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Dancing About Some Economic Optimism
7/9/2010
On July 7 I attended an investment outlook event sponsored by TD Bank. The keynote speaker was Robert Gorman, Chief Portfolio Strategist, TD Bank Financial Group. Mr. Gorman presented some concerns and strengths of the national economy.
Among the highlights were the following:
- The rate of economic recovery is slower than average recoveries. However, there has been some economic growth.
- Monetary policy has been generally accommodative, meaning that the central bank increases the money supply in order to ease the availability of credit.
- The oversupply of residential housing is still a concern. Foreclosures are still occurring because adjusted rate mortgages are coming due and unemployment is still high. However, the price adjustments along with low interest rates improve affordability, which will help sales over the near term.
- Commercial real estate is another concern because there is an oversupply and reduced demand. There were many refinances in 2006, and these will be coming due in 2011, further exacerbating the problem because many will have property values that are less than the loan values.
According to Mr. Gorman, the U.S. is in the second year of a four-year economic recovery period. Economic conditions are improving, although slowly, and the chance for a double-dip recession is not high.
After Mr. Gorman’s speech I felt somewhat optimistic about the overall economic recovery. I was not ready to start dancing down the street, since there are two more years to go in this economic recovery, but at least we are about halfway through.
- Alissa DeJonge, CERC Director of Research
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