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December Market Update

Steve Cain, Director – Writer/Editor

As we approach the end of 2013, the economy looks strong. For once, we appear to be heading into the home stretch with a bit of wind in our sails.

Steve Cain

Perhaps the best evidence of this economic vitality are the equities and housing markets. The Dow Jones hit 16,000 for the first time in its history in the middle of November. Although the Dow has dipped below this threshold again in early December, it is still riding high as are equity markets across the globe.
Housing has also shifted from a drag on the economy to one of its bright stars. For most of 2012 and all of 2013, all of the Case-Shiller Home Price Indices have been increasing. We are still not back at the frothy levels of 2006 and 2007. But the considerable home price appreciation that has taken place over the past two years has gone a long way to restoring confidence in this crucial sector of our economy, providing relief to countless numbers of American households who saw their equity vanish seemingly overnight in the wake of the Great Recession.
The US economy has added approximately seven million jobs since early 2010 and the unemployment rate has declined from low double-digits to its current 7.2% level. It is true that total jobs are still below pre-recession levels, and that unemployment remains above optimal levels. But it is equally true that both indicators are vastly improved from the depths of the recession.
If there is one big negative in all of this positive economic news, it is that the recovery is not being evenly felt across all demographic groups. The income disparity between the very well-off and everyone else continues to grow, and a disproportionate share of the improvements in the economy have benefited the highest income earners. Low and middle-income earners can be forgiven if they do not feel like the recovery has benefitted them. Indeed, many people in these low to middle-income brackets are still struggling in the wake of the recession.
But why dwell on the negatives? The slow but steady climb out of the deep hole we found ourselves in has been impressive, even if it’s not as evenly distributed as we’d like, and even if unemployment is still higher than it should be at this stage of a recovery. As long as we keep moving in the right direction, there’s reason to believe that the recovery will extend its reach across a broader cross-section of America.
All things considered, we’re in a better place than we’ve been in a long time and there’s reason to hope that this progress will continue. We’ll see what the rest of December has in store, but it looks like we’ll be able to look back on 2013 and say that it was a pretty good year.


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