This has the feel of a big week. The headlines that clicked by on Bloomberg today captured a different zeitgeist than last week, a sense of a logjam of rhetoric and disconnection break open.

Commentators will have a field day, but it’s worth taking a look at how the rhythm of the news shifted.

Here’s the summary of the day.

• The activity that drives jobs and the economy — manufacturing and services — is gearing up, albeit slowly.
• The employment market continues to stabilize.
• Obama, faced with a strategic defeat in Massachusetts, quickly tunes into popular opinion, backs off health care and goes straight after the Wall Street titans.
• Consumers are beginning to spend more, and the biggest Wall Street giant of them all bows to popular opinion to cut back its bonus pool, after using a Federal subsidy to post its highest earning year ever.
• In the midst of this sudden shift in momentum, the market slides, unclear what the implications are and in a hurry to hedge its downside risk.

Here’s the highlights from Bloomberg:

U.S. Economy: Leading Index Rises More Than Forecast

The New York-based Conference Board’s gauge of the outlook for the next three to six months climbed 1.1 percent, the most in three months, after increasing 1 percent in November. The gain exceeded the median forecast in a Bloomberg News survey for a 0.7 percent rise. Another report showed Philadelphia-area manufacturing expanded in January for a fifth straight month.

Factories in Philadelphia Fed Region Grew in January

Increases in exports and business investment, combined with a need to stabilize inventories, may promote further gains in manufacturing in early 2010. The report corroborates figures issued by the Fed Bank of New York last week that showed factories in that region accelerated, indicating the rebound is broad-based.

Jobless Claims in U.S. Unexpectedly Rise on Backlog

The jump was due to an “administrative” accumulation from late December and early January holidays, and did not reflect “economic” reasons, a Labor Department spokesman said.

Obama, Democrats Signal Willingness to Scale Back Health Bill

President Barack Obama and House Democratic lawmakers signaled a willingness to scale back legislation overhauling the U.S. health-care system after the party suffered a defeat in a key Senate race.

Obama Calls for Limiting Size, Risk-Taking of Banks

President Barack Obama, tapping into voter anger over bank bailouts, called for limiting the size and trading activities of financial institutions as a way to reduce risk-taking and prevent another financial crisis.

American Express Profit Surges as Spending Rebounds

“We still face the challenge of high unemployment levels, depressed real estate values, and shrunken household balance sheets, but the overall economy and our company are in stronger shape than they were a year ago,” Chenault said in the statement. “While the economic recovery now under way is likely to be modest, we expect it to continue and have begun to shift our focus to growing American Express for the longer term.”

Goldman Sachs Posts Record Profit on Bonus Pool Cuts

“The big story is the compensation,” said Keith Davis, an analyst at Farr, Miller & Washington LLC in Washington, which manages about $650 million, including Goldman Sachs shares. “They got the message that politically they can’t be paying out close to 50 percent of revenues anymore, at least for the time being. Obviously, that’s the primary reason for the beat.”

Stocks, Commodities Slide, Treasuries Gain on Obama Bank Reform

“Financials are selling off and dragging down the market,” said Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages about $2.5 billion in San Antonio. “There’s concern about an overhaul of financial services companies, with increased regulation, hurting the bottom-line of banks.”

The highlights of the holiday season are being presented in dribs and drabs. Earning seasons will tell us a lot. The consumer was clearly trying to generate energy in fits and starts. Spending was still tamped down.

But within the story about overall spending, there’s another significant trend: More and more buying went online.

The table to the right from eMarketer shows the change in retail e-commerce during the holiday season from 2008 to 2009. The figures suggest that a significant portion of consumers are incorporating their e-commerce behaviors into a multi-channel shopping strategy.

My experience reflects that. On December 20th or so, my wife and I went online and ordered about 80% of what we needed for our five kids for Christmas. The few days before Christmas, we shopped locally to get a couple of bigger gifts and to fill around the edges. I’d estimate that 75% of our Holiday shopping happened online and in the last week of the season.

The traditional metrics of Holiday tracking, which get huge coverage in the news, don’t capture this real economic activity.

These three charts help frame why the current economic climate doesn’t feel like a recovery.

State tax receipts have experienced a dramatic decline.

As retail sales drop, so do retail tax receipts, a big driver of local tax revenue.

As long as people are out of work, retail sales will be supressed. The current spate of job losses is deeper and more sustained than any recession after World War II.

I’ve been musing the last couple of days over the trajectory of the economy and the housing market, wondering what the recent trends portend. One by-product of the economic decline, neatly summed up in Paul Krugman’s New York Times piece this past Sunday, is that no expert is reliable. The future is unknowable and no one point of view has any great insight.

But I’m at a point in the book where I want to peek ahead a couple of chapters and find out how things are going to end up. Our company has gone through a radical shift over the past two years, with the bursting of the housing bubble and the subsequent crash of the economy cutting our business in two of our three largest areas in half.

The contraction has taken its toll, but we’re still standing. We’ve maintained our energy with our customers, have worked to keep our financial standing solid and have kept our equity stakeholders whole.

We know we have another challenging winter ahead. The question is, How challenging?

The driver of that answer will be in the housing market.

Look at the momentum of the past six months in the resale market and the circumstances appear rosy: sales are improving, prices have posted month-over-month increases, and pending home sales have been up for six straight months. Inventory has worked down from a high of 11 months last November to 9.4 months in July. An expert as august as Robert Schiller has declared that the housing market may have found a bottom — the kind of qualified forecast that most experts are limiting themselves to in these uncertain times.

The last two months of home sales data, though, have presented an interesting anomaly, one that suggests the the market is either at a key recovery inflection point, or that the market is experiencing a mini-bubble, being driven by unnatural market forces.

The charts to the right illustrate the anomaly. The first chart shows the number of homes sold by month from 2007 to June 2009. The fourth data series presents the average of homes sold in each month over the course of the last decade. (Interestingly, the boom and bust of the middle and end of the decade even out to roughly align with the average for the first four years of the decade.)

Traditionally, June is the peak month for home sales in the year, with units sold tailing off quickly through September. In 2007, the most challenging year of the slump, home sales dropped so much that December sales were lower than January sales, the only time in the decade such a phenomenon happened. Conversely, this year sales increased from June to July, only the second time in the decade (the other was in 2004, at the start of the boom), that this happened.

The second chart indexes the sales in each month against January, showing the relative velocity of home sales through the year. The trend in this chart against supports the observation that 2007 was a very weak year for home sales, with velocity never reaching normal highs and dropping more sharply than in other years. The chart also illustrates the rapid shift in velocity experienced this June and July. Through May, sales were gaining at a fairly typical rate during the year. The last two months, however, posted much sharper growth than a typical year: the July velocity, as measured against January sales numbers, was 20% higher than average.

Despite the strong acceleration in performance, observers point to various risk factors to suggest that the increase in home sales is a temporary bubble, and that the market will settle back into a moribund phase.

The two biggest factors cited are the home-buyer tax credit and the significant inventory of foreclosures still to come onto the market. These two factors have driven a high percentage of home sales this year, offsetting weak demand among move-up and existing home owners, many of whom are under water on their mortgages.

Washington has a key decision to make: Should the home buyer credit expire in November, should it be extended, or should it be revised to include all home buyers and create a higher economic incentive? There are few signals coming out of Congress today, as all eyes are focused on the health bills and Obama’s political future. If Congress extends or amends the bill favorably, the demand from first-time home buyers will remain strong enough to create a solid foundation for future sales.

Some observers close to the real estate are less concerned about the impact of foreclosures on the resale market. This is due to an interesting redistribution of housing stock. As a result of the credit crunch and increased unemployment, very little rental stock has been developed over the past two years. Investors are accumulating existing homes at foreclosure prices and creating new rental units. This demand is helping to move foreclosed homes off the market quickly, observers say.

In the short term, consumer confidence will be the primary driver the performance of the housing market. Will consumers believe that they are making a reasonable investment when they buy a house? Will they believe that prices are reasonably stable, and that they have got a good deal on the house they are buying? Will they have enough confidence in their own economic future to risk the transaction?

The Conference Board has tracked a steady uptick in consumer confidence since it reached its low in February. This uptick has been driven by a consensus among consumers that future expectations are improving, despite risk in their current circumstances.

This improvement comes despite a $10 trillion decline in consumer wealth in the last 12 months, despite a conviction that unemployment will top 10%, despite the knowledge that more than 16 million people are currently out of work, despite a sense of political helplessness across a country increasingly out of touch with Washington. The improvement in confidence suggests that consumers have baked these realities into their assessment of their circumstances, and that, on balance, more consumers feel good than they did six months ago.

But the fall will be telling. Lawrence Yeung, the economist for the National Association of Realtors, cites favorable economic data in projecting a recovery for the housing market in 2010, but warns that the psychology of home buyers, and consumers in general, could suffer in November, following the decline of the home buying tax credit. “A decline in the market following the tax credit could shift consumer psychology,” Yeung warns.

These concerns are short-term, but critical. For the long-term, the new normal for housing has begun to take shape. Bill Gross of PIMCO in his September letter forecasts a decline in home ownership from a peak of 69% to about 65% as one element of the new normal. As we climb out of the bottom of this epic trough, we’ll participate in a more orderly and disciplined market, where real estate offers a relatively stable, but slow-growing haven for personal assets.

Over the past three years, I’ve gathered data, analyzed trends and presented projections for our business and the markets.  While the events have unfolded generally along the lines I’ve outlined, the degrees and the timing have been widely divergent from my estimates.  So, as I came to the end of this exercise and looked at all of the information I’d gathered, I found two impulses warring inside me:  an exuberant relief that the market may be on the upturn tempered by a consciousness that more pain is most likely ahead.  Through it all, I’m amazed by the resilience of people and their ability to persevere.  That’s not a forecast.  It’s a fact.

I spent some time this morning looking through the transcripts of the Equity, AIMCO and Avalon Bay earnings calls and excerpted some sections that neatly summarize the current market conditions and outlook.

While revenue is down, declines in the rental rates of new leases are being offset by a widening spread between new lease and renewal lease pricing.

The pricing spread has increased focus on retention, the companies said.

Equity is renewing leases at 1% below the expiring rental rate, while the net effective new lease rate (a new metric Equity is tracking) is down 9% from the rates vacating tenants are paying.

AIMCO has experienced an overall decline of 1.3% in average rents, with new leases down 2.3% in price and renewal rent up 0.1%.

At Avalon Bay the spread is even wider, with new rents down 12% and renewal rents down 0.6%.

All three companies reported that rental rates have stabilized in the early part of the summer, and that generally traffic is up from significant dips in April.

The impact of the lower rents and lower occupancies drove down same-store revenue 2.4% at Equity and 2.3% at AIMCO. Equity reported occupancy at 93.7%, while AIMCO reported occupancy at 92.8%.

In other comments, Equity spoke in detail to the impact that increased exposure of listing information online has had on their cost structure.

Part of a bigger picture workflow transition that utilizes our web tools, engages the resident, transfers a lot of the work to the resident. When you put prices on line and you have that transparency kind of cut down your call traffic about 50% because, people know what your prices are. They don’t have to call. So, I think what you are seeing is really just the beginning stages of a longer-term focus that we have a fairly detailed plan that will take us probably the next three years to fully implement.

In addition, investment in their Equity web site has allowed them to significantly reduce their investment in paid advertising.

[Our] website is really a Ferrari, so to speak as far as the infrastructure. We’ve been able to move from page nine on a Google search as far as organic, all the way to page one. We’ve also taken more central control of a lot of the ILS spend, the Rent.com, the Apartments.com and you see significant optimization year-to-date on that expense.