At malls from New Jersey to California, shoppers are snapping up electronics and furniture, as fears of joblessness yield to exuberance over rising stock prices. Tractor trailers and railroad cars haul swelling quantities of goods through transportation corridors, generating paychecks for truckers and repair crews.
On the factory floor, production is expanding, a point underscored by government data released Friday showing a hefty increase in March for orders of long-lasting manufactured items. In apartment towers and on cul-de-sacs, sales of new homes surged in March, climbing by 27 percent, amplifying hopes that a wrenching real estate disaster may finally be releasing its grip on the national economy.
After the worst downturn since the Great Depression, signs of recovery are mounting — albeit tinged with ambiguity. Despite worries that American consumers might hunker down for years — spooked by debt, lost savings and unemployment — thriftiness has given way to the outlines of a new shopping spree: households are replacing cars, upgrading home furnishings and amassing gadgets.
Consumers are spending again, delivering a strong boost to first-quarter corporate sales and profits, and prodding some companies to rehire laid-off workers and others to start raising prices again.
From restaurants including Cheesecake Factory Inc., which posted its first increase in sales at stores open at least a year in two years, to high-tech bellwethers such as Intel Corp., which reported its best-ever first-quarter sales and operating income on strong consumer PC sales, buyers returning to their old ways are powering results.
The National Association for Business Economics' latest industry survey shows 57% of respondents reported rising demand in the first quarter, while only 6% said demand fell. It was the third consecutive quarter of rising demand, NABE said.
The April survey also shows job creation increased for the first time in two years, with the percentage of firms adding workers rising to 22% from 13% in January's survey, while those cutting jobs fell to 13% from 28% in January.
As with any expansion, there are going to be questions going forward. For example, is the large amount of consumer debt in the system going to act as a damper on consumer spending? Is the economy capable of expanding after the effects of the stimulus have worn off?
But, the signs are very clear at this point. Manufacturing has been getting better for the better part of a year as indicated by the ISM and regional economic surveys. Personal consumption expenditures are also increasing, as are exports.