The United States Economy Keeps Getting Better
Dani Gama
In the midst of all of the doom and gloom reports that we often hear about the economy, the good news often goes unnoticed. I am not suggesting that everything is sunshine and flowers with the long term debt problems of the U.S. But there were some encouraging data released today that should bring a smile to the face of investors.
Businesses are slowly started to invest again.
Gross Domestic Product (GDP) grew at a 2.6% from July through September of the previous quarter. The U.S. economy is growing at a faster pace than even economists had estimated. This is good news because it means that businesses are starting to deploy that $1.9 trillion dollars in cash that has just been sitting on their balance sheets.
Businesses are giving cash back to shareholders.
I have mentioned previously that a number of companies that either cut or suspended their dividends during the economic crisis of 2008 are starting to restore them again. This is a sign of the confidence that CEO’s and boards of directors have in the economy. They no longer have to hoard all of their cash. Rising dividends will bring the fixed income and dividend investors backed to the market.
Foreclosures are slowing down.
We may not be out of this entire housing mess yet but there are signs of stabilization in the housing market. Foreclosures are actually dropping. According to CNN Money, the number of foreclosure notices filed in November dropped 21%. That’s the best monthly decline ever. Whether this is due entirely to the drop in fraudulent mortgage practices by banks or not, we don’t know. But it is encouraging to the see the pace of foreclosures decelerating.
A good year for stocks.
The Dow and S& P 500 are both up double digits year to date. The Dow Jones Industrial Average is up 10.6% year to date and the S&P 500 s up 12.73%. The markets were down to such a low level that a double digit return over the past year had to be expected. The market may not increase double digits next year but it should be able to achieve single digit growth in 2011.
Do you think that things are getting better for investors in the United States or is your investment strategy to stockpile money inside your mattress?
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