Tuesday, April 28, 2009

Consumer Confidence Shoots Up, and More Good News

Despite the worry about the swine flu in the markets, which, if you read my last post you know I think is a bit over done, the markets are up today as I write this. There are 2 main reasons investors are looking at stocks more optimistically today after a bit of a sell off to start the week off:

Consumer Confidence Sky Rockets:
In the month of April, consumers gained a tremendous amount of confidence. The key index surged 12 points to 39.2 from a revised 26.9 for the month of March. This represent the largest increase in the index for quite a while, and in my opinion clearly shows sentiment both in investors and consumers minds have turned. I'm guessing that the fact that the stock market had rebounded this month, has given consumers more reason to be optimistic about the general economy. This is great because as their confidence rises, they spend more money, allowing business's to make more money, hire more employees, and give consumers even more confidence. Just like we had a downward spiral of bad news cause and effects, the opposite seems to now be occurring.

Home Prices Declining at Slower Pace:
The other piece of good news is for homeowners. The prices of home in 20 key cities of the United states has slowed it's pace of decline. This can lead to banks offering mortgages with more ease, and a general wealth perception for homeowners, which could further increase Consumer Confidence next month.

I think the economy has clearly bottomed, and things should be up from here, with a few bumps along the way. Should you invest in the market? If you have some extra cash, then go for it, in my opinion.

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