Al's Mid-Year Economic Forecast:
There's no way to sugar-coat what we're seeing on Wall Street, Main Street and Washington, D.C.
After living through the worst economic downturn in U-S History since the Great Depression, there are new signs almost daily "The Great Recession's" not really over yet.
Earlier this spring, the Dow Industrial Averages were approaching the 13,000 level on Wall Street.
Housing Nationwide was showing some signs of improvement, hiring looked like it was starting to recover, and consumer spending along with consumer confidence ,was also improving.
Thru April, it looked like our Economic Recovery was picking up strength.
Everybody wanted it to happen, since so many of us were still at risk of losing our life savings, our jobs and our homes.
We needed to feel better, and hoped "The Recovery" would pick up strength and the Economic Health of the U-S would keep improving.
But increasingly, it looks as if that's not happening as we enter the Early Summer of 2011.
Unemployment jumped in May to 9.1% from April. We're seeing the effects of Local and State Job Cuts. The U-S Labor Department reports in May, 30,000 Government Jobs were lost as State and Local Governments trimmed Budgets and Workers following reduced Tax Revenues.
Car sales are slumping along with Home Sales in most of the U-S.
Some Real Estate analysts point to the growing signs the U-S Housing Market is dropping again. Some data suggests Homes Nationwide have hot their lowest values since 2002.
Airline Travel is starting to slow down enough that Wall Street Analysts are starting to downgrade Airline Stocks.
While Gold and Silver remain near record-highs, Wholesale Oil is dropping under $100 a Barrel. And we should continue to see more drops in Gas Prices at Local Service Stations.
But it may still be a while before Food Prices start falling.
And rising Energy Costs have hurt a lot of families and businesses.
Housing, Jobs, Spending are all being hit hard.
And that's why Consumers have trimmed back as much as they have: If you have to pay a lot more at the Gas Pump and Check Out Counter, you'll have less disposable income for other products.
Less Spending translates into dropping Retail Sales, which in turn means Retailers will not be ordering as much merchandise for the rest of the Summer. And that'll translate into Factory Orders dropping off, which could mean companies will remain reluctant to add more workers.
The Cycle of Recession has not been broken and we still face a very uncertain Economic Recovery.
Isn't there any "Good News"?
On the upside, as we enter early summer Trading on Wall Street, let's take a closer look at the Numbers:
June 30th, 2010 saw the Dow at 10,465.
So even considering the recent losses on Wall Street, we're still well above last June.
December 2010 ended with the Dow at 11,577, so we're still over where we started off the year.
By the end of April, with the Dow at the years' closing high of 12,810 we thought we were well on the way to seeing the Dow hit the 13,000 mark within just a few weeks.
But then "Reality" hit us.
World Markets dropped following concerns about the continuing debt facing some of the biggest economies in Europe including Spain, Greece and Italy.
Don't forget about the Japanese Earthquake/Tsunami/Nuclear Disaster and you have another major world class economy brought to its' knees.
Then there's the U-S Budget Deficit:
To keep from falling into a major Economic Depression several years ago, Congress authorized several "Economic Stimulus Programs".
In essence, Uncle Sam pumped Hundreds of Billions of Dollars into the Economy to prevent our biggest financial institutions from collapsing.
And this all came at the same time we were waging war in Afghanistan and Iraq, which continues to further drain our finances. Granted, our spending in Iraq has hopefully been cut back dramatically.
So what's ahead for the Economy here in South Florida and across the country?
Full-Time New Jobs will remain scarce. Without major new business development here and across the country, companies may have little reason to add many new workers. And there are still too many incentives for Businesses to "Hire Overseas" rather than adding more U-S Workers.
Without new jobs or raises, many homeowners will continue to struggle to stay in their homes. And as long as there are Foreclosures, the housing market will remain flooded with "distressed" properties. Housing values will remain depressed.
But there are some "Bright Spots" Ahead.
I believe Summer Tourism will remain strong for South Florida. The Cruise Business should see some improved occupancy rates and it may be harder to find many "Bottom-Line Bargains" as prices start stabilizing and deep discounts are eliminated.
South Florida's Room Prices and Occupancy rates are still some of the highest in country as Foreign Investment, Foreign Trade and Foreign Travelers continue to enjoy the Financial and Business Climate here, as well as the Tropical Weather of Early Summer.
If you've followed the "Business Cycle" of South Florida for as long as I have, you know we usually hit a "Summer Slump" the end of the School Year. This year, it's even worse because of the overall weakness of the Global Economy.
But like so many other years, just wait till the Fall.
I believe we'll see another Economic turn-around by the 4th Quarter.
And I believe Consumer Spending will pick up and will be better than last year.
And that could help guarantee the 4th Quarter of 2011 will be better than last year, and give 2012 a good "Economic Shot in the arm" to hopefully make a lot more companies feel a little better about the future and start hiring again.
