Good News is Good News

The latest government report on jobs states that the US economy added 162,000 new jobs in the month of March. These are great news considering the economy had been shedding jobs every month for at least the past year straight. It’s also welcomed news since there does not seem to be another unemployment benefit extension bill in sight in congress. This is one of some of the good signs that the economy is picking up pace. Another piece of news is that home sales rose 8.2% in February, again nothing huge, but still a step in the right direction. The stock market has been soaring and it is close to being up 80% from a year ago. There seems to be a lot of people out there that are very positive on the US economy, I’m definitely one of them but cautiously. There are some things that we need to make sure do not happen again in order for the recovery to be here to stay. We need to make sure new mortgage loans are not structured so that the homeowner can actually pay the loan for the life of the loan as opposed to the way they were allowed to be structured before the collapse. We need to control foreclosures so that banks are not bogged down with undervalued assets which in turn would be catastrophic for the housing market and would leave even more home owners “underwater”. More importantly we need to wait on the ongoing negotiations between the US government and the Chinese government on currency valuation, a subject we have touched on before. If, as expected, the Chinese government allows their currency to float, at least within a range, the result would be very beneficial to the US as the balance of exporting power would be shifted. considering that Some economists believe that the Yuan is Undervalued by at least 40%. Even if it’s slightly, this new appreciation of the Yuan would make US exports more attractive and have very positive results in our domestic economy, by creating new jobs to meet the increase in demand and increase domestic saving and investment, these would all be very welcomed events for our economy. Maybe even the Fed will have to raise short term interest rates to fight off inflation, but I think that’s going to happen soon anyway.