Everyone knows we are in a recession, a severe one, but finally there are signs of light at the end of the tunnel! The worst quarter is likely to be behind us. Several segments of the economy have shown improvement. Here’s a rundown based on a recent U.S. Economic & Interest Rate Outlook from Northern Trust:
1. Consumer spending – In the first quarter, analysts expect that the contraction in consumer spending will be less severe than it was in the fourth quarter of 2008. Spending was up in January and retail sales were close to break-even in February.
2. Disposable personal income increased by 1.7% in January.
3. Motor vehicle sales have been remained constant at a fairly low level, but purchases and production are expected to pick up in the near future.
4.Housing – It isn’t going to do an about face, but there is some good news. The National Association of Realtors index of housing affordability hit a record high in January, meaning that housing has never been more affordable. We can thank the historically low levels of mortgage rates for this trend.
5.The money supply – In 1932 and '33, the demand for money wasn’t being met. The money supply was contracting. Today, the opposite is true. The money supply is growing at a fast pace and that increase will fund government spending.
6.The Fed is creating credit – The private sector has struggled in credit creation and the Fed has picked up some of the slack. This will give banks time to repair their balance sheets and will help get economic growth restarted later in the year.
So there’s the light at the end of the tunnel! In the meantime, keep an eye on the leading economic indicators.
Thanks to everyone who participated in the blog contest! The results are in, and the $100 winner is Nicole for her question about higher risk investing. Check out the full question and answer in the comments under my previous post. Congratulations, Nicole!
Although the contest is over, I encourage everyone to keep asking questions on the blog. I am happy to answer them for you!
This week I'm awarding $100 to the reader who posts the best comment or question on my blog! You can post on previous subjects I've covered or suggest a new topic of your own. Start a conversation by asking me a question or sharing information that other readers will find useful. On Friday morning, I'll go through the entries and award $100 to the reader with the most engaging and insightful post. You can submit up to five posts each. And hurry! Friday's only a few days away. Good luck!
In this tough economy, it can be difficult to maintain a positive outlook, but there are still a lot of positive things happening. So, this week I'm going to give you the top ten things I'm thankful for.
Number 10 - A life in the stock market. It's been up about 20% over the last four weeks. Let's hope it continues. Its success is critical for confidence in our economy and certainly for all of our retirement plans.
Number 9 - Honesty and Integrity. With all the dishonesty that we've seen on Wall Street, let's appreciate the honesty and integrity that we deal with on a daily basis.
Number 8 - Coworkers. I appreciate the people I work with; do the same.
Number 7 - Medical people - Doctors, nurses and support staff. They are there when we need them; let's appreciate them.
Number 6 - Our military both past and present. Their lives are on the line, let's be thankful for their service.
Number 5 - Your health - Nothing is more important. Without it life can be miserable; appreciate good health.
Number 4 - Our country - Freedom is a blessing none of us appreciates enough. We can go to bed without worrying about foreign attacks; not everyone is that fortunate.
Number 3 - Public servants - Police, firemen and yes even government workers.
Number 2 - Your job - Today it's more important than ever. Appreciate it and be thankful. View your job with a renewed commitment.
Number 1 - Friends and family - What can I say? It all starts and ends here.
I'm thankful for your readership!