Connecting the Headlines- On The Road to Recovery

Connecting the Headlines
It is my guess that no one would argue that we are not in a recession. Several signs have become evident including poor earning reports from Wall Street, the decline of job creation and production and the increase in unemployment. The most important question on everyone’s mind is how long will this recession last? The good news is that by the time we accept the fact we are in a recession; we have been in one for several months. Most professional forecasters surveyed by the FED agreed that the recession started last April and should last a total of 14 months. The GDP is expected to shrink by 2.9% in Q4.

Is it reasonable to expect the recovery to start in summer of 2009? According to Richmond Federal Reserve Bank President Jeffery Lacker it is. He believes the current monetary policy is “quite stimulative” and that the major economic shocks that hurt the economy are already behind us or starting to subside. So, is it possible that the worst is here or already behind us? If so, the times are tough right now; but not that bad. Inflation is a non-issue and gas is $1.83 a gallon near my house. This means that consumers will keep more money in their pockets due to falling prices on food and gas.

Another interesting story was on the Associated Press-GfK poll that was conducted Nov 6-10th and surveyed 1,001 adults. It found that 72% of Americans believe that Obama will fix the economy. This included 44% of Republicans surveyed! Regardless of where your political affiliations lie; if the majority of Americans believe Obama will take the steps to get the economy back on track; this is one of the keys to our recovery. Consumer confidence which you hear about all the time in the news accounts for nearly 2/3 of all spending! If the average American starts to spend money again, the economy will churn back to life. The bottom line is that the economy will get better soon and we all need to do our part by staying positive and working hard!

Interest Rate Trend Forecast
Short Term (Next 20 Days) - Steady to fractionally lower interest rates
Long Term (20 days out and greater) - Lower interest rates


Sources:
Fed’s Lacker: Reasonable to expect rebound in 2009; Reuters
For Full Article Click the link below:
http://www.reuters.com/article/GCA-Economy/idUSTRE4AK3Y120081121?sp=true

Forecasters: U.S. in 14 Month recession; Reuters
For Full article click below
http://www.reuters.com/article/newsOne/idUSTRE4AG54L20081117?sp=true

Poll: 72% are confident Oboma will fix economy (AP)
For Full Article Click Below
http://www.rockymountainnews.com/news/2008/nov/11/poll-72-are-confident-obama-will-fix-economy/

Market Alert by Larry Baer