Only Time Will Tell

Ten days ago the Dow Industrial Average closed at its highest level since 2007, 14,127.82—mere points away from the record close at 14,164 on Oct. 9, 2007. 

Seven days ago 17 of the United States’ 18 biggest banks passed the Federal Reserve’s latest stress test.  The 17 were deemed strong enough to survive a serious market crash or an economic recession.

Six days ago the US Bureau of Labor Statistics released the February unemployment rate—it dropped to 7.7 percent from 7.9 percent in January, the lowest level since December 2008.  The Labor Department also revealed that 236,000 jobs were created.

This morning, numerous business news sites released stories stating that home foreclosures were down a dramatic 25 percent in February 2013 in comparison to February 2012.

Minutes ago, the S&P 500 closed at its second-highest rate, 1,563—only two points behind its all-time closing high.  Similarly, Nasdaq closed at its highest level since November 7, 2000 at 3,259.

All of these factors beg the question—is the economy doing better?  Are we out of the woods?

The overwhelming answer seems to be “yes, but…”.  Consumers and businesses remain cautious but optimistic about the future of the American economy.  These factors combined indicate an economy that is bouncing back in earnest, since the recession of 2008.  However, the severe ways in which families were hurt when the housing bubble occurred causes most Americans to be cautious.

At the end of February, Dow Jones released the results of its Economic Sentiment Indicator.  Scored on a scale of 0 to 100 (higher numbers revealing more positive sentiment) and based off of a selection of 15 newspapers reporting original reporting on economic issues, the score increased in February to 49—its highest score since December 2007.

Ann Battle Macheras, Vice President of the Research Department for the Richmond Federal Reserve Bank, expressed this sentiment well, in an interview in January.  She thought that Americans saw the growth occurring in recent months.  They were, however, still cautious.  Although all of these indexes and statistics point to growth, there are still other factors to take in to account—the unknown impact of sequestration that just went into effect, for example.

The growth since the recession in the late 2000s has been slow, so it seems that only time will bring further growth and greater confidence in the American economy.

Emily Spanyer 

http://www.nasdaq.com/article/economic-sentiment-index-gain-projects-solid-if-unexceptional-recovery-20130228-01125#.UUJrgrvLi5I

http://money.msn.com/top-stocks/post.aspx?post=6cd1863c-366d-4f1b-a30a-19151c98eb80