Action by the Federal Reserve and Treasury to ease the credit market stopped the economy from declining any further, Shulman said, making it easier for companies to borrow money to pay their bills. Although borrowing is still challenging, the credit market is more malleable than it was three months ago.
That should also help ailing countries such as Japan, Mexico and Germany, Shulman said. Their rebound will in turn increase demand for U.S. goods, which has slid so steeply that economists predict exports will drop 12% in 2009.
Still, Main Street might not feel the effects of any of this for some time. UCLA forecasts that the national unemployment rate will continue to rise, peaking at 10.4% in 2010. June job numbers will be especially ugly, Shulman said, as college and high school graduates dependent on seasonal employment find that the traditional companies just aren't hiring.
What's more, the new administration is still shaping its healthcare and energy policies, making it difficult for companies to make decisions about big investments, Shulman said. A healthcare institution, for example, doesn't want to make major changes until it knows if the government is going to change how it gets paid.
There is a bright spot, though, said Larry Harris, a professor of finance at USC's Marshall School of Business. Consumers are becoming more confident and are beginning to spend again, as are some companies. "People are no longer as afraid as they used to be," he said. "They're starting to get on with their business."
--
alana.semuels@latimes.com
