Economic News
January News and Thoughts
What a year! Starting September 2008, the S&P 500 Index dropped more than 40 percent in six months before rebounding more than 50 percent. Talk of depression revisited was rampant as we anxiously watched the economy “recover” for most of 2009. Recently, we have heard encouraging economic news, including the National Association for Business Economics’ declaration that the recession ended in October.
Current optimism certainly is refreshing, and it is not without reason. The stock market has had positive returns in nine of the past 10 months. New unemployment claims fell and are now at their lowest point since September 2008. Industrial production is up 3.8 percent since June. Retail sales rose 1.3 percent in November, doubling the consensus forecast. Housing sales in October and November also provided positive numbers.
But there are skeptics who have evidence to back their concerns. Problems in the banking and financial sector persist. The FDIC reported in November that the number of “problem” lenders climbed to its highest level in 16 years. Fifty banks failed in the third quarter of 2009, which is double the full-year total for 2008. Bank lending continues to be difficult and commercial loan refinancing in 2010 still needs to be addressed. As Federal Reserve Chairman Ben Bernanke recently said, “We still have some way to go before we can be assured that the recovery will be self-sustaining.”
Will the positive news outweigh the negative in the coming year? Will we see further economic growth in 2010? What will the markets do? The truth is no one can consistently predict the future. What we think was clearly demonstrated over the past many months is that the discipline needed to adhere to even a well-designed investment strategy can be difficult and sometimes emotionally trying. But the rewards of staying the course have been rewarded over time. This is the prescription that Merit Wealth Management will continue to counsel as we wish you a very happy and healthy 2010.
