Economic Recovery Forecast Slows Stocks In March 2010

Economic Recovery Slows Down in March

Home sales put damper on a hopeful gain in the stock market after the announcement of fewer jobless claims around the country. This is more evidence that the economy is not quite ready to rebound as of yet.

There is no denying that the United States economy is still having trouble getting itself out of the financial basement after the financial crisis of 2008-09 rocked the country. Case in point, stocks during the first week of March were moving up after the announcement that jobless claims had fallen for the first time in two weeks, but all it took was a drop in pending home sales to bring the market back to reality.

Pending Home Sales Fall

The market remained relatively even after gaining in the early hours of Thursday, but with the announcement from the National Association of Realtors home sale agreements fell by over seven percent between December and January, which puts the levels at their lowest since nearly a year ago, that gain was lost.

Jobless Claims Fall

Back to some good news, the jobless benefits claims fell to 469,000 for the past week, which is 1,000 better than the 470,000 jobless claims that most economists were predicting after two weeks of increases in jobless claims that took most by surprise on the markets. The talk has been that the economy is recovering, but when jobless claims rise, this is obviously not the case.

Unemployment Rises

Even though jobless claims fell, the stock market takes another hit on the basis of the fact that unemployment is expected to rise. The unemployment rate rose from 9.7 percent in January to 9.8 percent in February, putting it dangerously close to the dreaded 10 percent. The reason for the increase was the cutting of 50,000 jobs by employers in February. The loss of these full-time positions will also mean an increase in average hourly earnings and average hours worked.

Stocks Staying Flat

Throughout the first week of March, the stock market has remained very flat with very little growth or lost. Many experts are waiting to see reports on consumer spending because consumer spending accounts for a massive part of the economic activity of the country. In order for the economy to do well, more consumers need to be spending their money.

The Federal Reserve has already said that economic recovery would be slow due to the low amount of demand for loans and the troubling job market.

What is clear is that the market is not going to spring out of its funk during the month of March, although there are many economists hoping that while the market is entering March like a lamb, it will leave the month like a lion. Only time will tell, and everything hinges on the all important consumer spending factor to determine if the market rises or falls in the coming months. The economy may be recovering, but it is moving slowly, and there are many slow months ahead for economists and the stock market.

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