Tuesday, December 28, 2010
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It Was 2010
It was a year that saw record unemployment, it was a year of economic recovery. It was a year of political upheaval, it was a year that American voices were heard. Icons of U.S. manufacturing closed their doors, iPad and 3D TV became common household names.
It was 2010. A year with highs and lows like much every year before it, and likewise all those that will follow.
Record unemployment figures and lackluster home sales left Americans wondering which sectors of the economy, if any, showed true recovery.
As I write this article, all major stock indices show marked improvement over where they closed for year-end 2009. Tech stocks had a strong year, NASDAQ is 17.32 percent above its December 31, 2009 close of 2269.15. The DOW Jones Average had the smallest increase at 10.80 percent. The best overall indicator is the S&P 500 with a 12.75 percent increase.
As of December 21, 2010, 157 banks and 24 credit unions failed in the U.S. during the calendar year. All but one Arizona bank were acquired by another institution. Despite the unusually high number of failures, not a single depositor suffered a loss of funds.
The economy had little effect on the outcome of these banks except for the fact that it probably accelerated the inevitable. Every industry has its successes and failures, banking is no different.
Major institutions are no longer in danger of failure. In fact, out of the $247 billion handed out in TARP funds in 2009, only $60 billion is outstanding. Repayments have generated about a 17 percent return from stock-warrant repurchases.
The world joined hands to deliver aid to the people of Haiti in the wake of a devastating 7.0 earthquake that left 230,000 dead, 300,000 injured and another million homeless.
The worst oil spill in U.S. history closed the fishing and shrimping industries in the Gulf states that were still struggling to rebuild after Hurricane Katrina in 2005. It took nearly three months for BP to cap the Deepwater Horizon well. By the time they did, an estimated 4,300,000 barrels of oil had polluted the pristine waters of the Gulf of Mexico.
Healthcare has been a long-standing problem in this country. The Obama Administration sought to tackle this challenge with the passage of landmark legislation. The bill is still embroiled in controversy. The plan appeared to be more of a political battle than true social transformation, legislators openly admitted they hadn't read it but urged passage in order to find out what was included. Opponents believe the price is too high for the average American. To date, 22 states have contested its constitutionality in courts.
Technology continued to impress in 2010. Tablets had been around for over a decade but never really caught on. Until the iPad. Apple took the success of its iPhone and made it just a little bigger. The result was a gadget powerful enough to replace a laptop, yet small enough to carry around wherever you go.
Google introduced an operating system for smart phones that brought its user-focused services to the palm of your hand. Android phones held a mere 2.8 percent of the market share last year. By November 2010, it was 25 percent and growing.
You might have been pleasantly surprised by TV prices if you were shopping for a new set for the holidays. Prices on traditional HDTVs had come down considerably. With the introduction of 3D sets in the marketplace this year, 2D had become so ho-hum!
Yet sales of 3D TVs haven't been so hot. They're pricey to start with, and you can expect to add at least another $500 for the required active shutter glasses for a family of four. There aren't many 3D movies yet available, making the cost even harder to justify.
Expect that to change in 2011. Toshiba will release a 3D TV that doesn't require glasses at all, the effect is created through a layer of thin film over the screen. As the technology becomes more popular, you can bet more and more Blu-Ray discs can't be far behind.
Every challenge or failure brings opportunity for something new and innovative. This certainly resonated true in 2010, bringing hope that 2011 will do the same.
Best wishes for a happy, healthy and prosperous 2011 - from the staff of GCFlash.
The retrospective on 2010 continues. From many perspectives, we are ending the year not far from where we ended 2009. The unemployment rate was 10.03 percent at the end of 2009 and is projected to be 9.7 percent at the end of 2010 according to a composite of 81 economists accumulated by Bloomberg. That same group predicts continued improvement, albeit slow, ending 2011 at 9.2 percent.
Short-term interest rates have remained fairly constant as well with the Central Bank rate at 0.25 percent at the end of 2009 and 2010. The same group of economists does not expect that rate to increase to .5 percent until the fourth quarter of 2011. Similarly, the 3-month U.S. Treasury was .25 percent at the end of 2009 and is expected to be only .31 percent at the end of 2010. On the longer end of investment lives, the 10-year U.S. Treasury note was 3.84 percent at the end of 2009 while it is only 3.47 percent today.
Consumer attitude is in question as the consumer confidence survey announced today a level of 52.5 which came in below expectations of 56 to 58. The end of 2009 showed levels of 54.4. (For comparison, 2007 ended the year at 90.) This index surveys consumer attitudes on current and expected economic conditions. However, consumer spending has increased by 3.8 percent in the last year, with Personal Income increasing a like amount.
The Federal Reserve announced its monthly comment that the economy recovery is continuing with stable inflation. This positive, though lukewarm, comment has continued since the end of 2009. Here is hope that the progress will continue for each of us. Happy New Year!
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