After almost four year of economic recession, the strains of Auld Lang Syne that welcomed 2012 were sung with exuberant hope. This year held promise and, indeed, it appears to be living up to the anticipation by some people’s estimation. Others approach the good news with a grain of salt bearing in mind the seeming recovery in spring 2011 which quickly plunged against the backdrop of the Euro Zone crisis that wasn’t resolved until early this year.
Quarter 1 Reflection
If one examines the data for Quarter 1 alone, it appears the US economy is doing well. Thanks to warm weather trends, retail sales have continued to grow beyond the typical holiday boost through the first few months of the year; the stock market rallied and the Dow Jones managed to remain above the 13,000 mark for more than a few hours at a time. Home sales were up due to the extension of historically low mortgage rates and first-time home buyer tax breaks. Another positive trend highlighted by CNBC Real Estate Reporter Diana Olick - “homebuilder confidence has doubled in the past six months… Stocks of big public builders are up over 40 percent.”
These positive indicators were tempered by 8.3% unemployment holding steady through January and February; however, the quarter was generally one of recovery.
Quarter 2 Projections
The first weeks of Quarter 2 have been marred by the latest unemployment numbers. After a preliminary report by ADP indicated a significant decrease in the unemployment rate in the U.S., the official 8.2% unemployment rate was underwhelming. With only a tenth of a percent decrease, experts are concerned that the country may not be on the mend but rather the official report may be an anomaly in a growing unemployment rate though there is evidence which supports the fact that the slight decrease in the unemployment rate indicates the overall trend. According to a CareerBuilder.com report, 30% of employers seeking to increase their rosters of full-time employees this quarter, up from 24% in Q1.
The concern about the unemployment rate, along with uncertainty about China’s economic future, has affected the stock market; however, many are still cautiously optimistic that the recovery seen throughout Q1 will continue in Q2, especially in the housing and retail sectors. National Association of Realtors spokesman Lawrence Yun stated recently that “with housing showing some recovery, though at a moderate pace, the contribution to the GDP will be positive both this year and next. A housing market recovery will result of an approximate 0.7 percentage point growth in GDP. That’s good news for people working in the industry, for retail shops, and for the broader economy.” If the housing industry continues on its current trajectory, it indicates solid growth for the rest of the economy.
Quarter 1 showed some improvement and there is little reason to think that Quarter 2 won’t continue, if more modestly, in that vein. While there is some potential concern regarding the stock market’s reaction to Asian market projections, key indicators of true economic growth appear to be headed in the right direction. It appears that recovery is on the horizon.
Are You Prepared for Recovery?
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