It may seem hard to believe after such a tumultuous week on Wall Street, but economists do see a few bright spots.
For one, Americans with good credit scores can get some of the best housing bargains in decades. Freddie Mac's latest survey shows the average rate on 30-year, fixed-rate mortgages has dropped to 4.32 percent. That's down to the half-century lows set during the fourth quarter of last year.
At the same time, home prices are even cheaper than last year. The S&P/Case-Shiller 20-city composite shows that over the past five years, nationwide housing prices are 46.5 percent lower. The combination of low mortgage rates and low real estate prices is making it possible for more people to be able to afford their first homes.
And those who already own homes — at least those with good credit scores — can refinance mortgages to reduce their monthly costs. With cheaper mortgages, consumers can spend more money on retail goods. And in fact, retail sales are strengthening.
Last week, the Commerce Department said retail sales rose 0.5 percent in July, registering the strongest gains since March. IHS Global Insight U.S. economist Chris Christopher said consumers bought more cars. The pace of buying was not blistering, but still, during such an uncertain time, "mild news is good news," he said.
Also, another report last week showed first-time claims for state unemployment benefits fell by 7,000 during the first week of August, down to 395,000. That was a bit better than economists had been expecting.
Another silver lining involves the weaker dollar. When the U.S. currency is weak, U.S. manufacturers can compete more effectively with competitors in strong-currency countries.
Here's just one example: For the past year, investors from all over the world have been rushing to buy Swiss francs because that country is fiscally sound. But as a result, the Swiss franc has become a super-strong currency.
That makes real Swiss cheese expensive in other countries, so their sales have dropped dramatically. That's good news for American dairy farmers, who now have a competitive pricing advantage.
Perhaps the single best hope for the economy can be found in the drop in oil prices. This past spring, oil and gasoline prices shot up. Now with oil in a more reasonable price range – around $85 a barrel instead of $114 hit a few months ago – the economy is re-balancing itself. Cheaper oil is leading to cheaper gasoline for consumer in most regions of the country. So far, gas prices are down about few pennies a gallon, but may go lower this fall. Paying less at the pump could help consumers hang on to more of their money.
JOHN YDSTIE, host: Hard as it maybe to believe there are other silver linings in this economy, NPR's senior business editor Marilyn Geewax joins us now to discuss some of them.
MARILYN GEEWAX: Hi, John.
YDSTIE: So we've got a rollercoaster stock market, job growth is at a snail's pace, productivity is slowing and some European economies are in turmoil. Hard to see the silver linings. Why should we be optimistic at all?
GEEWAX: John, you and I have been covering the economy long enough to know that it can be full of surprises. Often, bad news for one sector has a way of morphing into good news for another sector. So it's possible that some parts of the U.S. economy may actually be benefiting from our recent problems.
YDSTIE: Like what? What are some positives?
GEEWAX: Well, interest rates for one. The cost of borrowing just keeps going down. Of course, that's because this global turmoil. But the bottom line is it's cheaper to get a home mortgage or to refinance an existing one, at least if you have good credit. And the average rate now on 30-year home loan, it's around 4.3 percent. That's a great rate historically, and it means that a lot of people who couldn't afford homes in the past may now be able to buy a home.
And refinancing applications are rising. When people are able to move into these cheaper mortgages, they can save hundreds of dollars a month. That gives more money to spend at the store. And in fact, we actually are seeing retail sales strengthening.
YDSTIE: That's a bit of a surprise? What are people buying?
GEEWAX: Last week, the Commerce Department said that retail sales rose in July. It showed the strongest gains since March because people were buying cars. But also, shoppers were taking advantage of early back-to-school promotions. So sales at big chains like Kohl's and Macy's, they were up.
YDSTIE: But increased spending isn't really an option for the 14 million Americans who are unemployed. Many of them are actually facing the prospect that their unemployment benefits will run out. And the Fed's decision last week to keep interest rates low was, in part, because the job market remains stagnant.
GEEWAX: All of that is true. But again, we're actually starting to see slightly better news about jobs. Last week, there was a report showing that first-time claims for state unemployment benefits fell by 7,000 during the first week of August. It was down to 395,000. Now, I know that sounds like a lot, but it was better than economists had been expecting. And remember, the jobs report that came out for the whole month of July, it was also came in better than economists had been expecting. And this weaker dollar could be helping boost hiring in the coming months.
YDSTIE: The U.S. dollar is weakening against other currencies. What effect does that have on job growth?
GEEWAX: Well, a cheap dollar could help all sorts of businesses. Here's just one example: for the past year, investors from all over the world have been rushing to buy Swiss francs because that country is so fiscally sound. As a result, the Swiss franc has become this super-strong currency, and that means that real Swiss cheese - yes, they really do make Swiss cheese -has become expensive for other countries, and their sales are dropping dramatically.
So that's good news for American dairy farmers. Demand for domestic cheeses goes up, they make more of it, maybe they hire a few extra hands to keep up with that demand. You could apply that weak-dollar effect to all sorts of small businesses.
YDSTIE: Marilyn, you really are Miss Sunshine.
(SOUNDBITE OF LAUGHTER)
GEEWAX: John, again, you know, I don't want to sound like I am minimizing the problems in this country. And we may well be looking at another recession. But it's fair to point out that there are some positive indicators. Take the recent drop in oil prices. This past spring, oil and gasoline prices shot up. Now we have oil in a more reasonable range - more like $85 a barrel instead of that $114 we were seeing a few months ago. So the economy is starting to rebalance itself.
YDSTIE: Yes, but again, oil prices have dropped because most people are now expecting slower growth. And we know slow growth is going to hurt job creation.
GEEWAX: In the short term, that is true. But in the long term, cheaper energy can set the stage for a rebound. And we're already seeing some of the benefits from that cheaper oil. In most regions of the country, gas prices have started easing a little bit - it's down a few pennies a gallon. And we're starting to see that ripple out to the consumers. If people are paying less at the pump, they could start saving a little more for their holiday shopping.
So, no one knows for sure where the economy really is heading, but it's possible that there are more strengths out there than we're seeing right now.
YDSTIE: NPR senior business editor Marilyn Geewax. Thanks for joining us, Marilyn.
GEEWAX: Oh, you're welcome, John. Transcript provided by NPR, Copyright National Public Radio.