So let's put on our "rally caps" and take a peak at what news could be pointing to better days ahead for our U.S. economy. Accordingly, for now let's choose to see the glass as half full and project a brighter future than the experts are predicting. OK?
With everybody focused on the drama of the fiscal cliff negotiations underway in Washington and the ongoing European financial fiasco as well, little attention is being paid to some potentially important good news developing in the U.S. economy. In fact, our economy may be healing better and faster than anyone predicted. If so, that would be great news and I wanted to share it with you.
So here goes.
As a starter, it looks like holiday sales are starting off well, and that's a pleasant surprise. In addition, home sales and prices continue to improve and yesterday Ford's top salesman reported that car sales are looking good, too. And to top it off, consumers are no longer as deeply in debt as they were a few years ago either. That means there's more money to spend in our consumer driven economy. And that will keep our nation's unemployment rate declining, albeit at a slower than desired pace.
So maybe we'll be seeing some unforecasted strength in the U.S. economic situation sooner than later. Wouldn't a better than expected 2012 Christmas selling season be nice for a change?
Ford's Sales Chief See Strong U.S. Vehicle Demand has the story on car sales:
"Jim Farley, Ford’s global sales and marketing chief, says company executives are watching for signs that anxiety about the potential for higher taxes–or worse, a dip back into recession–is affecting U.S. consumers. What they see instead is a buying public focused on other priorities.
“The average car is 11 years old,” Mr. Farley said during a conversation Monday with reporters ahead of this week’s Los Angeles Auto Show. “The fleet has never been older.”
Equally important, Mr. Farley says, is that as customers roll aging rattletraps into dealerships, they’re discovering that comparable new vehicles are significantly more fuel efficient. At Ford, for example, a customer driving an 11-year-old, six cylinder Ford Explorer that averages about 15 miles per gallon could replace it with a 2013 Explorer that gets 23 miles per gallon with a four-cylinder, turbo-charged “EcoBoost” engine.
“Customers are more and more doing the math about their vehicles” and putting a high value on fuel economy, Mr. Farley says.
A third factor driving the U.S. auto industry’s recovery is a volley of fresh designs from major manufacturers. . . .
Analysts are forecasting relatively robust November sales and . . . they expect November car and light truck sales will rise 12% compared to a year ago, and hit an annualized run rate of 15 million vehicles, up from a 13.6 million vehicle sales pace in November 2011."
Brighter Housing Picture Dimmed by Past Price Collapse updates the improving housing situation:
"Tuesday’s Case-Shiller home-price report confirms that home prices are up strongly this year. Through September, prices are up 7% from the end of last year.
Some of the gains in home prices are seasonal, of course. Prices typically soften in the last quarter of the year, as there’s less sales activity during the colder months of the year. But those declines probably won’t be large enough to wipe out the gains from the first three quarters of the year. . . .
But the market is still a long way from recovery. . . . In fact, prices are higher than their levels of four years ago in just two of the 20 cities: Denver is up by 2.3% and Washington, D.C., is up by 1.6%. Many markets are still well below their levels of four years ago. Here’s how the cities stack up:
The upshot is that folks who bought a home one year ago have reason to feel good about home prices. But those who bought in 2008—a full two years after home prices began to slide—could be waiting a while before their homes are worth anywhere near what they paid for them."
And Falling Mortgage Balances Offset Rising Student, Auto, Credit-Card Debt says this about the all important improving comsumer debt situation:
"Americans cut their debt further in the summer, with falling mortgage balances more than offsetting increases in other types of borrowing, new data show.
Household debt — the money Americans owe on home, auto and student loans, credit cards and other types of consumer debt — fell by $74 billion in the third quarter to $11.31 trillion as of Sept. 30, the Federal Reserve Bank of New York said Tuesday. The drop reflected a continued decline in mortgage debt, as some households paid down balances while others lost their homes in foreclosure.
Americans have reduced their debts by more than $2 trillion since household debt peaked in summer 2008, a process called deleveraging. Economists say the process will put households on a sounder financial footing in the long term, though it has sapped consumer spending and slowed growth in the short term.
The new Fed figures showed signs that Americans are slowly increasing some types of borrowing. Excluding home loans, household debt rose by 2.3% to $2.7 trillion in the third quarter, reflecting increased borrowing to pay for autos and college.
Student debt, the largest form of consumer debt outside of mortgages, rose by 4.6% during the quarter to $956 billion. Auto-loan debt rose by 2.4% to $768 billion. Credit-card balances increased slightly, by $2 billion.
Also, though mortgage balances fell, mortgage originations rose for the fourth consecutive quarter. That fits with other reports showing that the housing market has picked up in recent months.
“The increase in mortgage originations, auto loans and credit card balances suggests that consumers are slowly gaining confidence in their financial position,” Donghoon Lee, senior economist at the New York Fed, said in a news release. “As consumers feel more comfortable, they may start to make purchases that were previously delayed.”"
SUMMING UP
Things are looking up.
And to add to the picture, this year's holiday selling season is off and running and may be stronger than most pundits are currently predicting.
Then if energy and commodity prices continue their recent decline, that will help improve consumer confidence further heading into 2013.
And to really juice up the possibilities, it's a good bet, or at least not a bad one, that our feckless politicians won't snatch defeat from the jaws of victory. So if they somehow manage to not screw up the fiscal cliff negotiations now underway, that would provide another reason to foresee further economic gains next year as consumer confidence improves.
So cars are selling, more houses are selling and at higher prices, the consumer is getting his debt burden under control and energy and commodity prices are perhaps heading down, thereby giving consumers more pocket money to spend.
And a sustainable higher level of consumer spending would lead to more business investment, more jobs and lots of other goodies for our nation's finances and the world's economies.
So while we're not about to get carried away and become irrationally exuberant anytime soon, there are legitimate reasons to forecast that the economic surprises in 2013 may be pleasant ones.
And most of all, let's cheer for higher sales. Because if sales are better than predicted, all else will be better than expected, too.
Stay tuned.
Thanks. Bob.
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