End of July, First of August, CAR SALES RISING...Economic Recovery?

6 months ago, Global Perspectives predicted that by the end of July, that by the end of July, the "Market Psychology" of perceptions of the economy in the USA would hit bottom, and that general perceptions would then begin an upturn.

It is now August 1, 2009, and headlines by Associate Press say: "SIGNS OF RECOVERY, ECONOMY MAY BE GROWING AGAIN".

One of the brightest stock market traders we know is a retired stock broker named Bob Collier, who lives in Post, Texas. Bob wrote me last week and said: "I've made more money in the stock market in the past 2 months than in years. Things are looking up!"

The Associated Press wrote: "...the worst recession since World War II appears on the verge of ending."

A key, in any recovery is confidence. We have repeatedly written about the need for stability, so that business leaders will have confidence to make long term plans, to hire, to add equipment, to buy inventory, and to ramp up new manufacturing. The subsequent creation of jobs, helps the economy where it helps most, in new jobs.

First comes confidence and the leading indicators of the stock market as well as polls of business confidence suggests that new optimism is growing. Then, gradually, solid economic growth through business expansion and job creation follows.

Our prediction was that the psychological bottem would be by the end of July, and that the true economic recovery would be on the way solidly by the end of December. An excellent example of the beginning of the end of the recession is the "cash for clunkers" program. So many thousand Americans decided to buy cars under this program that the original $1,000,000,000 (Billion) dollars that was funded for this program was used up in just a few days. Now there is a vote before the Senate to extend another $2 Billion. Car dealers are buried with people buying cars under the program! "So many have come in that we can't keep up with the paperwork" said one auto dealer. This is quiet a contrast to an industry that a few months ago said sales were down 40%.

So, it appears that the quick response of our government, and other governments of the world, is beginning to pay off. President Obama said: "Eventually, businesses will start growing again and will start hiring again, and that's when it will truly feel like a recovery to the American people".

But this recovery will be slow, it will take years to repair all of the damage done over the past 8 years. When new construction, new hospitals, new technology, new manufacturing and elimination of domination by giant monopolies in banking and industry, the U.S. will see sustained recovery.