Three pieces of news today to digest… Ben Bernanke spoke (good news), and Retail Sales and the Producer Price Index for March are both in.
First… Let's start with our Federal Reserve Chairman Ben Bernanke who now says that there are signs the rate of decline in economic activity appears to be slowing, leaving him "fundamentally optimistic" about the U.S. economy and a possible recovery. Bernanke said that recent data are encouraging and could signal a bottoming in the decline of economic activity.
"Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding, and consumer spending, including sales of new motor vehicles," Bernanke said in prepared remarks. "A leveling out of economic activity is the first step toward recovery."
Bernanke was quick to point out that a sustainable recovery will not come without a stabilization in the financial system and credit markets, although he remarked that the U.S. is "making progress on that front as well, and the Federal Reserve is committed to working to restore financial stability as a necessary step toward full economic recovery."
He also said he was "fundamentally optimistic about our economy," adding that conditions remain "difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience, and persistence."
Second… Next up was retail sales for March, which were much weaker than expected, but upward revisions to January and February reduce somewhat the importance of the decline, both because of the netting of the figures and because the revision pattern could be tilting up instead of down.
Some analysts believe that the price declines may have been responsible for at least some of the decline in March retail sales. This means that the volume of goods sold was better than implied by the sales figures, which are released without any adjustment for prices. Today's data indicate that the first-quarter average is below the fourth-quarter average, pointing to a decrease in the consumer spending portion of the first quarter's gross domestic product.
As reported, retail sales fell 1.1% in March, a whopping 1.4 percentage points below the consensus forecast. Revisions to past months were up five-tenths of a percentage point, reducing the sting a bit. Excluding automobiles, retail sales fell 0.9%; expectations were for an unchanged reading. Revisions to this group were up three-tenths of a percentage point. Gasoline sales reduced the ex-auto tally by a tenth of a percentage point.
However, retail sales for the quarter were up a cumulative 1.1% overall and 1.9% ex-autos. That's far better than in the fourth quarter, when retail sales fell 8.9% overall and 8.7% ex-autos. Reinforcing the stabilization idea are the past three weeks of chain-store sales figures, which were the best of any three-week period since December 2007. Excepting that period, the three-week period is the best since December 2006.
Third… Prices paid to U.S. producers unexpectedly fell in March after two months of gains, indicating the recession is keeping inflation under control.
The 1.2 percent decrease followed a 0.1 percent gain in February, figures from the Labor Department showed today in Washington. Excluding fuel and food, so-called core prices were unchanged. Over the last 12 months, wholesale expenses fell by the most in almost six decades. Inflation is expected to stay in check partly because the global downturn has kept a lid on the cost of fuel and other commodities.
What this all means to you, the foreclosure investor, is that our economy is not dead and showing signs of slowly recovering. The Fed will continue to work on restoring growth and each day will continue to get brighter. Housing is already recovering in the hardest hit areas of California, Nevada, Florida and Arizona. (Read more here: Existing Home Sales Up BIG: Housing Turnaround Underway :Housing Bidding Wars in California?; Reno/Sparks Investors: Housing Turnaround Underway; Housing Bidding Wars Hit Arizona)
The foreclosure moratoriums are up and so are the number of foreclosures. Do a search here to see what's available in your area. You'll be surprised at all the great deals right around your corner.
But make sure before you write a single offer that you "Do the Math Right" and lock in your 15% profit when you buy. I will show you how next Tuesday in my Mastering Mini-Lab Live Webinar and Conference Call. You must register in advance. More here.
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