We've grown so accustomed to bad economic news that good economic news is eyed suspiciously. Nonetheless, in mid-February, the Federal Reserve substantially upgraded their forecast for U.S. economic growth.
Output of goods and services is now expected to grow by 3.4-3.9 percent in 2011 (up from the previously forecast 3-3.6 percent). Apparently, a rise in fourth quarter 2010 consumer spending - which accounts for about 70 percent of U.S. economic activity - is responsible for the improved forecast. As measured monthly by The Conference Board, the Consumer Confidence Index rose to above 60 in February; it had dropped to a low of 25 during the economic recession.
Then, in early March, a survey of economic conditions in the Federal Reserve's 12 districts confirmed that manufacturing grew in all but a few regions in January and February. Moreover, according to the Fed's Beige Book, "Labor market conditions continued to strengthen modestly, with all districts reporting some degree of improvement."
Finally, employment numbers compiled by the Labor Department revealed that companies added 222,000 jobs in February - the most in nearly two years and the 12th consecutive month of private-sector job gains. This brought the unemployment rate down to 8.9 percent, the first time it fell below 9 percent in nearly two years. Will this economic momentum continue? How will particular sectors fare?
In this month's premiere Market Reports issue, we look at the trends in 10 specific industries - aerospace, automotive, biosciences, electronics, food processing, healthcare, IT/digital arts, medical devices, plastics, and renewable energy. Most have weathered the economic storm and are now rebounding, diversifying, and preparing for growth despite numerous challenges still ahead. Make no mistake - Tightening government budgets and new regulations present some obstacles, but the resiliency of these industries and their ability to innovate and adapt will serve them well.
Interestingly, despite those budget shortfalls, many states and localities are still offering tax and financial incentives to those firms committing investment and promising job creation in their communities, according to the experts at Crowe Horwath
(See "Tax Exemptions & Incentives: Still the Golden Egg?" on page 25.) Companies must navigate a complex financial landscape, they explain, but the benefits of securing funding, tax exemptions, and other incentives are too great to ignore.
In the end, economists are hopeful that these government budget shortfalls and threats of layoffs do not derail the recovery and put the kibosh on all the good economic news.