FINANCE: Glass Half Empty or Half Full?

By Patricia Kummer; Kummer Financial Strategies- Highlands Ranch
Posted

The economy has been in limbo for so long it is hard to feel good about the microscopic changes.  However these little moves are starting to add up.  I believe we are making our way from the half empty feeling to the half full.  Just in the past few weeks, here are a few examples of positive indicators of a simple, slow but sustainable recovery.

  • New jobs are starting to add up.  First we had to stop losing jobs, then we were neutral for awhile and now we are creating jobs again, albeit it on the low side, but many months of positive job creation is starting to make a dent in the stubborn unemployment rate.  Non-farm payrolls added 171,000 jobs in October a substantial increase from September.  Positive growth was posted by 60.7% of private industries in October.  The total number of people employed also increased, by 410,000.¹
  • Both personal income and personal spending were up for September and have been consistently positive for months.  These numbers are still coming in at less than one percent at a time, but after several years it is starting to compound.  This is crucial since we need consumerism to support business growth.
  • Housing numbers are holding steady with a slight upward climb, especially in Colorado.
  • Gross Domestic Product increased from 1.3 percent in the second quarter to 2.0 percent in the third quarter.  This has been a sustainable number for several years.  This is crucial to prove we are not going backwards or slipping into recession.

The stock market has already made an amazing recovery from 6700 on the Dow Jones Industrial Average in the spring of 2009 to hovering close to the mid 13,000 mark.  This is an impressive return yet some investors remain cautious.  The pessimistic folks may be the ones who missed the recovery by sitting on the sidelines and are now trying to figure out how to reposition.  Even European markets have seen a significant return despite the volatility and debt restructuring.

Several of our old standby excuses for the economic doldrums are being eliminated.  The election will be over; the European Union will prove they can support the fiscal reform; business will start to spend some of the excess cash on their balance sheet; and consumers will start spending for the holidays.

Of course there is always something that can go wrong somewhere, but the negative reasons are fading and positive economic data points are starting to compound.

 

Patricia Kummer has been an independent Certified Financial Planner for 26 years and is President of Kummer Financial Strategies, Inc., a Registered Investment Advisor in Highlands Ranch. She welcomes your questions at www.kummerfinancial.com or call the economic hotline at 303-683-5800.Any material discussed is meant for informational purposes only and not a substitute for individual advice. Investing is subject to risks including loss of principal invested.