Monday, September 21, 2009

Is the Recession Over???

Let's jump right into it... what exactly is a recession? By definition, a recession is a slowdown in economic activity. In recent years, some economists have dubbed this as a slowdown in the 'velocity of money'.

Here's a quick example: If it use to take 30 days for money to change hands between the customer/painter/paint supplier... it now takes 45-60 days. Albeit a simple example. This is a slowdown in economic activity or exchange of money.

Now the $10 million dollar question. Is the recession over? It appears to be. Economic data is improving and some Economists, such as Brian Westbury of First Trust Advisers, actually think the economy is stronger than people think.

Retail sales jumped a solid 2.7% in August. This is the largest increase since January 2006. Expectations were for an increase of 2.0%. The "cash-for-clunkers" program added steam to motor vehicle and parts sales, which increased 10.6%, the largest increase since right after 9/11.

Excluding autos, sales advanced 1.1%, above the consensus of +0.4%. But July's retail sales were downwardly revised to -0.2% from -0.1%. Gas station sales rose 5.1%, boosted by higher prices at the pump. Excluding autos and gas stations, sales rebounded 0.6%, its largest gain since February.

Recessions are often tied into your personal situation. So, while #'s are improving, if your household income is still suffering due to less overtime, higher taxes, etc., it's hard to feel elated about an economy that is slowly improving.

Take heart... recessions aren't permanent.

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