03 November 2009

How to tell when the economy is getting better?

Recently, I have more time to walk around and seek for others' opinions regarding their view on "whether recession was end?".

After fooling around, I'm proud to make a conclusion: "50% YES, 50% NO"
(Real conclusion: NO conclusion at all).

Then, I'm frustrated and came out with my own conclusion. However, my conclusion depends on the following 5 indicators:

  1. An improvement in the Unemployment Rate
    - 1st Sign – Corporate silence, which means no more job-cut announcement
    - 2nd Sign – Companies might start hiring again (slowly)

  2. More stable home prices
    - Housing prices had fallen for 2 years now, 20% worldwide
    - Once prices stabilize, buyers will stop worrying and bargain-hunting activities will pick-up slowly again

  3. Consumer confidence rebound
    - When corporate silence, housing and stock market will turn around
    - People feel more secure about their jobs and income, and will start to spend/consume again
  4. A less volatile stock market
    - When corporate news came out, stock market did not react crazily
    - Less sensitivity in stock market means all the news had actually factored-in the pricing of companies

  5. Economic growth turns positive
    - In order for a sustainable recovery, a country’s economy must be positive (+ve GDP growth)
    - Of course, it all starts with an improved companies’ earnings

Agree or Not? This is my answer to the above question.

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