Dow up but would it remain up?

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The DOW opened in the black this morning for the first time in weeks. The 379-point rise, courtesy of good Citigroup news, gave some people hope. That hope has risen further, as stocks continued to climb, albeit modestly, throughout the day.

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The Dow Jones Industrial average has risen 4.80 percent, a large climb considering the recent economic conditions having left it tumbling lower and lower. A large number of companies are gaining a few percentage points here and there in the stock market today, a shining ray of light on the otherwise gloomy economy.

 

Does this mean we're seeing the light at the end of the tunnel? Doubtful, in my opinion. While perhaps things will stay steady at the rate they've risen to, economic forecasts suggest that things will not really improve until sometime in 2010 at the earliest. In a nation full of foreclosures, with nearly the highest unemployment rate since World War II, it's going to take a lot more than a nearly 400-point rise in the Dow to get things back on track.

 

Perhaps these little steps will affect the bottom line, and make a difference for the people who really need it. Maybe some of these companies who are beginning to climb the stock market again will be able to afford to hire more employees.




But one small blip in the radar isn't going to make a big impact. I believe that this is the first of several small blips, each momentary, but leaving the stock market a little higher than it was the day before. Eventually, we'll reestablish the financial backing we need to raise the stocks to the enormous heights they were before this economic collapse, but not any time soon.

 

I live in a small town that has been relatively unaffected by the huge economic crisis. However, I do find myself, and many others, shopping more cautiously now, attempting to save money, and holding our breath for the time it hits our community. It's going to be some time before these little blips amount to much of anything, but once they do, I have faith that the entire United States - and possibly the rest of the world - is going to let out one huge sigh of relief. In the mean time, we'll sit and wait, saving our pennies. Hoping.

The Economy, Recession, and Recovery

Economists are still waxing grim about the new unemployment figures
released by the Department of Labor last Friday, estimating current
unemployment levels at 8.1%, the highest since 1983. The AP looked
specifically at 3 markets - housing, jobs, and stocks - and consulted
experts on past trends as well as future predictions.

First, the job market.

Economists are predicting that our troubles with the job market are
not over. Some experts predict that the unemployment rate will top 9%
nationally this year. Some states are weathering this storm worse than
others. In my state, Michigan, January figures put unemployment at
11.6% and climbing and predictions are even more dire.

Economists are focused on 1983 right now, but with this year's current
prediction of 9% unemployment, we're still sliding in under the
December 1982 record of 10.8 percent. Still, it's looking for a silver
lining in a very dark cloud that shows no sign of passing overhead any
time soon.

Even if the economy does turn around, it will most likely still be a
weak market for 4 or more years, based on predictions. In the
meantime, Michigan in particular will keep reeling as plants keep
closing. According to Michigan's WARN list, a large number of
companies are doing mass layoffs or closing plants this season. Many
of them are automotive-related, but not all. Personally, two of my
local friends got laid off last week and only one was in the
automotive industry.

Secondly, the housing market.

It's no surprise to anyone that house values have dropped. In January,
they're down 14.8 percent from just a year ago according to the
National Association of Realtors. Areas that were previously dealing
with the housing boom are harder hit by price drops than Detroit, but
that's because we were having difficulties in Michigan before the
recession even hit.

The housing market is complex, though.


We like to look to history to
determine the future, and the Great Depression is often brought up
when talking about the current state of our economy. As it relates to
housing, home prices fell about 30 percent during the Depression.
Regardless, according to the National Association of Realtors, it will
take a while for any stimulus to affect housing data.

Thirdly, many economists and industry experts are focused on stock.
The stock market peaked in October, 2007. At this point, it's now less
than half the value it was then. Experts agree that the market has
survived worse, but many of them were surprised that it fell as far as
it has.

As for predictions regarding stocks, we look to the investors to tell
us if things are picking up. Investors are watching the markets
carefully, waiting for all markets to pick up as well as signs of
increased consumer spending, and we're waiting for them to start
reinvesting in the market. This is a follow up to an article I did
this past week on the economy and the newly released employment rate
figures.

Obama and his 10 year budget plan - Doom?

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Politicians at every level are often jeered for trying to be all
things to all people, no matter how disparate their interests and
objectives may be. President Barack Obama campaigned on the idea of
change; the underlying hope of the potential for change from
theObama's 10-Year Budget Proposal "business as usual" in Washington
was the message I believe brought voters to the polls.

On February 26, 2008, President Obama gave the nation yet another
glimpse of not only how he envisioned changing the way business is
usually done, but how he is actually going about making those changes
a reality when he truthfully revealed his first budget for the U.S.
while in office.

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The president was candid—he didn't tell the nation
what they wanted to hear, but he told them what they needed to
hear—and his budget reflected items that his predecessor kept on
separate books, so to speak, including funding of the wars in Iraq and
Afghanistan as noted by newsday.com, among other major line items.

President Obama outlined a 10-year budget plan that includes his
pledge to halve the budget deficit by 2013. He and the nation face a
tight-rope walk with the current economy. Refreshingly, the president
gave the information straight on the chin.

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For every change that is
desired, there are choices to be made and costs to be incurred—that's
the way it is in the real world. As individuals, we face these
realities every day when we choose whether or not to purchase a new
car, whether this week we will eat bologna or steak, or even if we can
afford to refill our prescriptions.

For the first time in a very long time, it feels as if Washington and
each citizen of the U.S. is in this situation together. It's not a
pretty place to be, but it is together that as a nation we have the
greatest strengths.

The proposed budget must first, of course, make it through Congress.
It's time for each of us to examine the president's proposals and
write our senators and representatives to let them know what we do and
do not support about the budget so they canObama's 10-Year Budget
Proposal act accordingly. That is how a democracy is supposed to work
and finally, American citizens have someone in the most powerful
position in the nation who is leading by example.