Thursday, May 7, 2009

US Economy is Recovering

Another Week, another climb for US Stocks. I thought since I missed my usual Wednesday post, I will make up for it by doing an overview of some of the Good News we have all received this week, which Points to a recovery sometime this year in the economy, and the stock markets:

#1 Bank Stress Tests
The stress tests seem to be showing positive signs. None of the 19 banks who participated in the tests have been found to be insolvent. Because of this Bank stocks have sky rocketed this week.

#2 Unemployment Rate Easing
The number of people filing first-time unemployment claims fell by 34,000 this week alone. Although more people are still filing for unemployment, then are getting jobs, by quite a wide margin, the fact that the rate of job declines is falling is a signal of a trend change.

#3 Corporate Outlooks Becoming Rosier
Companies like Macy's, Cisco, Walmart, and other are giving outlooks which are much rosier then most people were expecting. This shows that they have information that supports a soon ending recession.

It is looking more and more likely that the worse recession in decades may just end before we hit a new decade. Fall of 2009 should see some growth in the economy in my opinion.

2 comments:

Blair Dunlap said...
This comment has been removed by the author.
Blair Dunlap said...

While I too want to see our economy get back on track- trust me I want to see us move forward more than anyone- I want to take a moment to respond to your post. My overall argument is that in order for our country to move forward, we still need to take some serious action to get new jobs created and get our big companies and little companies on track (through generating not just new government jobs, but also new private sector jobs).

My response to #1: That stress test by no means shows that all things are a-okay for our big banks. It should be a supporting argument that new ideas need to be put in place to generate revenue. The report still showed that banks like BoA, Citigroup and Wellsfargo will need to raise billions more in capital to be ok if our economy continues to take a dive. They need to raise this money privately without gov. help. How can this be done?...with new ideas. Our gov. was here as a spring board (well, TARP was more like the biggest trampoline known to man) and now needs to let them move on with their ideas. We cannot continue to let the gov. define their success through centrally-managed/backed funds (also known as taxpayer dollars). Our country is founded on the principle of freedom, one of which is the freedom of ideas- so let's show this world what we're made of by showing those big ideas.

My response to #2: Unemployment rates may be easing, but as a report today showed-the number of unemployed Americans receiving benefits climbed to a record high according to a Labor Department report release today (http://finance.yahoo.com/news/New-jobless-claims-apf-15164532.html?.v=6). What does this mean? It means that companies may be easing up on layoffs, but there are still a lot of people out there still looking for jobs, but can't find one because there aren't jobs out there to be found. Bottom line, we need to get things moving to stimulate the creation of new jobs.

My response to #3: Great news that companies like Macy's, Cisco, Walmart and others are giving rosier outlooks than people expected! We do need to keep in mind that many have been aiming low in predictions given the current economic situation, in the hopes of being pleasantly surprised. We need to increase consumer confidence and in order to do that we need to get our markets moving. Increasing consumer confidence will lead to an increase in consumer spending, which will...you got it...open up more jobs (retailers, real estate, etc.)!

I'll write more on my thoughts later tonight on my blog. Please feel free to check back at http://thedunlapreport.blogspot.com/

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