The stock market soared last month as data indicated an economic stabilization. But does that mean the recession is over? And if so: When will things feel better on Main Street?
>> Maggie Rodriguez: July was a very strong month for the Dow, the best in 20 years, in fact, but what does that mean in the big picture? CBS News correspondent Bianca Solorzano is at the New York Stock Exchange with the latest. Good morning, Bianca.
>> Bianca Solorzano: Hi. Good morning, Maggie. July definitely treated Wall Street well. Auto sale numbers are due out later today, and we are learning that Ford saw its first monthly sales increase in nearly two years. But are they actually signs that the economy is turning around? It was hot new on Wall Street last week. Stocks finished out July sizzling. The Dow was up more than eight and half percent, scoring its best July since 1989. One of the reasons, the country saw positive signs of stabilization through July. New home sales are up, jobless claims are down, and a recent GGP report shows slowing decline. The White House says we're seeing signs of an economic turn around.
>>
Speaker: It's the actions this administration have taken have been very effective in helping stabilize conditions.
>>
Speaker: I'm pretty sure we've already seen the bottom.
>> Bianca Solorzano: But with plenty of negative factors still looming, is the end of the Recession really anywhere in sight?
>>
Speaker: This is really a Band-Aid approach by simply printing money. This is not done. This has not played out yet.
>> Bianca Solorzano: So July may have brought good news, but we'll have to wait and see what August brings, and of course the many, many months ahead. Maggie.
>> Maggie Rodriguez: CBS' Bianca Solorzano. Thank you, Bianca. Joining us now from Stanford, Connecticut is Liz Ann Sonders. She is chief investment strategist for Charles Schwab and Company. Good morning, Liz Ann.
>> Liz Ann Sonders: Hi, Maggie, how are you?
>> Maggie Rodriguez: Good. Please speak to the viewer at home, who heard all weekend long and is hearing again this morning, how the Recession is over and the recovery has begun, but is saying, well, I still don't have a job. I'm still strapped for cash. It sure doesn't feel like things are turning around.
>> Liz Ann Sonders: Okay. First, let's understand what the bureau that dates Recessions does. Now, we won't find out officially for probably quite some time. It's usually more than a year. But they go back with the benefit of hindsight. And the point where the economy stops rising and starts to fall is the beginning of the recession. At the point where the economy stops falling and starts to rise, it's the end of a recession. Think about what that point is, when the economy stops falling and starts to rise. It hasn't risen yet. We're really at the bottom at that point.
>> Maggie Rodriguez: Um-hum.
>> Liz Ann Sonders: So when you're in that moment, it doesn't feel good to most people, even if, indeed, technically the Recession is over, which I do think it is.
>> Maggie Rodriguez: The unemployment numbers sure don't make it feel like we're out of the woods. Historically, do unemployment numbers lag behind in an economic recovery? Do they take a bit to catch up?
>> Liz Ann Sonders: It depends on what employment statistic you're talking about. The unemployment rate, yes, a very lagging indicator. It has never peaked inside a recession. It has always peaked at the end, or more typically, well after. However, unemployment claims, those weekly numbers that we get, if you look at a four-week average of initial unemployment claims, they're down by about 100,000 from the recent peak. We have never still been in a Recession at that point. So that's one of the leading jobs indicators, the unemployment rate is the most lagging of the jobs indicators.
>> Maggie Rodriguez: So given where you think we are right now in our economic recovery, what is the take away for the average Joe? What should I, at home, be doing to take advantage of the opportunities, if there are any right now?
>> Liz Ann Sonders: Well, I think the take away is, historically and in general, you tend to see a recovery have a relationship to the downturn. That the tougher the downturn, the bigger the pop you get coming out. And I think it's not going to be much different this time. I think what we really have here is a coiled spring, a coiled spring for inventories, a coiled spring for jobs, a coiled spring for production, all of which feeds into one another. And I think it's gonna take a while for it to be felt broadly, but we're gonna start to see it in things like inventories, "Cash for Clunkers" a perfect example of that. We're going to see it, then, in the production that's needed to ramp up to build those inventories. That feeds into jobs, which feeds into confidence. And I think we're not gonna see all that different a cycle this time.
>> Maggie Rodriguez: In other words, patience, everybody.
>> Liz Ann Sonders: Patience. Always, always.
>> Maggie Rodriguez: Liz Ann Sonders thanks so much.
>> Liz Ann Sonders: Thank you.
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