The real estate market and unemployment remain a drag on the economy, but some signs are pointing toward improving growth, an economist for the Federal Reserve Bank of Richmond said Tuesday.
"It's still pretty dark out there in some parts of the economy, but we think the sun is set to come up," Ray Owens, a senior economist and research adviser at the Fed, said at a meeting of the Greater Richmond Association for Commercial Real Estate.
Owens echoed general predictions of modest economic growth this year and a "gradual strengthening" in 2012, as the effects of several "unanticipated, negative shocks" to the economy this year fade, such as supply-chain disruptions from the earthquake in Japan.
For now, weak job growth and consumer uncertainty continue to hinder growth. "The real power of the economy is with the consumer, with households," Owens said.
Real personal income rebounded after the recession ended, but the growth rate has slipped this year, prompting a slowdown in the growth of personal expenditures.
But one possibly positive trend is that "we have not seen the savings rate ramp up," Owens said. That could indicate some "underlying optimism" among consumers, he said.
"If there is good news in the economy, it is coming out of the business sector," Owens said, pointing to rising industrial production and orders among suppliers. "Orders are picking up at businesses," he said.
"It's a reason for a bit of restrained optimism about where the economy is headed in the future," he said. For the residential real estate market, however, he said, recovery is still a ways off.
"Brighter days are ahead for much of the economy," he said. "Unfortunately, it looks like the fundamentals of residential and commercial real estate are going to be toward the back end of that."