U.S. Economic Recovery on the Way

There’s a lot of doubt on the much touted US economic recovery, but as days go by, it seems the downturn which started in December 2007 has its roots in the mortgage industry, might be starting to become an upturn.

The Obama administration’s stimulus package together with smart government moves such as lowering of bank lending rate to record low levels and approving of programs to provide billions of dollars into the financial system is delivering encouraging results. Everything is on the upward trend, the stock market, the housing sales and construction, the consumption index, and sad to say includes the unemployment rate.

The unemployment rate has been increasing steadily as companies nowadays employ a common practice of laying off employees until the financial position of the company improves. Recently big businesses such as Goodyear Tire & Rubber will be kicking off 5,000 people and 3M Company is taking out 1,200 staffs. This practice keep pushing the unemployment rate higher and it now stands at 8.5 percent. Things will get worst as experts predict it will reach 10 percent by the end of this year.

However this setback is offset by more positive news recently. The US government had just announced that the U.S. trade deficit dropped to 28.3 percent in the month of February. For two months since the start of the year the annual rate of deficit stands at $373 billion. Ever since the recession started the trade deficit has been declining as Americans reign in their spending and focus on saving. The month of February saw one of the highest saving rates in the country which stood at 3.6 percent. The US trade deficit indicates that it is exporting more than importing. While imports are decreasing, exports of goods and services increase by 1.6 percent last month.

Not only that the stock market continue its rally which was triggered by the news from Citigroup’s first ever profit since the summer of 200. As of Thursday the Dow Jones industrial index went up by 2.6 percent to 8,042 points. The further increase this time is triggered by a news update from banking giant Wells Fargo. Wells Fargo which is one of the recipients of stimulus package is expecting a profit of $3 billion dollars for this quarter.

This stock market rally in turn passed the positive effects to its European and Asian counterpart as Japan's Nikkei stock increased by 3.7 percent and Germany's DAX went up by 2.9 percent.

For the first time in eight months, the Dow Jones-AIG Commodity Total Return Index went up by 3.5 percent. The index is an indicator of the increase in commodities prices which itself indicates an increase in consumption. There have been reports of the general consumer index is going up this month of March.

The last good news ironically pertains to the labor sector. The Labor Department reported recently that jobless claims went down to 654,000. This number is way below the 660,000 claims expected by experts. In the US if you are jobless for good reasons, the government provides financial help in the form of unemployment benefits up to a certain period of time.

As time passes, more and more positive news are coming out, solidifying the claim that the much waited economic turn around is really here and it’s happening this very minute.