It is now December. Therefore, it is right that we start looking at the first of the year. We are not trying to downplay the data released in December. However, for example, the employment numbers tend to be skewed by seasonal factors and even though there are adjustments, this year the adjustments may be hard to analyze because of the rapidly changing environment. Witness the precipitous drop in the weekly unemployment claims reported the last week in November. The volatility of the markets the Friday after Thanksgiving was due to the Dubai debt crisis and certainly it did not help that many participants were on the sidelines for the Holiday.
Come the first of the year we will have a whole new ball game. By the end of January and early February, we will have retail sales figures that measure Holiday spending. We will also have the first reading on the economy in the last quarter of the year. Finally, we will have the first 'post-Holiday' employment report. If we are indeed recovering and not in danger of a double-dip, these numbers will be critical. Meanwhile, the downward revision in the third quarter economic growth was widely expected. The fact that it was partially due to a paring down of inventories actually bodes well for future growth. Of course, this brings us back to the future. If the markets are to stay strong as they have for most of this year, rates will have to stay low as they have for all of this year. Right now rates on home loans are at record lows. And we must show that the economy will stay in positive territory but not overheat so that rates do not rise.
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