Â The Economy Stokes Further Optimism
With the European debt crisis hanging over the markets, our politicians continuing to act like children and now the markets worrying about the regime change in North Korea, there seems to be no end to the scary headlines. Even if the news is not scary, the media is pumping up bad news. For example, last week the National Association of Realtors adjusted home sales down for the past five years because they did not present accurate numbers. The headline? The recession caused worse real estate sales than we thought. The media seems to have lost the fact that existing home sales rose last month. New home starts were also surprisingly stronger, especially in the multi-family sector. Finally, real estate inventory is significantly lower than it was 12 months ago.
Through all of these negative headlines, the economic news is actually brightening our horizon. We had previously mentioned the precipitous drop in first time unemployment claims which is stoking optimism regarding possible future employment gains. Here is the point. The recovery is moving forward while worries overseas and in Washington are dampening our "public" enthusiasm. For example, the stock market has rallied significantly from the lows of October but despite this rally, interest rates are still at their historic lows and gas prices have not risen in the past several months. If the crisis in Europe were resolved and politicians were being cooperative, rates and gas prices would be going up based upon the positive economic news. We don't really care what the media "headlines" say. We care that these economic reports prod businesses to use some of the cash they are sitting on to pick up the pace of hiring. This is what we need for our current economic situation to continue to get better into the first quarter.