January 26th, 2012 by Wade Kozich
I wanted to share a few of my observations about what I am hearing and reading. So far, the economic news has been very solid. Equity markets are up close to 5% . While I would not say we are in a sustainable Bull Market , it sure seems like there signs of continued strengthening in the markets. Retail sales for the Holidays showed solid gains, autos sales were strong in 2011 and are projected to be strong again in 2012. Even housing is showing signs of life with the big home builders stocks up sharply. Yesterday, the Fed announced maintaining historically low interest rates through probably 2014. While this may be a sign that they think the economy is still weak, it also shows they are going to continue to try and support economic recovery and the markets responded favorably…equities were up sharply and long term Treasury yields were down.
Besides reading various periodicals, my world is really middle market businesses in central Ohio. My read right now is that this group is generally very optimistic about the upcoming year. Some clients in manufacturing and distribution have been reporting amazing growth in sales for the month of January. Some of this may be pent up demand. I have even heard various stories of suppliers not being able to fill orders like in the lumber industry.
Europe will continue to cause concerns but right now is relatively quiet and the EU seems committed to dealing with their issues. Most, however, do predict a recession in Europe this year. The problems in Europe will invariably continue to spill over to the U.S. but I also believe this will have some positive effects on U.S. markets as investors continue to seek the safety of the U.S. We are hearing a lot of rumblings about manufacturing returning to U.S. markets. U.S. efficiencies and technologies coupled with lower labor costs are making the U.S. a more attractive place to manufacture goods.
The turnaround in the oil and gas markets is another amazing development. For a host of reasons including shale drilling in Ohio and Pennsylvania to oil in Canadian sand fields, to better drilling technology offshore, the U.S. is well on its way to ending dependence on foreign oil.
In short, I am seeing mostly all good signs. Another important point is that while various people will still debate what 2012 is going to look like, there is general agreement that the economy is going to pop big within a year or two. As business owners and advisors, we all need to be ready and be thinking about this. Do not be left in the dust when things REALLY take off, which will happen. Confidence is everything.