Are All Pieces in Place for Recovery ?
In predicting the state of the economy for this year, most analysts seem to be forecasting another lackluster year of recovery. However, we are not sure that all the pieces are not in place for the economy to have a stronger year.
Why do we think this could be the case? Two words: five years. In the past months we have heard the term five years repeated again and again. For example, in mid-January first time unemployment claims fell to a level not seen in five years. December housing starts were also the strongest seen in five years.
Is this a coincidence? We think not. Car sales are the strongest we have seen in five years and American household formulation has also increased to a point not seen in….you guessed it, five years. Even states and local governments have started hiring again with this sector expected to add jobs for the first time in several years. We are not saying that there are not potential roadblocks. Even if the Federal budget negotiations are resolved, a solution will translate into a shrinking Federal workforce. The European debt crisis is far from over and there are many homes in the “shadow inventory” awaiting foreclosure. Yet, for the first time in five years we can say that the positives outweigh the negatives as we gear up for 2013.
As we approach the first major data of 2013 in the form of the January employment report, we are hoping that consumers and businesses feel exactly the same way in this regard.