Yep, it's been a tough year. There's still much to lament, such as decades-high unemployment, rising budget deficits and shaky financial institutions, but considering the abyss we were staring squarely into at this time last year, we've also come a long way and made great strides toward a healthier economy. So, as we enter the traditional Thanksgiving period, let's take a few moments to give thanks for the modest financial gifts we've received this year - and maybe more importantly, give thanks that in many cases, our worst financial fears failed to materialize.

  1. Major Stock Indexes Rise
    Good tidings! Major stock indexes are up 60% since their March lows. The rebound in our equity markets has been critical on several fronts. First, it has helped stem the losses seen in retirement accounts like 401(k)s and IRAs. These retirement accounts are increasingly the No.1 funding vehicle for retirees, so recouping any losses here is a big help, especially to the baby boomer demographic.
    There's also a confidence issue at play, and our stock markets - for better or worse – are a de facto barometer, an economic "feel-good" factor. Fortunately, stock markets look forward, not back. Right now, they're telling us they anticipate better times down the road. (To see how far the markets have come, check out The Fall Of The Market In The Fall Of 2008.)

  2. GDP Growth Returns
    Gross domestic product growth is the engine that makes everything go in our economy. GDP growth leads to stock market growth, contributes to job and wage growth, and increases tax revenues for state and local governments to help balance their budgets. We obviously need all of these things, and the GDP growth of 3.5% in the third quarter was a good start.

    We still need consistent GDP growth over several quarters to claim economic victory, and we need it to be more organic, not artificially spurred by government stimulus and one-time fiscal measures. As we look forward to 2010, this will be the biggest catalyst to getting us out of this recession and bringing down our nosebleed unemployment level. (To learn more about what GDP can tell us about market health, see What is GDP and why is it important?)

  3. Banks Repay Their TARP Loans
    Ten of the banks that received Troubled Asset Relief Program (TARP) funds were allowed to repay $68 billion to taxpayers in June, and most of the major recipients have committed to fully repaying their TARP loans over the next 24 months. Also, as the stock prices of major banks rise, the chances of the government earning a good return on its TARP loans and direct investments only increases.

    Even the much-maligned auto makers are starting to make good on their promises to pay. General Motors even announced that it would start repaying its $15+ billion in federal loans.

  4. Home Prices Are Stabilizing
    While home prices are still down 30% from their peak, prices in many geographic areas ticked upward in August, September and October according to the benchmark Case-Shiller Index.

    If home prices can stabilize and even (gasp!) begin to rise in 2010, the hundreds of billions in mortgage-backed securities (MBS) can begin to improve the balance sheets of our battered financial institutions rather than deteriorate them, as has happened for the past two years. There's still much progress that needs to be made, however, as mortgage delinquencies are still on the rise, and the threat of higher interest rates looms on the horizon. But hey, it could be worse - a lot worse.

  5. First-Time Homebuyer Tax Credit Is Extended
    The $8,000 tax credit for first-time homebuyers was scheduled to end on December 1, but those who didn't get on board in time have plenty of reason to be grateful. President Obama recently extended the credit until June 2010 in an effort to help to spur the housing market further. It was a smart move by Congress, as new housing starts remain at multi-decade lows, and inventory levels are still high across the housing market. The tax credit was also expanded to include income levels of up to $125,000 for individuals and $225,000 for joint filers.

  6. Corporate Profitability Is Getting Stronger
    Profit margins have been strong at corporations over the past few quarters as inventories have been depleted and costs wrung out of business models. We still need to see more demand in the form of revenue growth, but stabilization and earnings per share (EPS) growth is good and companies should come out of this whole mess stronger, smarter and looking to hire if conditions continue to improve. Higher EPS numbers also mean more tax revenues, which are sorely needed.

  7. The Rest of the World Is Resilient and Growing
    Another good sign: Many foreign markets are doing quite well. GDP growth in China and India is tracking above 7% for the year, Brazil is growing and will begin its mega infrastructure roll-out to prepare for the Olympics in 2016, and smaller emerging economies in South America and Asia are holding steady and/or growing.

    The internal, domestic economic strength of these foreign markets will help U.S. exporters to sell more goods, which represent over half the earnings of S&P 500 companies.

  8. Inflation Is at Bay
    Inflation has yet to appear, which is keeping interest rates low. This is helping the U.S., as it must borrow heavily to fund its growing budget deficits. Most economists do agree that inflation is inevitable down the road given all the money being sloshed around Washington and Wall Street, but there seems to be enough slack in the economy that we may have a few more quarters before inflation creeps up on us. By then, hopefully the economy is on better footing, which will allow the Federal Reserve to raise rates slowly without stifling the recovery.

  9. Regulatory Scrutiny Has Increased
    The Securities and Exchange Commission (SEC) has been near the top of a long list of entities that deserve a good finger-wagging for errors of submission or omission leading up to the financial crisis. But new measures are being put into place to protect investors from fraud and negligence by their financial advisors and corporate CEOs.

    Whether the SEC is up to the task remains to be seen, but you can bet that they are embarrassed and bruised, and will be on the warpath to find the next problem before it blows up in their face. Any increased diligence by the SEC, or by groups like the credit ratings agencies (who are also quite red in the face) can only help investors in 2010 and beyond.

  10. We're Still Standing!
    Last year at this time, many wondered if our financial system would even survive at all. It did (thank goodness), and that may be the best blessing of all.

Related Articles
  1. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  2. Economics

    The Problem With Today’s Headline Economic Data

    Headwinds have kept the U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest GDP revisions prove it.
  3. Fundamental Analysis

    Is India the Next Emerging Markets Superstar?

    With a shift towards manufacturing and services, India could be the next emerging market superstar. Here, we provide a detailed breakdown of its GDP.
  4. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  5. Stock Analysis

    The Best Stocks to Buy for Less than $10 before Year End

    Learn about the best stocks to buy under $10. These stocks are speculative but have considerable upside given their valuation and market conditions.
  6. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  7. Economics

    How Do Asset Bubbles Cause Recessions?

    Understand how asset bubbles often lead to deep, protracted recessions. Read about historical examples of recessions preceded by asset bubbles.
  8. Term

    Understanding the Maintenance Margin

    A maintenance margin is the minimum amount of equity that must be kept in a margin account.
  9. Economics

    Puerto Rico Will Soon Become America's Greece

    Explore the similarities that exist between Puerto Rico in relation to the United States and Greece in relation to the European Union.
  10. Investing News

    What Shook the U.S. Stock Market Today?

    What was looking as a decent year for US Stock market has suddenly gone off track as the Dow Jones Industrial Average plunged 531 points in the week ending August 23, 2015.
RELATED TERMS
  1. Emergency Banking Act Of 1933

    A bill passed during the administration of former U.S. President ...
  2. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  3. Slander

    Slander is the act of harming one person’s reputation by telling ...
  4. Libel

    Libel is publishing a statement about someone in written form ...
  5. Defamation

    Defamation is any statement (written or spoken) that damages ...
  6. Fair Housing Act

    This law (Title VIII of the Civil Rights Act of 1968) forbids ...
RELATED FAQS
  1. Is Argentina a developed country?

    Argentina is not a developed country. It has one of the strongest economies in South America or Central America and ranks ... Read Full Answer >>
  2. Is Brazil a developed country?

    Brazil is not a developed country. Though it has the largest economy in South America or Central America, Brazil is still ... Read Full Answer >>
  3. Are Social Security payments included in the US GDP calculation?

    Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Transfer Payments For ... Read Full Answer >>
  4. What are the disclosure requirements for a private placement?

    The U.S. Securities and Exchange Commission (SEC) has set forth disclosure requirements for private placements, including ... Read Full Answer >>
  5. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  6. When has the United States run its largest trade deficits?

    In macroeconomics, balance of trade is one of the leading economic metrics that determines the trading relationship of a ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!