Plus: The EPA last week declared in no uncertain terms that greenhouse gas emissions are putting the public’s health at risk, setting the stage for unprecedented action.

Times Still Tough but Glimmers of Hope Seen
In information collected on or before April 6, for the Federal Reserve’s latest Beige Book report, five of the 12 regional banks reported a moderation in the pace of economic decline. The most encouraging signals so far have shown only modest improvements in areas such as consumer confidence, job losses, home building and home sales, and manufacturing.

Consumer Confidence
“Consumer sentiment levels took an unexpected jump higher as of the middle of April,” the Wall Street Journal reports (subscription required). The Reuters/University of Michigan preliminary consumer sentiment index for April rose to 61.9, the second straight gain, from 57.3 in March. The index reached a three-decade low of 55.3 in November.

“Confidence among U.S. consumers advanced to the highest level since the bankruptcy of Lehman Brothers Holdings Inc. pushed the economy deeper into the recession,” Bloomberg News says.

Unemployment
In the week ending April 11, first-time claims for unemployment benefits fell sharply, tumbling by 53,000 to 610,000. The moving four-week average fell to 651,000, a decrease of 8,500 from the previous week and the first decline in three months.

The third consecutive weekly decline of initial claims suggests an ease of pressure in the weak labor market, according to the U.S. Department of Labor.

Continuing jobless claims climbed 172,000 higher to a record 6.02 million in the week ending April 4, underscoring the difficulty in finding new work. Even though companies may be slowing the pace of firing, they haven’t started hiring back in any great numbers.

Home Building and Home Sales
In a report from the Commerce Department, the home-building sector showed tentative signs of bottoming out in March, “the latest indication that a key sector of the economy may be stabilizing after years of declines,” the Wall Street Journal says (subscription required):

While housing starts last month tumbled 10.8 percent to an annual rate of 510,000 units, the decline was centered on the volatile multifamily category — including apartment construction — that surged the prior month. Starts of single-family homes remained flat from February at 358,000, the Commerce Department said, marking the third-straight month around that low level.

In a separate sign of improvement, the National Association of Home Builders (NAHB) said its housing market index posted its biggest one-month gain in five years in April as many home buyers jumped on lower prices and incentives. The NAHB/Wells Fargo Housing Market Index, which is based on a survey of home-builders’ perceptions about the housing market, rose to 14 in April from 9 in March following months of dismal readings.

Manufacturing
Meanwhile, the Philadelphia Federal Reserve Bank’s manufacturing index improved much more than expected in April, rising to negative 24.4 from negative 35 in March. Even more encouraging, manufacturing firms are beginning to anticipate better conditions in the coming six months: “Broad indicators of future activity showed significant improvement this month,” the Philadelphia Fed reports. “The future general activity index remained positive for the fourth consecutive month and increased markedly from 14.5 in March to 36.2, its highest reading in 18 months.”

On the other hand, the shipments index fell to a record low in April, so “the rebound is more potential than real,” MarketWatch says. Industrial production dropped 1.5 percent last month as factories curbed their output of furniture, appliances and other goods to line up their operations with reduced demand, according to the Federal Reserve. Although declining demand pulled down manufacturing output across a wide range of industries in most districts last month, there were signs of leveling-out in parts of the country, and falling energy prices put more money into consumers’ pockets. The Institute for Supply Management’s Report on Business index also improved in March, with U.S. factory activity shrinking at a slower pace than in the previous month.

“U.S. manufacturing activity is expected to keep contracting for at least another three to six months and most manufacturers say federal stimulus spending will be only ‘slightly’ effective in boosting the economy,” the Wall Street Journal reports based on a survey of major producers (subscription required).

Opportunity Amidst Caution
All of this is not to say that the recession may be ending. Most economic evidence shows the economy is still contracting — but at a slower rate. It could be months or even years before the economy is growing at a pace that will add jobs and improve standards of living.

“While the global economic picture will remain troubled for the near term, slightly improved U.S. economic data could be a harbinger of positive signals for a grim world landscape,” echoes a new report by the Manufacturers Alliance/MAPI.

As such, analysts remain cautious of the recent hopeful economic evidence, “pointing out that an economy falling at a slower rate was still heading down,” the New York Times notes.

“A reduction in the pace of declines does not simply equate to economic rebound,” an analyst in the technical strategy group at Miller Tabak & Company wrote (via New York Times). “This is a crucial difference and one that in many months and years, people will be wondering why everyone on the block didn’t realize this.”

According to the new American Express OPEN Small Business Monitor, a semi-annual survey of business owners with less than 100 employees, only 34 percent of small business owners in the manufacturing sector have an optimistic outlook on the economy, compared with 52 percent six months ago. Some 35 percent identify themselves as “survivors,” compared with 29 percent who describe themselves as “opportunists.”

Despite the challenges they face, 74 percent of manufacturing entrepreneurs believe managing through the recession has made them better business owners, and nearly four in 10 entrepreneurs feel the current economic environment creates opportunities for their business.

Greenhouse Gases Declared Threatening
Last week the Environmental Protection Agency (EPA) declared, in no uncertain terms, that greenhouse gas emissions are putting the public’s health at risk, setting the stage for unprecedented action.

The EPA on Friday ruled that “carbon dioxide, a suspected cause of global warming, is an air pollutant that it is legally bound to regulate, a decision likely to have a vast impact on the U.S. economy and the way American companies do business,” Forbes reports:

Lisa Jackson, the EPA administrator, signed a so-called endangerment finding, stating that carbon dioxide and five other products of fossil fuel combustion are harmful to both the environment and to human health. As a result, the EPA could begin regulating automotive CO₂ emissions as soon as June. The ruling also gives the EPA broad power to regulate greenhouse-gas emissions from industry and electric power utilities for the first time.

“The landmark decision lays the groundwork for federal efforts to cap carbon emissions — at a potential cost of billions of dollars to businesses and government,” the Wall Street Journal reports (subscription required).

Although the finding had been expected, “supporters and critics said its issuance was a significant moment in the debate on global warming,” the New York Times reports.

Many critics warn that regulation of carbon dioxide emissions would raise energy costs and eliminate jobs, further stifling the economy. John Engler, president of the National Association of Manufacturers, tells the Washington Times, “It is the worst possible time to be proposing rules that will drive up the cost of energy to no valid purpose.”

Proponents say the decision was long overdue and would bring long-term social and economic benefits. The new regulation “likely means a boost for greentech companies developing carbon sequestration technologies, to efficiency companies that lower energy use, to developers of wind and solar electric generation projects,” Forbes says.

The finding “could touch every corner of Americans’ lives, from the types of cars they drive to the homes they build,” the Journal says. Unless “superseded by congressional action, the EPA ruling eventually could lead to stricter emissions limits. Businesses that stand to be affected range from power plants and oil refineries to car makers and cement producers.”

EPA officials caution that the finding does not guarantee action from the Obama administration. President Barack Obama has stated that, ultimately, he prefers to regulate greenhouse gasses through legislation rather than an EPA mandate. The White House maintains that any EPA oversight would be subject to public comment, meaning that the agency might not be able to act on greenhouse gas emissions for several years.