The January jump: Economy heading up?

Tom Foreman | BIO
AC360° Correspondent

Hang on. That’s what some of the nation’s best economic forecasters are telling consumers. Whether these experts are studying those endless piles of numbers about joblessness and consumer credit, or plumbing the depths of the stock market’s turmoil, or looking into a Magic 8-Ball; the trend is unmistakable. Quietly, cautiously, and yet steadily, more voices are rising to say the economy either is ready to start turning around.

It sounds preposterous, of course, amid all the bleak news about unemployment, businesses closing and that ocean of bad mortgages still flowing through the financial sector. But these prognosticators base their rosy beliefs on three simple ideas.

1. They think the government’s programs are working. Already they have noted that lending institutions, buoyed by all that bailout money, are more willing to lend to each other. That is the first step, these economists say, toward truly unfreezing the credit market and making a lot more money available to small businesses and consumers. Remember, the initial problem was not loans, it was bad loans.
2. They believe consumer confidence will come back. Sure, plenty of people are worried about their jobs now and cutting back on Christmas spending. But with the new year, and a new president, these forecasters expect a psychological boost as most people realize they still have jobs, houses, and things they want to buy.
3. They say the housing market is ready to bounce back. Almost all of our neighborhoods have been deafened by the roar of falling property values for months now. The good news is that has pushed scads of houses into a price range that is very attractive to buyers. As the credit market warms up, those buyers are expected to begin driving those prices the other way.

All this could be wishful thinking. Chaos in global markets, missteps by the new administration, a big natural disaster, or any number of other things could derail all the optimism in a flash. And we should note that plenty of economists are warning that we may yet have to endure months of difficulty before things get better.

But at least they are talking about things getting better. Maybe in January. Maybe in June. But 2009 is already, for some, looking like if not a very good year, at least a much better one.