Indicators Point to Recovery?

By  | 

There are many factors used as yardsticks in measuring the economy. Unemployment rates and actions by the Federal Reserve are two, but the most generally accepted is stock market fluctuations as measured by the Dow Jones and Nasdaq averages.

This week the Federal Reserve issued an optimistic report anticipating a 4% rate of growth in 2004.

Bob Coffin, a financial consultant with A.G. Edwards Investment firm, studies the Fed's position.

"Having the Federal Reserve come out and basically forecast a higher rate of growth for the economy next year is good news and they also suggested the unemployment rate will come down and manufacturers will be expanding and creating new jobs," Coffin said. "So that's certainly good news for people looking for work."

Coffin said there are reasons the stock market has risen in recent months.

"The stock market has increased in value because the stock market has anticipated a recovery in the economy," said Coffin. "It's anticipating a faster growing economy next year. So we've had an increase in the stock values because of the more favorable outlook."

Coffin said the anticipated recovery could have many ramifications.

"Obviously a growing economy means a growing job market and that's certainly good news for people who are looking for work. It's good news for investors who benefit from better profitability from the companies they invest in," he said.

When the market closed Wednesday, the Dow was down about 10 points for the day, but is up near the 10,000 mark at 9803. But earlier this year, the Dow was below 9,000. It appears headed in a new, positive direction.