The Fading Recession

As we head through summer it appears the recession’s grip on the economy is beginning to loosen. Manufacturing and service sector activity has rebounded, bond and credit markets have improved and are functioning again, and leading economic indicators are pointing to a recovery in the months ahead. Last week we saw a surprise dip in the unemployment rate, just one of many signs that businesses are starting to hire again.

A recent Blue Chip Economic Indicator Survey of economists shows that most economists now believe the U.S. recession will end in the 3rd quarter, and a Moody’s Economy.com recent recession survey showed that the recession is slowing in 85 metro areas across the nation. The recent batch of earnings reports were better than expected, and some companies are even upping their forecasts for the coming year.

So it appears that the recession is fading, and might even be ending this quarter. Of course we will not know for sure until after the fact, but things are sure looking better than they were at the beginning of the year. The market typically pauses in August, so this may be a good time for those who have been on the sidelines to get back into the market. The S&P 500 is still down 20% from where it was last year, and though the recession is fading, real economic growth is still ahead of us.