Monday, December 7, 2009

This Recovery is Not a Mirage

While the popular press continues to find reasons for worry, the recovery of the US economy is underway. If you're still hunkered down, it's time to stick your head up out of the foxhole, look around, and step up your new-business acquisition machine. As someone recently said, "I'm gaining market share by keeping my doors open."

Surely, if you're still standing, there are fewer competitors out there. And those who have fallen have left unserved or underserved customers -- there for the taking.

Consider the broad indicators confirming the economy's current direction:
  • New claims for unemployment insurance have dropped for each of the past 5 weeks. -

  • November job losses were one tenth those in October (11,000 vs. 110,000).

  • In revised reports, 159,000 fewer jobs were lost in September and October than first reported

  • GDP expanded for the third quarter, and the fourth quarter is expected to follow suit-

  • Productivity is up again, for the 3rd quarter, this time by a whopping 8% (2nd quarter was a 6.9% gain). Despite the number of unemployed, those still employed are cranking out goods and services at a record pace.

  • Mortgage applications are up, thanks to record low interest rates

  • The economy and the stock market shook off the Dubai debt crisis without looking back

  • Retailers reported slight improvement of Black Friday sales vs. 2008, along with a strong increase in Cyber Monday sales (expected to be an all-time record for single-day online sales)

Most importantly, the Federal Reserve's monetary policy remains very loose, keeping interest rates low. This single action by a single Government entity will continue to fuel an economic expansion, just as it has in every economic "cycle" in the past. By "cycle", I mean the ups and downs in the US economy driven, by and large, by the monetary policy of the Federal Reserve. The prevalent idea of a "double-dip" recession appears unlikely any time soon, unless the Fed miscalculates as it subsequently tightens up the money supply.

Once the Fed decides the economy is growing again at a sufficient rate, monetary policy will tighten up. Money supply will be reduced and interest rates will climb to something matching the GDP growth rate -- hopefully, not a lot higher.

So, until that happens, the sun is shining on American business. Let's make some hay!

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Terry Weaver

Chief Executive Boards International

Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it

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