Sixty four days into the Obama government and it seems the latest development in the overall economy points to an early economic recovery than most experts expected. Last March 24, Dow Jones Indexes organized a gathering of financial experts to assess the effects of the government bailout plan on the economy and they predicted that the recession will be over by the end of the year. Current news however indicates the opposite. The economic recovery may already be happening.



The government bailout plan involves lowering the Federal Funds Rate to historic lows. The current Fed Funds rate is being maintained between 0 percent and 0.25 percent. The congress and senate also wasted no time and immediately approved the massive $787 billion stimulus package which is expected to provide one-time rebates to about 111 million families, tax breaks to businesses and ease mortgage loan limits.

This was followed by the decision of the Treasury Department to purchase $300 billion worth of Treasury securities and to help banks clean up bad assets that are mortgage related. All these actions must have an immediate positive effect on the economy and the US citizen's mindset as reflected by current events.

The Dow Jones industrial index was just hovering at 6,926 points three weeks ago, when news of Citigroup's profit for this year was announced it triggered a rise that up to this day continues. This Thursday the Dow Jones is now 7,889 points and still not showing any signs of abating.

On the housing front, the Commerce Department reported that house and apartment construction has increased dramatically by 22.2 percent in the month of February compared to the month of January of this year. There is also a corresponding increase in house sales although in specific areas of the country only. First American CoreLogic reported that in Cape Coral, Florida house sales has also gone up by 103 percent while in “Fairfield sales jumped 226% in the fourth quarter of last year compared to the same quarter in 2007”.

Freddie Mac also reported this week, that the average rate on 30-year fixed-rate mortgages went down to lowest level ever reported by its survey, the current rate is 4.85 percent. Last week it was 4.98 percent, as a result mortgage refinancing applications rose more than 30 percent this March.

Source:http://www.monitorbankrates.com

The Commerce Department reported that consumer spending rose 0.6 percent last month January after dropping 1 percent in the previous December. This has extended increase in consumption of high end manufactured goods in February. The fourth-quarter 10 percent growth in sales announced by Best Buy has been interpreted by most as a sign of increasing consumer spending. This is despite the fact that the personal savings rate jumped to 5 percent from 3.9 percent in last year's December.

It seems a big number of people have a lot more cash that what most pundits estimate. The only grim news is the ever increasing unemployment rate which is now estimated to reach 652,000 people and experts predict it will reach 10 percent by the end of the year. The increasing number is an indication that more people are being laid off than being hired. And there are more to come as Caterpillar Inc. planned to lay off more than 2,400 jobs and automotive giant, General Motors Corp. is planning to cut off 3,400 employees.