Much of last week was spent in the US southern city of Atlanta, at CNN Center, our Global headquarters. After my rather gloomy Profitable Moment last week, I’d hoped moderate temperatures and the southern outlook would be more palatable. In some ways it was. The southern fried chicken I enjoyed at a local restaurant was delicious. And the bread pudding for dessert required hours at the gym afterwards. I really should have asked for the recipe, even though making it would be way beyond my kitchen skills. The sputtering economy in the south, however was not quite as tasty. I am sorry to report, it was still tinged with the bitter tastes.
My good friend, who is in real estate, was relieved to tell me that, properties were at last coming onto the market, but at unrealistic prices. Even when there were potential buyers, they could not obtain mortgages. The lending crunch is still strong for all except the most creditworthy. He is working twice as hard to make half as much.
Having heard his anecdotes, I was not surprised to see this confirmed with figures showing sales of previously owned homes falling 7.2 per cent in January to the lowest level since last summer.
Other friends, who work in retail, told me that the year had started off badly. Without discounts shoppers were not shopping. Looking at the week’s numbers, this was confirmed by consumer confidence data from the Conference Board ( a fall back to levels seen last April) and the Michigan consumer sentiment numbers – both of which revealed an increasing concern about the future.
It was not all doom and gloom however, the US did revise upwards its growth numbers for the fourth quarter, from 5.7 percent to 5.9 percent, so the end of last year was better than first thought. I tend to pay little notice to this number for several reasons. The revision was relatively small, the number is firmly rear-view driving and crucially, it covered the holiday season. The concern has now firmly shifted to what is happening now! The first quarter can do much more damage than what happened three months ago.
It is obvious that today’s forward-looking indicators like consumer sentiment, are showing Americans are not comfortable about the direction of the recovery. They are putting off buying things. The recovery is tepid.
Some of you will be wondering how I square this circle with the fact that the Dow Jones Industrial’s showed a gain of 2.6 percent in February. This was the market’s best performance since November. If things are that bad, why didn’t the Dow fall? Good question.
The US is currently doing the economic equivalent of dancing two steps forward…one step back. Some months, it is the opposite, and no progress is made. It is a brave person who is prepared to say that the direction is full steam ahead anytime soon.
My short trip finished as it began, being hit by another storm in the northeast. Record levels of snow have disrupted life and there may well be another storm next week too. This will take its toll on the first quarter’s numbers although it should be mitigated as things get back to normal and increased activity compensates.
Either way – my short trip to the US showed that things are rocky on the economic front. As for that delicious bread pudding in Atlanta, if you have a favourite dessert recipe, do drop me line. No matter how dire the economy, there is always room for dessert!
Next week, my dispatch comes from the much warmer climate of Bahrain as I get ready to present Quest Means Business each evening as part of CNN’s iList week – cnn.com/iList.
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Richard Quest is a CNN correspondent based in London, host of the weekday one-hour program “Quest Means Business”. For program highlights and more, go to www.cnn.com/qmb
