First Signs Of Economic Recovery

By Doug Marshall
Market Assessment
Published April 8, 2009

Fear is rife and worry is rampant. The economy’s ills are affecting the mood and optimism of a world that’s been sent into a downward economic spiral.

Or so it seems on the street…

From an investor’s standpoint, however, there are some positive signs that recovery may be coming. Not today, not tomorrow, but soon and hopefully of an enduring nature.

Here are some indicators that bring hope:

· Banks are making money. With spreads over the cost of funds at recent historic highs, those lenders still lending are making huge premiums on their loans.

· Housing starts have surged. Having hit an all-time low in January of 2009, recent upward trends in housing and pending starts show a marked slowing in the pace of decline.

The bottom may still be a ways away, however, and a housing glut continues to plague home builders and developers.

· The stock market is up. Always a good thing, the stock market has continued to climb in recent weeks, with the Dow Industrials breaking 8000 last Thursday, for the first time in two months.

The news from the Commerce Department that factory and manufacturing orders were up, as well as the loosening of mark-to-market accounting standards on banks by the Financial Accounting Standards Board, fueled the rally.

· Retail sales are recovering. In weekly chain stores sales throughout the US, retailers have seen slight but positive increases in sales. Recent surveys conducted by ICSC and Johnson Redbook confirm that consumers are beginning to spend more.

· Airline traffic is better than expected. Full airports and planes reveal that the airline industry does not lack for sales. It’s taken some drastic measures. Many airlines have cut back on services and routes and begun charging for services normal included in airfare.

· Not all are pessimistic. Dr. Mark Dotzour, who is the head economist from Texas AM University, spoke at the national TICA conference in San Diego last month. He said that he believes the data shows that this recession should be over by year end.

It’s interesting to consider that the average time needed to sell a house has gone from 11 to 6 months over the course of the past year.

Spring has sprung. And it’s to be hoped that the American investor reads all the news before panicking into error.

We’re on the way…

Source:
Rich Karlgaard, Digital Rules, "Twenty Reasons to Be Optimistic"
As printed in Forbes, April 13, 2009