Wednesday, March 25, 2009

Recession Soon to be Over?

Are we At the Tip of the Good-News Market Iceberg?

Just like the last 5-6 months was filled with bad news and no glimmer of hope, it seems as though we may be finally bucking this trend. What will it mean for the economy, the stock markets and struggling families in general?

Monday we had the bank rescue plan emerge, giving hope to the country that the banks will likely be in ok shape after the worst recession in decades. Yesterday we were informed that home sales have risen much more than expected, and today we find out that durable goods orders have increased last month. We also learned today that mortgage applications have risen quite a bit, given that rates are at record lows. This will hopefully allow some refinancing, permitting many homeowners to stay put.

Is this just the tip of the iceberg? Will the good news continue? In my opinion yes! Next Thursday, April 1st, most Americans will begin noticing their paychecks are a bit larger. Why? Because starting that day your taxes deducted from that check will be less, thanks to the stimulus package passed last month. On top of this there is a general sense of optimism in the media whereas just a week or two ago it was months of pessimism. Are we going to wake up in a recovered economy tomorrow? No, but I do think by the end of this year the recession will be over, and starting in early 2010 the unemployment rate will begin to drop.

In the meantime I suggest watching the stock market. I would not be at all surprised to see the Dow in the 9000-9500 range by July or August provided there are no major bouts of bad news beyond what is expected.

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