NEWS AND PHOTOS

What a year. It started with the economy faltering and then got worse. There was a financial panic followed by the disappearance of a number of major financial institutions.  Companies cut payrolls every month, the stock market cratered and the recession deepened. In other words, 2008 will not be remembered fondly. 

The year began with growth declining, causing Congress to pass a fiscal stimulus bill. That gave many of us some cash to spend, which we did. But once it was gone, so was the economy. 

And then the financial sector collapsed. Many of those imaginative sub-prime mortgages disappeared into the abyss of foreclosures. As property values sank, so did the earnings of many of the nation’s largest financial institutions. Some of the oldest investment banks in the nation simply didn’t make it. 

As the credit crisis expanded and markets seized up, the Federal Reserve and the Treasury were forced into the breach. Markets were propped up by government money and companies were supported by taxpayer largesse. 

The damage was massive. Few industries escaped being cut off from credit and consumers and businesses shut down their borrowing and spending. Confidence hit rock bottom and the economy slipped into a significant recession. The arbiter of business cycles, the National Bureau of Economic Research, officially declared a recession and indicated it had begun in January.

So, will we ever get out of this mess? Yes! Indeed, the recession may end sooner than most expect. There are a variety of programs already in place and others that are likely to be implemented that should ease the downturn and set the stage for the recovery.

The Federal Reserve and Treasury have helped stabilize the financial markets. Although the credit standard pendulum has swung wildly from too easy to too tight, the worst of the credit crunch is behind us. The government has stepped in to stabilize weak financial and industrial firms and stands ready to continue doing so.

The prospect of a massive new fiscal stimulus program also holds out hope that conditions will start to improve as we move through the year. Instead of a one shot income program, President-Elect Obama’s advisors are suggesting a variety of initiatives.  Some will help sustain current spending. But more importantly, wide spread infrastructure spending will help support activity well into 2010. It is crucial that whatever is done is strong enough and lasts long enough to ensure we don’t fall back into recession. The ideas being floated seem able to do that. 

Finally, there is the wild card, psychology. Households have replaced irrational exuberance with irrational despondence. Yet, people learn to adjust fairly quickly to difficult situations and, once individuals start believing in the future, they will start spending again. 

The combination of monetary policy, government support, fiscal stimulus and improving confidence could start changing the direction of the economy as early as the summer.  Although the first half of year will be difficult, with many jobs being lost and the unemployment rate rising sharply, conditions should change during the second half of the year. I would not be surprised if when I write my annual review and outlook next year, the economy has rebounded sharply. 

Joel L. Naroff, Ph.D, is Chief Economist for TD Bank, America’s Most Convenient Bank®. Following TD Bank Financial Group’s acquisition of Commerce Bancorp Inc. on March 31, 2008, TD Banknorth and Commerce Bank merged on May 31, 2008, to become TD Bank, America’s Most Convenient Bank. Today, TD Banknorth and TD Bank form one of the 20 largest commercial banking organizations in the United States with more than $114 billion in assets, and provide customers with a full range of financial products and services at nearly 1,100 convenient locations from Maine to Florida.  TD Bank is headquartered in Cherry Hill, NJ and Portland, ME. TD Banknorth and TD Bank are trade names of TD Bank, N.A. For more information visit www.TDBanknorth.com and www.TDBank.com.

TD Bank, America’s Most Convenient Bank, is a wholly-owned subsidiary of TD Bank Financial Group, one of the strongest banks in the world.  Among the top 40 banks in the world, TD Bank Financial Group is one of only seven to be rated “Aaa” by Moody’s.

The financial market meltdown has stabilized. That’s the good news. Unfortunately, sanity has not returned. Large swings in the equity markets are now a way of life. But concerns about the potential failure of additional major firms have dissipated. However, the key question still remains: How long and how steep will this recession be and how do we get out of it? 

That we are in a recession is no longer a question. One look at the jobs numbers confirms it. Business cut workers for the tenth consecutive month in October and the job losses are accelerating. When you add the 240,000 lost positions to those that came before, 1.2 million jobs have disappeared this year. Shrinking payrolls mean rising unemployment and the rate now stands at 6.5%, the highest level since March 1994. 

What is amazing is the speed at which firms have reacted to the faltering economy. Normally, managers retain their people as long as possible out of fear of losing them. But with real time information about the state of the economy, companies appear to be hunkering down and looking to ride out the storm. The first places they look for cost savings is their labor expenses, and they have moved quickly to adjust. 

The job loss implications are truly troubling. Falling employment means less income and that translates into declining consumer spending. That is made all the worse by the collapse of consumer confidence to some of the lowest levels we have ever seen. The retail sector has been hurt and this is likely not going to be a very merry holiday season for many. That also points to problems in early 2009, as firms that didn’t make their numbers during the holiday rush go out of business.

But the most vexing problem is the credit markets. Although the Treasury and Federal Reserve have avoided the threatened meltdown, the survivors are in no mood to extend credit to very many people. The old saying that banks will lend to people who don’t need the money, but will not give money to those who do, seems to be happening. It is more difficult to get credit cards, limits are being reduced and even home equity lines are being cut. Households and businesses alike are having a tough time getting loans.

The tight credit has harmed a number of major industries. Motor vehicle sales dropped to the lowest pace in twenty-five years. The evolving stabilization in the housing market was set back as mortgage requirements were stiffened. 

The growth restraints are extensive, but we don’t have to fall into a depression. The Treasury and Fed are easing the problems and conditions are improving, albeit slowly.  The rapid adjustment of firms holds out hope that job losses will slow sooner than normally would be expected. 

But the wild card in all of this economic turmoil is psychology. Households and business executives are all worried and are reacting accordingly. Many who can spend are not. Ultimately, the depression will wear off and spending will pick up. It is possible that rising confidence could lead to a surprisingly large increase in growth. But that may not happen for another year so – we may have some tough times to ride out.

Joel L. Naroff, Ph.D, is Chief Economist for TD Bank, America’s Most Convenient Bank®. Following TD Bank Financial Group’s acquisition of Commerce Bancorp Inc. on March 31, 2008, TD Banknorth and Commerce Bank merged on May 31, 2008, to become TD Bank, America’s Most Convenient Bank. Today, TD Banknorth and TD Bank form one of the 20 largest commercial banking organizations in the United States with more than $114 billion in assets, and provide customers with a full range of financial products and services at nearly 1,100 convenient locations from Maine to Florida.  TD Bank is headquartered in Cherry Hill, NJ and Portland, ME. TD Banknorth and TD Bank are trade names of TD Bank, N.A. For more information visit www.TDBanknorth.com and www.TDBank.com.

TD Bank, America’s Most Convenient Bank, is a wholly-owned subsidiary of TD Bank Financial Group, one of the strongest banks in the world.  Among the top 40 banks in the world, TD Bank Financial Group is one of only seven to be rated “Aaa” by Moody’s.

The financial market meltdown has stabilized. That’s the good news. Unfortunately, sanity has not returned. Large swings in the equity markets are now a way of life. But concerns about the potential failure of additional major firms have dissipated. However, the key question still remains: How long and how steep will this recession be and how do we get out of it? 

That we are in a recession is no longer a question. One look at the jobs numbers confirms it. Business cut workers for the tenth consecutive month in October and the job losses are accelerating. When you add the 240,000 lost positions to those that came before, 1.2 million jobs have disappeared this year. Shrinking payrolls mean rising unemployment and the rate now stands at 6.5%, the highest level since March 1994. 

What is amazing is the speed at which firms have reacted to the faltering economy. Normally, managers retain their people as long as possible out of fear of losing them. But with real time information about the state of the economy, companies appear to be hunkering down and looking to ride out the storm. The first places they look for cost savings is their labor expenses, and they have moved quickly to adjust. 

The job loss implications are truly troubling. Falling employment means less income and that translates into declining consumer spending. That is made all the worse by the collapse of consumer confidence to some of the lowest levels we have ever seen. The retail sector has been hurt and this is likely not going to be a very merry holiday season for many. That also points to problems in early 2009, as firms that didn’t make their numbers during the holiday rush go out of business.

But the most vexing problem is the credit markets. Although the Treasury and Federal Reserve have avoided the threatened meltdown, the survivors are in no mood to extend credit to very many people. The old saying that banks will lend to people who don’t need the money, but will not give money to those who do, seems to be happening. It is more difficult to get credit cards, limits are being reduced and even home equity lines are being cut. Households and businesses alike are having a tough time getting loans.

The tight credit has harmed a number of major industries. Motor vehicle sales dropped to the lowest pace in twenty-five years. The evolving stabilization in the housing market was set back as mortgage requirements were stiffened. 

The growth restraints are extensive, but we don’t have to fall into a depression. The Treasury and Fed are easing the problems and conditions are improving, albeit slowly.  The rapid adjustment of firms holds out hope that job losses will slow sooner than normally would be expected. 

But the wild card in all of this economic turmoil is psychology. Households and business executives are all worried and are reacting accordingly. Many who can spend are not. Ultimately, the depression will wear off and spending will pick up. It is possible that rising confidence could lead to a surprisingly large increase in growth. But that may not happen for another year so – we may have some tough times to ride out.

Joel L. Naroff, Ph.D, is Chief Economist for TD Bank, America’s Most Convenient Bank®. Following TD Bank Financial Group’s acquisition of Commerce Bancorp Inc. on March 31, 2008, TD Banknorth and Commerce Bank merged on May 31, 2008, to become TD Bank, America’s Most Convenient Bank. Today, TD Banknorth and TD Bank form one of the 20 largest commercial banking organizations in the United States with more than $114 billion in assets, and provide customers with a full range of financial products and services at nearly 1,100 convenient locations from Maine to Florida.  TD Bank is headquartered in Cherry Hill, NJ and Portland, ME. TD Banknorth and TD Bank are trade names of TD Bank, N.A. For more information visit www.TDBanknorth.com and www.TDBank.com.

TD Bank, America’s Most Convenient Bank, is a wholly-owned subsidiary of TD Bank Financial Group, one of the strongest banks in the world.  Among the top 40 banks in the world, TD Bank Financial Group is one of only seven to be rated “Aaa” by Moody’s.

Every month we get new economic data that contain glimmers of hope that the housing market may be bottoming. Despite that, the problems this sector has created seem to be hanging on. This may be changing, but it has taken government intervention to give the weakest economic link a life raft. Whether the takeovers of Fannie Mae and Freddie Mac ultimately do the trick is something that may take time to determine. But at least now we know that another major uncertainty has been removed.

Hopefully, this was the summer of the housing market’s final blow-out. The two huge government-sponsored mortgage agencies, Fannie Mae and Freddie Mac, finally succumbed to declining home prices and questionable management decisions. The government takeover was necessary as these two organizations were basically the lubricant for the mortgage markets. They allowed financial institutions to make mortgages and then sell those mortgages so they had the funds to make even more mortgages. 

Unfortunately, like other financial institutions, as prices fell, Fannie and Freddie found that they were suddenly losing money. This reduced available funds for mortgages and, given the weakness of the housing market, something had to be done.  Together, these agencies had more than six trillion dollars in mortgages and they were way too big to fail.  Allowing them to crash likely would have led to a collapse of what is left of the housing market. The takeover ensures that funding for home buyers will continue, and at a pace that would not have been the case with weakened agencies.

The hope created by the bailout is that with more mortgage money available, rates will fall, home sales will improve and prices will start stabilizing. That is critical not only for the health of the housing and financial sectors but also the economy in general. And that is needed as the labor market continued to soften during the summer. 

In August, businesses cut more than 100,000 workers from payrolls and the unemployment rate jumped to 6.1%. This is the highest level in five years. As expected, with few people buying gas guzzlers, the motor vehicle makers sliced deeply into their workforces.  But financial institutions, hotels, airlines, supermarkets, department stores and most other places no longer visited by consumers also reduced employment levels. The only good news was that wages continued to rise decently, so there is some money flowing into household bank accounts.

Looking forward, the situation remains muddled even with the government’s actions.  But at least now it seems that mortgage money will continue to flow. Yes, there are many questions to be answered about what the taxpayer will have to pay for the privilege of a better operating mortgage market. And the role of government in the economy has taken a new turn as bailouts have become a matter of policy. But ultimately, we were going to have to pay the price for irresponsible lending, bad government policy, failed regulatory oversight and fraud. The questions are “how much” and “when?”  That we are paying it now rather than later, likely will lower the cost to, and accelerate the time when, the economy can get back to growing solidly. 

Joel L. Naroff, Ph.D., is Chief Economist for Commerce Bank. Commerce Bank, America’s Most Convenient Bank, is a leading financial services retailer with more than 475+ convenient stores in New Jersey, New York, Connecticut, Pennsylvania, Delaware, Washington, DC, Maryland, Virginia and Florida. Following TD Bank Financial Group's acquisition of Commerce Bancorp Inc. on March 31, 2008, it was announced that operations of TD Banknorth and Commerce Bank will be combined under the brand name TD Bank, America's Most Convenient Bank®. Today, TD Banknorth and Commerce Bank form one of the 20 largest commercial banking organizations in the United States with $120 billion in assets, and provide Customers with a full range of financial products and services at nearly 1,100 convenient locations from Maine to Florida. TD Banknorth and Commerce Bank are trade names of TD Bank, N.A. For more information about Commerce, please visit the company’s interactive financial resource center at commerceonline.com, or call 888-751-9000.

CHERRY HILL, N.J. July 26, 2008 - Thousands of South Jersey homebuyers currently standing on the sidelines will have the opportunity to live the American dream in a home that they can now afford to buy if the U.S. Senate passes the badly need housing stimulus package before Congress adjourns for its August recess, according to the Builders League of South Jersey.

The landmark Housing and Economic Stimulus Recovery Act of 2008, H.R. 3221, which has passed the House and is expected to be approved by the Senate this weekend, includes an all-important $7,500 temporary home buyer tax credit for qualified first-time buyers that will stimulate home buying and reduce excess supply in housing markets. The tax credit can be used for homes purchased between April 9, 2008 and July 1, 2009.

“Going home to a place you love to live in is the essence of living the American Dream,” said Builders League of South Jersey President Robert H. Brown. “Having the Federal government give you that last boost you need to make it happen, makes putting down roots even sweeter. Our families and our communities desperately need this legislation to energize the region’s economy and release some of the pent-up demand in the housing market.”

The legislation also includes several other provisions to help revive housing and the economy, including FHA modernization, reform of housing government sponsored enterprises Fannie Mae and Freddie Mac, expansion of the mortgage revenue bond program and enhancement of the Low Income Housing Tax Credit to help spur production of badly needed affordable rental housing. The Builders League has joined the National Association of Homebuilders in urging Congress to pass the legislation.

While New Jersey does not suffer many of the woes of the national housing market, with excessive inventories of unsold new and existing homes, this legislation would release some of the idle demand in the region’s housing market.

“Many buyers, especially first time home buyers and those considering their first move-up home, have decided to wait and see how prices and incentives adjust further,” Brown said. “Fortunately we don’t have a housing market that’s spiraling out of control like other areas of the country. The market is beginning to move again, albeit slowly. Those buyers who have decided to stay on the sidelines and time the market may just miss the best time to buy a new home in decades. Giving first-time homebuyers a hefty tax credit will improve affordability. When more people purchase their first home it will ultimately stimulate the entire housing market in South Jersey.

“A few years ago many first time buyers were simply priced out of the market in New Jersey. Now it is much closer to reality for them,” Brown said. “They may find buying a home today is a much better and more competitive investment than renting. It’s certainly a much better way to start a home and get established in the community they want to live in.”

SOUTH JERSEY ECONOMY: Housing is vital to the local and state economies, creating jobs and generating taxes and wages, which positively influence the quality of life in a community. According to an economic impact study conducted in South Jersey by the National Association of Home Builders in 2002:

• Buyers of newly built homes will spend an average of $8,900 – or about five percent of the purchase price - to furnish, decorate and improve that home within the first year. That’s more than twice the average spent by non-movers.
• In the first 12 months of ownership, buyers of existing homes spend about $4,000 more than non-moving homeowners in home decorating and improvements.

ABOUT THE BUY NEW, IT’S TIME CAMPAIGN: The Builders League of South Jersey launched a public information campaign this spring to address some of the misconceptions about the real estate market in South Jersey, as it compares to the housing market nationally. The campaign works to provide pertinent information on market conditions and trends so residents can make more informed decisions about where they live in the future. To listen to audio and video files on housing market conditions in South Jersey visit www.buynewitstime.com.

CHERRY HILL, N.J. JULY 25, 2008 — It makes more sense financially to buy a house than to rent in South Jersey, according to a study recently released by the National Low Income Housing Coalition (NLIHC) and the Center for Economic and Policy Research (CEPR).   

The study shows that a family in Southern New Jersey can expect to spend about the same amount of money each month to own a home as they would to rent. But home owners can anticipate building a nest egg of equity ranging from $10,836 to $14,492 if they stay in the home for just four years. 

“This study supports that buying a home in South Jersey is a wise choice for long-term financial security,” said Robert Brown, president of the Builders League of South Jersey in Cherry Hill. “With today’s near-record low interest rates, market conditions that make it the best time to buy a home in decades and great selection of new homes on the market to choose from, there has never been a better time to invest in a home and your family’s future.”

Home owners who have fixed-rate mortgages are also protected from rent increases, and can more easily budget for long-term housing expenses. For example, according to data from the Department of Housing and Urban Development (HUD), the Fair Market Rent (FMR) for a two-bedroom unit in South Jersey rose from $738 in 2000 to $932 in 2008. Most homeowners also have a financial advantage over renters by being able to deduct mortgage interest and other eligible expenses from their taxes every year.

The study used data from the Census Bureau’s American Community Survey and the HUD’s Fiscal Year 2008 FMR for its calculations. More information can be found on the NLIHC (www.nlihc.org) and CEPR (www.cepr.net) Web sites.

“Don’t wait to live the life you want if you have the perfect opportunity to build equity for your future by owning a home. Now is a great time to buy a new home,” Brown said.

To find out about home buying opportunities in South Jersey, go to: www.buynewitstime.com.

Prospective home buyers have the choice of two types of houses on the market:  resale or new.

Home buyers planning to buy a brand-new house or condominium often cite energy-efficiency, open layout, a warranty, and being able to select appliances, flooring, paint colors and other design elements as factors driving their choice. 

But builders say that buyers can be drawn to a new house for reasons that aren’t so obvious.  Below are a few more benefits of a brand-new home that you may not see in the sales brochure.

Building a Community Together
A brand-new community is one of the built-in benefits of many new homes. When families move in to a subdivision at the same time, often lasting bonds of friendship and neighborliness are formed right away. Nobody is the “new kid on the block,” and many home builders host community block parties in new developments to help owners meet and connect. Popular amenities like pools, walking trails and courts for tennis and basketball offer additional opportunities for interaction among neighbors of all ages.   Often new communities are comprised of home owners in the same stage of life, such as young families or active retirees, so neighbors can get to know each other through carpools, PTA meetings, tennis matches or golf games.

Entertaining
Throwing a party in an older home can be a challenge because smaller, distinct rooms make it difficult to entertain guests in one large space.  Builders are responding to today’s homebuyer preferences with layouts featuring more open spaces and rooms that flow into each other more easily, like the popular great room.  While you are in the kitchen preparing dinner, you can still interact with guests enjoying conversation in the family room without feeling closed off. The feeling of spaciousness in today’s new-home layouts often is enhanced by the higher ceilings and additional windows that bringing in more light than you would find in an older home.

A Clean Slate
For some buyers, parking the car in a sparkling-clean garage or being the first to cook a dinner in a brand-new kitchen is part of the appeal of new construction.  In addition, you won’t have to spend time stripping dated wallpaper or repainting to suit your own sense of style. You can create your own home décor from the get-go!

The advantages of being the first owner of a home extend to the outdoors. Instead of inheriting inconveniently or precariously placed trees, or having to tear up overgrown shrubs, you can design and plant the lawn and garden you want.  

Outlets, Outlets Everywhere!
Homes built in the 1960’s and earlier were wired much differently than houses today.  Builders had no way of anticipating the invention of high-definition televisions, DVRs and computers that we enjoy today—and the very different electrical requirements they would introduce.  New homes can accommodate advanced technologies like structured wiring, security systems and sophisticated lighting plans, and can be tailored to meet the individual home owner’s needs.

Anyone who has ever lived in an older home can also attest to the fact that there are never enough outlets, inside or out! New-home builders plan for the increased number and type of electronics and appliances used by today’s families, so you can safely operate a wine cooler, Christmas lights or your computer.

CHERRY HILL, N.J., May 5, 2008 – For people considering a move, there are four reasons to buy a new home in South Jersey today, according to the Builders League of South Jersey’s Buy New It’s Time campaign.

1. Value-added opportunities and the adjusted pricing offered by many of the region’s new homebuilders have made purchasing a new home in South Jersey more attractive than ever before. Yesterday’s upgrades, such as hardwood floors, granite countertops, decks, and finished basements, are standards today in many new neighborhoods.

2. Historically low interest rates have improved the affordability of new homes for many residents in South Jersey.

3. A new home is where you are going to live your life. The glut of investors, speculators and house flippers has left the South Jersey real estate market. As such, most shoppers looking for a new home in South Jersey are planning for the perfect place to live. They’re looking for a sense of community and a home they love.

4. There is a limited window of time to purchase a new home in South Jersey.
Unlike other areas of the country where there is a glut of new homes for sale and tens of thousands of homes waiting to be built, New Jersey doesn’t have an extensive inventory of new homes on the market. Land-use regulations in New Jersey will stymie new neighborhoods from being built in the future, which will ultimately affect the cost of all new homes in the future.

The Builders League of South Jersey has launched BuyNewIt’sTime.com, a public information campaign to address some of the misconceptions about the housing market in South Jersey. Developed in response to buyers’ concerns about the stability of the region’s real estate market as compared to the national market, the campaign seeks to provide potential homebuyers with the information they need on South Jersey real estate market to decide if now is the right time for them to buy a new home.

“Bad news about the national housing market is everywhere. For the last two years we’ve been overwhelmed by the news of falling home prices, bankruptcy, financing and foreclosures,” said Builders League of South Jersey President Bob Brown. “While New Jersey is in the middle of a market correction after 15 years of home prices steadily rising, South Jersey is not experiencing the woes faced by other areas of the country. The bad news on the national housing market, however, is feeding consumers’ fears about investing in a home and their future. We hear it every day. What has not dissipated in this market slowdown is the demand for homes in New Jersey: People still need a place to live.”

The website offers a series of interviews with housing industry experts and homebuyers who bought a new home in South Jersey in the last two years. The Consumer Information section offers plenty of answers to consumers’ toughest questions about buying a new home today. The campaign also hosts a series of Builders League podcasts with housing industry experts discussing real estate market conditions and national housing news.

“Every marketplace is different. National conditions are less important than what is happening in your neighborhood,” Brown said. “In Southern New Jersey, because we don’t have the inventory build up that we’ve seen in other areas of the country, like Florida, Atlanta or Las Vegas, our home values have held pretty steady. The rapid increase in home prices that saw the average ticket price in New Jersey rise 87 percent between 2000 and 2005 has leveled off back to reality, which is a buyer’s advantage.  Coupled with an increase in value-added incentives offered by many new home builders today, the market is perfect for buying a new home today. It’s not going to last. In three or four years, those who waited to buy may regret it.”

The campaign was developed through the creative direction of Shovi Websites of Bedford, Mass., Next Step Graphics of Mount Laurel, N.J. and Media Imagery of Pennsauken, N.J.

ABOUT THE BLSJ: The Builders League of South Jersey is a housing industry trade association of builders, developers, suppliers, subcontractors, lenders, consulting professionals and others involved in providing residents with places to live and work in South Jersey. The Builders League is committed to promoting balanced solutions for solving New Jersey’s housing needs while planning for preservation, environmental protection and economic growth.

The Builders League which is comprised of firms from Burlington, Camden, Gloucester, Salem, Cumberland, Cape May and Atlantic counties, is an affiliate of the New Jersey Builders Association and the National Association of Home Builders. For more information on the League visit www.blsj.com

There is an old saying that if you don’t like the weather, wait a minute and it will change.  We have been waiting a long time, but the economy may finally be starting to change.  We still have a weak housing market but sales are bottoming. Energy costs remain in orbit, but the satellite is starting to come back to earth – just a touch. And the financial crisis continues. Maybe the difficulties there are not over, but we know a lot more than we did.

The root of so many of the economy’s troubles is the housing sector. Defaults, foreclosures and bankruptcies have savaged the balance sheets of financial institutions.  They have reacted by cutting back on credit and that has restrained growth. We need the housing market to stabilize if the economy is to bounce back. 

The first sign in the housing market has bottomed will come when home sales stop falling. That actually seems to be occurring. Existing home sales have been in a very tight pattern for about nine months. Yes, demand has bounced up and down and we did hit a low in June, but pending home sales are moving up. Whether it is cheap foreclosures hitting the market or prices becoming more affordable, demand is improving. A similar flattening pattern is appearing in new home sales. Okay, prices are still falling and they may continue doing that into next year in some areas. Nevertheless, there are enough positive bits of information to indicate that the worst may be behind us. 

And then there is energy. After making a wild charge toward $150 a barrel, petroleum prices hit a brick wall. Suddenly, all those “non-speculators” decided that the U.S. and world economies were not strong enough to support energy prices anywhere near to where they had risen. The result was a rout and petroleum prices headed back toward $110 a barrel – at least for now. Gasoline prices closer to $3.90 are still draining household bankbooks, but lower is better than higher.

We still face many problems. For the seventh consecutive month, the nation’s employers cut their workforces. The job losses in July were a little less than they had been but they were enough to cause the unemployment rate to jump to 5.7%.  That is the highest level since March 2004. Firms are also reducing hours worked and that means income growth should be weak. Without money to spend, households are not going to buy like crazy during this back-to-school spending season. 

Despite all the restraints on growth, the economy has yet to turn negative. In the spring, the expansion was actually a touch faster than in the winter. Yes, we are talking sluggish, tepid, disappointing activity. But in this case up is better than down and the longer the expansion continues, the greater the chance we can hit bottom and start moving upward. The economy just needs to hold on and, once housing turns and the financial sector stabilizes, growth should start improving.

Looking forward, we are clearly not out of the woods yet. But I would not be surprised if we start seeing some signs of improvement soon. Just don’t expect anything great to happen before next year. 

Joel L. Naroff, Ph.D., is Chief Economist for Commerce Bank. Commerce Bank, America’s Most Convenient Bank, is a leading financial services retailer with more than 470+ convenient stores in New Jersey, New York, Connecticut, Pennsylvania, Delaware, Washington, DC, Maryland, Virginia and Florida. Following TD Bank Financial Group's acquisition of Commerce Bancorp Inc. on March 31, 2008, it was announced that operations of TD Banknorth and Commerce Bank will be combined under the brand name TD Bank, America's Most Convenient Bank®. Today, TD Banknorth and Commerce Bank form one of the 20 largest commercial banking organizations in the United States with over $119 billion in assets, and provide customers with a full range of financial products and services at nearly 1,100 convenient locations from Maine to Florida. TD Banknorth and Commerce Bank are trade names of TD Bank, N.A.

Commerce is headquartered in Cherry Hill, N.J.   For more information about Commerce, please visit the company’s interactive financial resource center at commerceonline.com, or call 888-751-9000.