Turning the Corner

We are approaching the end of the 1st Quarter, and the US economy may be turning the corner. This "glass half full, and rising" perspective comes from the following:

1. As GM goes, so goes the USA. GM recently indicated that they will not take an additional $2 billion in funding offered by the US government. If GM can survive, or go into some sort of breakup/packaged bankruptcy as a stronger company than it appeared to be 3 months ago, this is a good sign.
2. Citibank stock it rebounding from under $1 to over $2.50 in a week. Same story as GM, if Citi can survive, this means less US government support for the US banking system.
3. Housing prices stabilizing. The reduction in housing prices and and interest rates seems to have reached a point that buyers are emerging, and home prices in some areas of the country are stabilizing. For example, on www.zillow.com, an Internet site that "quotes" current housing values, my home in NJ lost 20% in value since the time I bought it in 2005, but over the past three months the value has gone up 5% from the late 2008 low.
4. Quality merger activity. Four strong pharmaceutical companies (Pfizer/Wyeth and Merck/Schering Plough) has agreed to mergers, and there is word today that IBM might be looking to purchase Sun Microsystems. These transactions signal that company valuations on the US stock market have reached a "bargain" level, and may be signaling a bottom to the intense reduction in values that started in September 2008.

I'll update this perspective in a couple of weeks, but if these 4 points are "signs of life" in the US economy, recovery may be on it's way in the latter half of 2009, which would be much sooner than many other projections.