State of the Economy – February 2010

For the most part, companies reported good growth, but the stocks still slumped. That 11,000 marker in the DOW is still as elusive as ever. The dollar is strengthening due to national debt focus shifting on the Euro zone (Greece, Spain and Portugal), which is generally bad for US exports and increases the comparative value of USD based foreign debt. Housing prices are still in the dumps and but unemployment took a swing for the better… whether statistical or real, who knows? There is a house now on sale in my neighborhood, which will give an indication of where I personally stand when sold.

Over all it feels like January 2009 when everyone held their breath for three months before just having to gasp for air and start moving ahead. It seems that larger companies that downsized are still trying to make due to keep margins up and the only investment is really in manufacturing, as they start to build capacity up again. This is really the double dip here and now.

The last round of stimulus promises will finally focus on large infrastructure projects and high speed rail transportation, which is my personal pet. As discussed in previous blogs, the current administration cannot afford to cut of stimulus before that fall election season. Cutting of stimulus too early would be catastrophic. It is interesting to see if the democrats can push any meaningful legislation through this year, with regards to healthcare and/or banking industry regulations. Healthcare was did not pass with a majority in both houses. To me that is an indicator of future legislative success.

Nothing has changed in 12 months… when will lending start again? Without new legislation we would start lending with the same bad habits that we had before the recession. In my book the bigger issue today is financial regulation than healthcare. Until new laws are passed we are in a western style stalemate between Pennsylvania Avenue and Wall Street and nothing will move.


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