As we begin to anticipate the Christmas Holiday and look forward to the New Year the economic data, while still a little “mixed”, suggests that we have more reasons this year than last to celebrate and look forward to 2011 with optimism:
- November New Home Sales were up by 5 percent.
- Durable Goods Orders were up by about 2.4 percent.
- Private businesses are spending on capital goods
- A recent study by The University of Michigan/Reuters indicated that consumer confidence was increasing. Based on third quarter results it increased at an annualized rate of about 2.8 percent over last year.
- While not gigantic, the November Consumer Price Index rose 0.1 percent excluding food and energy costs.
- While the excluded food and energy are real and significant costs to consumers inflation is not currently a real concern
- Disposable Personal Income was up about 0.3 percent.
- The third quarter’s GDP growth rate came in at about 2.6 percent and that is up a little from the government’s prediction for the third quarter of 2.5 percent. The GDP could be as high as 3.0 percent in the 4thquarter depending upon final sales results
- The most recent statistics for new unemployment claims reflected a decline
- The mortgage benchmark 10 year U.S. Treasury rate seems to have stabilized during the last two weeks hovering in the approximate range of 3.32 percent to 3.39 percent. With one more week to go unless there is some massive and unanticipated end year sell off of treasuries, residential mortgage rates should remain stable.
- The Bush Administration tax cuts have been extended which includes an extension of jobless benefits and a Social Security payroll tax cut.
- According to the Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations prepared by the Mortgage Bankers Association for the third quarter: “Third quarter 2010 commercial and multifamily mortgage loan originations were 32 percent higher than during the same period last year and 15 percent higher than during the second quarter” and “Commercial and multifamily mortgage lending continued to pick up during the third quarter”.
- The unemployment factor while vacillating nominally has remained under 10 percent, is currently about 9.8 percent and expected to decline during 2011.
- It is too early to tell the actual impact of the Federal Reserve’s announced investment of approximately $600 billion to stabilize and hopefully lower and maintain long term interest rates for an extended period.
- Fed Chairman Bernanke, in an interview that appeared on CBS’s “60 Minutes” earlier this month stated: “
“I reiterated that the Fed is prepared to buy even more than $600 billion in Treasury bonds over the next eight months, should it decide the economy needs the fuel of even lower interest rates”.
According to Chairman Bernanke, the risk of inflation is overblown as he is 100 percent confident that the Fed will be able to ward off inflation, when the time is right by raising interest rates and unwinding its stimulus programs.
The foregoing are all positive aspects. No matter what type of economy we are in there always is some negative data to consider. Right now housing values appear to still be declining in twenty areas of the country but not in the rest of the country where values appear to have bottomed out and stabilized. In other areas home prices have started to increase and in San Diego, for example, they have risen by about 3 percent since 2009.
I still see reporters posting negative economic articles but often without explanation and there is a time when that is most appropriate. Right now that bothers me especially when we are all looking for the economy to rebound.
I believe the preceding is cause for optimism. I believe that “the bucket” (the economy) can now be observed as being more than half filled as opposed to being looked at as if half empty. We’re no longer truly fearful of impending decline or a double dip recession. Things are inclining so let’s all try to approach next year with a positive outlook.
I just wanted to provide a little Christmas cheer and wish all of my readers and friends “Happy Holidays”.