.
>> Interviewer: So it could get worse before it gets better?
>> Jill Schlesinger: At least on the employment front.
>> Interviewer: Alright Jill, thank you so much.
>> Jill Schlesinger: Thank you.
>> Interviewer: For more about signs of the economic recovery head to Moneywatch.com.
==== Transcribed by Automatic Sync Techologies ====
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