April 14th, 2009
04:45 PM ET

The Economy: Better, or just less worse?

Program Note: Tune in to hear more from Ali Velshi tonight on AC360° at 10 p.m. ET.

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Ali Velshi
CNN Chief Business Correspondent

President Obama delivered a speech in which he outlined what the government is doing – and has done – to get out of this recession, which is now (I think) in its 17th month. Federal Reserve Chair Ben Bernanke said today that there are "tentative signs" that the economy's slide is slowing, but that a full recovery won't come until the financial sector stabilizes.

Markets are having a rough day, largely because of some economic indicators that show things aren’t all that rosy. Retail Sales for March, as measured by the government, were weaker than expected, after seeing what seemed to be an uptrend. And inflation continues to be lower, as consumer demand fails to pick up.

So where do we stand right now?

Banks are starting to show signs of life, but it may have something to do with the fact that they got low interest money from the government and got to loan it out at higher interest. TARP only has about $135 BILLION left (of $700 BILLION) and there’s no appetite on Capitol Hill to be giving Wall Street more money. BUT, a number of banks (Wells Fargo, Goldman) are talking about giving back their TARP money – this could end up adding $50-$100 BILLION to TARP. Still, we don’t know how this Treasury ‘Bank Plan’ is going to work.

The market has been up each week for 5 straight weeks – pretty impressive by any measure. Will the winning streak end this week? Is this just a “bear market rally” or is it time to get back into this market?

Unemployment is at 8.5% and most (including the administration) expect it to go higher; potentially, millions more jobs may be lost. Unemployment was at 4.9% when the recession started. Best case scenarios have us back down to those levels around 2013.

Housing prices continue to fall. Best case scenario is that they could bottom by the end of this year. Interest rates remain at more than 50 year lows. More houses are being sold, but at lower prices, because there are so many distressed and foreclosed homes on the market.

Filed under: Ali Velshi • Economy
soundoff (21 Responses)
  1. dina212

    Retail is down??? Greed caused this recession. Admitting that much will get us out of it. They need to provide an itemized list as to where the $565 billion went. That's too much money. I'm iffy about the money going to banks now. It just dawned on me that they might be using that money for off-shore ventures which is why we aren't seeing much effect.Worst case scenario: get the money back from the banks, give the money/loan to whatever companies are laying off, sustain them or allow them to Merge or be taken over by another company. When the recession first hit wasn't this the plan (I think it was Morgan stanley or an asian bank) that's where this should be headed. Keep the jobs! once retail goes, that's it. We have the money it's just that the 10% wealthy has to widen to about 20%.

    April 14, 2009 at 9:09 pm |
  2. Joe G. (Illinois)

    Why not just use them world renowned 25 Police Cadet Officers Jobs we got at the cost of the first couple of trillion dollars as the statistical ground level 0 and set the job creation benchmark for the next 5 trillion dollars of spending to 50 blue collar jobs of the Nationwide Average Income Level. If not.. All this money we are spending doesn't seem to get us anywhere.. That just my opinion.. But if someone else has a better one I like to hear it..

    April 14, 2009 at 8:36 pm |
  3. Mike, Zephyrhills, FL

    AARP reports 6.4 million people 65 and older are working today.

    If they would just retire, that would allow the younger ones to have those jobs.

    I know many of these people who are 65 an dolder and they are not workin because they have to, they work for gambling money, extra cash to save, to meet men /women, bored, or just plain greed.

    Sad they just cant let a younger guy have the job. Corp America wants these people on Medicare and part time, work cheaper, pay no benefits, work anytime they need them, etc.... Sad!!!

    April 14, 2009 at 8:04 pm |
  4. Linda

    Stop letting people send money to other countries. That is very bad for our money multiplier! Less money in this country, means less money to lend! Why is this administration going to let people send more money oversees?? Geeze!

    April 14, 2009 at 8:00 pm |
  5. Mike in Atlanta GA

    I guess I missed the article on the hundreds of tax day tea parties that are taking place all over our country on Wednesday, April 15. Can you let me know where I can find them, please, on the CNN website.

    Regarding the economy, these tea parties have been organized by the grassroots of our country, Republicans, Democrats, Independents, Libertarians, etc., because Obama and our Congress have spent all of our tax dollars for the next 10 – 20 years. The stimulous bill was passed without any of our representatives or senators even reading the bill before they voted for it. When families run out of money, they do not continue to spend what they do not have. They CUT their expenses! That's what our government should be doing.

    The tea parties are NOT about "extremist right-wingers. We are part of the silent majority who now what to be heard. The events will be civil and peaceful unless ACORN and other organizations try to disrupt our meetings.

    The tea party in Atlanta will be at the State Capitol building just a few blocks from the CNN headquarters. Let's see if CNN will even mention the event let alone cover it in a balanced presentation.

    April 14, 2009 at 7:59 pm |
  6. Mike, Zephyrhills, FL

    Guess Wall Street wants people to have confidence and buy stocks and invest. In the Real World, 90 million baby boomers retiring and prices going up at ave of 40% a yr and disposable income going down 20% a yr, ???? Anyone see a problem here?

    April 14, 2009 at 7:59 pm |
  7. Carla

    The Flat Tax plan is where it's at. Been proven time and again by those who know. Of course if it's implemented then Big Gov't doesn't get to play while working American's pay, so very few of them really want to see that happen.

    April 14, 2009 at 7:39 pm |
  8. Luis

    When CNN can Explain,

    Money Velocity.

    Just wait for people to start back with the old habits of Borrowing money
    Inflation is going to hit you guys where the sun don't shine.

    April 14, 2009 at 7:25 pm |
  9. Elizabeth

    When is the news media going to focus some energy on the usuary rates that the credit card companies are charging? I know that legislation is being worked on, but it will not go into effect until 2010. The banks are rushing to put unreasonalbe rates into effect NOW before the laws can come into play. I am a widow who lost a major portion of her 401K (so investing more in it is impossible–and stupid) and with time I could pay down my debt (my house also has no equity left in it–and I bought right in the 90"s and I have a fixed interest rate). I am also on SS. With time I could pay things off at the old rates, but not at the extremely high rates the banks are going to charge now. I pay my bills on time, but with my utilities going up,etc. I don't know how long I can continue to do so. The banks are not lending money to the everyday joe and regulating the interest rate they can charge (lower than 20 to 30%) would put money in the average family's pocket right now. I figure I have a few months to survive before the credit card companies force me to do something I do not want to do. I have always paid my bills and I was brought up to do so. I have friends that filed for bankruptsy and are sitting pretty now with no bills. I borrowed the money expecting to draw on my investments to pay it back in Jan. Well, we know what happened there. With things left the way they were, the banks would get their money. With the high interest rates, they may not. How does that help the economy? Everyone wants to know "You helped bail out the banks, when are you going to help bail out me?": The trickle down effect is not going to help seniors in time. Making the banks retain their old interest rates would help everyone. Please help. Thank you.

    April 14, 2009 at 7:13 pm |
  10. Mari

    What's interesting, is that the so-called-fiscal-conservatives moaning and criticizing over the ......... spending, and pork, are the same people who stayed .........silent........ while Bush .......doubled the National debt!

    @ Terry in TX......... the National Debt WAS being PAID OFF by Bill Clinton.

    And Terry in Tx, the National Debt IS.......... not $1.2 Trillion! It is........ over........... $10 TRILLION! ( National Debt Clock Google it)

    When Bush took office in 2001, Clinton left Bush a robust economy; a National debt of $5 Trillion........ and a budget surplus!

    Bush .........doubled the National Debt in eight years...... to over $10 Trillion........ and Obama inherited the "Crash of 2008".

    The GOPers like to blame, demean, criticize President Obama, but ..... during the 1994-2007 that the GOP control both House & Senate, they had a field day........... DE-regulating, the very financial institutions that helped cripple and destroy our economy. Look up the Bob Gram "Financial Services Modernization Act of 1994" and see for yourselves how this "act" played a part in the demise of our banks and Wall Street.

    Give President Obama a chance, as most Americans are, he has been in office a mere........ (just about) 100 days!

    April 14, 2009 at 6:50 pm |
  11. JC- Los Angeles

    Lifting the national carpet and sweeping under billions of dollars in mortgage fraud and then asking for one big national do-over does not a recovery make.

    How anyone thought a fedspeakian octogenarian with an egregious penchant for handing out free money was a panacea for post 9/11 America is anyone's guess.

    Until our nation produces goods and services that people around the globe need; until we treat a good education as mandatory; and until we curb the morally bankrupt, culturally corrupt nature of so many, we will fail to recover.

    April 14, 2009 at 6:12 pm |
  12. susan

    it's not going to feel better until i get a job again.

    April 14, 2009 at 5:55 pm |
  13. Vickie Show Me State

    Let me get this straight. I can buy a house for less than what the owner owes on it. Yet, he can't buy the house at the same price that I can, to keep it? Makes no sense what-so-ever!

    April 14, 2009 at 5:52 pm |
  14. Annie Kate

    2013 for job recovery? Man, that is a long time......I hope people can find some sort of employment in the meantime while they wait on their job sector to bounce back. No job means no money which means lots of misery for a family. I hope the 2013 is a far too conservative guess and that the job markets recovers a lot quicker.

    April 14, 2009 at 5:48 pm |
  15. earle,florida

    If we can talk our way out of this hole we dug, with our head half-way submerged,we should survive the out-going tide. I'd rather be confused on a roller-coaster knowing it will eventually end,than lost on a roundabout with every outlet a endless cross-road! So ,I definitely believe were on the road to recovery,but that virtue that we call ,"patience" will be tested to it's limits,...

    April 14, 2009 at 5:41 pm |
  16. Terry, TX

    Geithner and Obama have not a clue of what they are doing....they are just getting nervous about the American Taxpayers...and well they should be.....no more bailout....no more money....and enforce the laws that we have.

    As a mother of three....I would have taken the 787 billion of the fake Job Stimulus Package....and the 450 Billion Omnibus with the 9,000 Pork Packages...and I would have paid the country's 1.2 Trillion debt.
    No Bailouts...No Pork...Companies should have gone thru bankruptcy...and started the budget and projects fresh.

    No we had to pay ACORN, La Raza, Catfish, STD's, Education, Unions, Weatherization...etc..there's no focus with this administration ....as American Taxpayer...I am ticked off.

    April 14, 2009 at 5:36 pm |
  17. Nick

    And, Reggie, please learn to use proper grammar and spelling. It's a nuisance to read what you've typed because there is NO punctuation. Also, could you please be a little more general? I mean, a face lift and then a financial uplift? Seriously. First, where would all the money needed for that face lift and uplift come from? They've already shelled out close to 2 trillion. Are you gonna work to pay the taxes just to pay the INTEREST on all of your uplifting, face changing programs? I certainly dont want to mortgage away my future, and my kids', and grandkids' futures on MORE wasteful spending. Get real, brotha. If you're not part of the solution, you're part of the problem. Get some real ideas for some solutions and maybe people will begin to listen.

    April 14, 2009 at 5:28 pm |
  18. Nick

    Reggie, I didnt see him slam BO. Did you? You Dems are all so sensitive about anyone that dares to say that his optimism is unfounded. Give me a break, WILL YOU!!

    April 14, 2009 at 5:22 pm |
  19. Isabel Siaba

    The big problem is that the visibility of improvement is slow and gradual. Often the economy goes a few steps forward and others backward.

    Today, for example, investors don’t like the result of sales of trade, which fell in March. The fall in consumption brings concerns because in the first months of the year this rate was high. So many people bet that this trend could mean the beginning of a recovery. With consumption on the rise, businesses turn back to produce and the level of employment would improve, and then forward.

    But let’s to believe because the side looking good, at least there aren’t signs that the bottom of the well will be again reached.

    Thank you.

    April 14, 2009 at 5:16 pm |
  20. REGGIE

    WE need to take care of home first starding with a face lift then with a finace up lift then go abroad with the rest of our I said our plans to recovery how simple is that.

    April 14, 2009 at 5:13 pm |
  21. REGGIE

    Did you here what he said we are moveing ahead give him a chance will you please thank you.

    April 14, 2009 at 5:04 pm |