Good News Seen Traveling in Packs

KnowledgeToday has once or twice noted the occasional bit of good news emerging from the wreckage of the global economy. So far, these items have surfaced one at a time: a boost in car sales in China, a moderation in U.S. job losses. Today, however, we pointto a small cluster of possibly positive signs, with the usual caveat: A few upticks do not a recovery make.

First, U.S. Federal Reserve chairman Ben Bernanke went before the congressional Joint Economic Committee this morning and delivered what The New York Times called "his most upbeat assessment since the United States fell into its most severe financial crisis since the Depression and its steepest recession since at least the early 1980s." In his prepared remarks, Bernanke said: “Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while. We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly.” The Financial Times also offers an upbeat cast to Bernanke's testimony. But it warned that while "his comments will fuel hopes that the US economy is starting to reach a floor," he also noted that "evidence of overall stabilization remained 'tentative' with better news on the consumer front set against extreme weakness in business investment."

On the other hand, The Wall Street Journal reported today that "an April survey of loan officers by the Federal Reserve found a smaller number of banks were tightening loan standards compared with a few months ago. And the FT notes that London interbank money market rates – the amount banks charge to lend to each other – fell to record lows today, "in a further sign that the credit markets are thawing." The low rate "suggests confidence among investors is growing and that the global economy is past the worst of the financial crisis."

While these indicators probably should not inspire an entrepreneur to rush out and open a chain of luxury retail shops (see: "The Shopper of Tomorrow: Trading Down"), they do indicate the gradual recovery scenario described by Wharton faculty and others in various Knowledge at Wharton articles, including "Global Economic Forecast for 2009: Will Demand for Good News Outpace Supply?" and "Dear President-elect Obama: Here's How to Get the Economy out of the Ditch."