Signs show recession easing, economic experts say

WASHINGTON (AP) — Housing construction unexpectedly plunged, the number of people receiving jobless benefits grew and JPMorgan Chase & Co. said its first-quarter profit dropped compared with last year.

That was the bad news. But those same reports Thursday included some silver linings suggesting the recession may be easing.

The pace of new-home construction seems to be nearing a bottom. First-time jobless benefit claims fell more than expected for the second straight week. And JPMorgan’s profits were larger than analysts had expected. In the past week, two other banks, Wells Fargo & Co. and Goldman Sachs Group Inc., issued positive earnings reports, too.

All told, growing evidence indicates the economy may be stabilizing.

“The economy is still very weak, but there are some encouraging signs that support cautious optimism,” Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech Thursday.

The Commerce Department said construction of new homes and apartments fell 11 percent in March. But economists noted that the drop was driven by a steep fall in new-apartment building. The construction of new single-family homes matched February’s level and remained above January’s record low.

The consistency in home construction, even as the economy shrank, signals that single-family home building “is now at or near a bottom,” Robert Dye, senior economist at PNC Financial Services Group, wrote in a note to clients.

Economists cautioned that the figures largely reflect a slowing of the pace of economic decline compared with even worse conditions earlier this year. Recovery is still at least months away, they said.

“What would have been bad news last September is good news today,” said Diane Swonk, chief economist at Chicago-based Mesirow Financial.

On Wall Street, stocks rose, partly in response to the economic news. The Dow Jones industrial average closed up nearly 96 points.

Both President Barack Obama and Federal Reserve Chairman Ben Bernanke have mentioned some recent signs of progress this week, while adding that the recession is far from over.

The Commerce Department said construction of new homes and apartments fell to a seasonally adjusted annual rate of 510,000 units in March. It was the second lowest pace on records that go back 50 years.

Applications for building permits, considered a good barometer of future activity, also fell in March to an annual rate of 513,000 units. But that suggests housing starts will remain stable at around 500,000 in April, economists said, albeit near record low levels.

“Right now, stable looks good,” Dye said.

Low housing prices and record-low mortgage rates may finally be spurring sustained interest in home buying.

The Federal Reserve reported Wednesday that the number of people shopping for homes is beginning to rise, leading to a scattered pickup in sales.