A flurry of better-than-expected bank earnings reports this week, coupled with some tentatively encouraging economic data, suggest the economy and the financial system might not be quite as sick as many had believed. Or are they?
Facing conflicting evidence, analysts are wrestling with whether the economy is making a fitful climb back up — or whether the crisis will get worse before it gets better. “We’re beginning to get a little visibility on how banged up corporate America has been,” Mark Vitner, senior economist at Wachovia Corp., says of today’s earnings reports from Citigroup Inc. and General Electric Co.
But the better-than-anticipated results from the banking giant and the diversified manufacturer — among the most beleaguered companies in their industries — buttress the notion “that just maybe we can see some light at the end of the tunnel now,” says Vitner, who anticipates an end to the recession toward year’s end but continued high unemployment well into 2010.
The number of Americans receiving jobless benefits has surpassed 6 million for the first time while housing construction unexpectedly plunged in March. Even those outwardly negative reports carried some silver linings suggesting the recession could be easing, namely a second straight drop in new jobless claims and some stability in new single-family homes.
