Look for economy to gain traction in new year

[DemocratSinceBirth]

I'm optimistic about 2011. The U.S. economy will gain traction as the year progresses, and by summer businesses will be hiring rapidly enough to bring down the unemployment rate measurably. Stock prices should hold their own, and while more declines in housing prices are likely, that sector's crash will be over by next New Year's. After three very lean years for most Americans, this one will feel much better.
Fueling this optimism is the financial health of U.S. businesses. Profits have fully recovered from the Great Recession after firms dramatically lowered costs and widened their margins. Despite only modest sales gains and weak pricing, earnings growth has rarely been stronger.

Business balance sheets are also about as strong as they can be. Corporations have slashed debt amid low borrowing costs; the proportion of cash flow going to debt payments has fallen significantly. Cash holdings have also surged to near-record levels as a proportion of short-term corporate debt.

There is no longer any doubt about businesses' ability to expand; the only question is when they will be willing to do so. If history is a guide, this should happen increasingly over the coming months. In past recoveries, profits improved six to 12 months before job growth picked up. The logic is straightforward: Managers realize they cannot boost profits forever merely by cutting costs. To sustain strong earnings growth and support their stock prices, they need to seek revenue opportunities. That means greater investment and more hiring.

The process has been more attenuated in the current recovery, probably because of credit constraints on smaller businesses and the psychological battering all firms have taken. Many managers still seem shell-shocked from their near-death experiences during the Great Recession.



http://www.philly.com/inquirer/opinion/20110102_Look_for_economy_to_gain_traction_in_new_year.html

[DavidDvorkin]

1. Look for may DUers to cast every good number in a bad light.

[DemocratSinceBirth]

2. Mark Zandi Is One Of The "Wall Street" Analysts Who Has Been Supportive Of The President

I hope he's correct...

[DrDan]

5. it works both ways

[MannyGoldstein]

3. Another year of green shoots?

http://www.slate.com/id/2215911/
http://roomfordebate.blogs.nytimes.com/2009/04/06/the-economys-green-shoots-real-or-imagined/

Awesome!

[Name removed]

4. Deleted message

Sub-thread removed by moderator. Click here to review the message board rules.

[bluestateguy]

6. Don't look to satisfy the resident doomers and gloomers on DU

If DU had existed in 1998-99, they would have been bitching and complaining daily about the economy.

[Enrique]

11. the economy is really bad right now

Really bad. If you are not personally experiencing how bad it is, you are very lucky.

[Safetykitten]

7. Riiight.

[DemocratSinceBirth]

8. I'd Bet The Ranch GDP Goes Up And Unemployment Goes Down In 011

By how much I don't know.

[Demeter]

9. You Will Be Looking In Vain

If the People die, so does the nation.

[Enrique]

10. look for profits to continue soaring

and workers to continue suffering.

[golfguru]

12. With the republicans able to stop everything in House

what job creating initiatives are you hoping will do the trick?
The party of NO is like a big net in FRONT of the goal posts.

[Clio the Leo]

13. Rec'd for optimism.

[jannyk]

14. 'Summer of Recovery' part deux?

"....and by summer businesses will be hiring rapidly enough to bring down the unemployment rate measurably."

yeah, just like they said they would be last year.

Whoop di fucking doo!