By Bob Landaas
One of my favorite expressions about investors is that we tend to be victims of our most recent perceptions.
That helps explain a recent survey indicating that despite mounting evidence of recovery, the majority of respondents don’t feel good about the U.S. economy right now – especially in the Midwest.
The survey, conducted by Hart Research Associates for Citi, found Midwesterners to be particularly sour on current conditions, with 61% saying the economic worst is yet to come.
People have this lingering memory now of the crash of 2008, and they’re reluctant to shed that mindset.
So 61% say they don’t think the economy has hit bottom, even though the numbers suggest otherwise.
Consider the following:
- The Bureau of Labor Statistics reported recently that in April Wisconsin and 11 of its 12 metro areas had lower unemployment than in April 2009, unlike the national trend in which unemployment rose in 78% of the metro areas over the last year.
- Manufacturing’s on the mend. The latest purchasing manager reports from the Institute for Supply Management – including reports from Chicago and Milwaukee – show increasing momentum for manufacturing growth. And we’ve got more manufacturing jobs than anywhere in the country.
- In Metro Milwaukee, 64% of the companies think they’re going to sell more goods and services than they did a year ago at this time, according to the latest quarterly business outlook from the Metropolitan Milwaukee Association of Commerce.
- The hiring outlook in the Milwaukee area for the third quarter is among the strongest in the country, with employers statewide also expecting to expand, based on the latest Manpower survey.
So it’s amazing that the average person in the Midwest hasn’t really caught up with what’s going on.
We are well into the recovery. Very few experts expect a double-dip recession. But people are still worrying about the jobless numbers and the problems in real estate. They’ve got this vivid memory of the downturn in 2008, and they’re reluctant to shed that.
Another curiosity about the Citi survey is that although 61% of Midwestern respondents said they don’t think the economy has seen bottom yet, 65% said they were optimistic that their own situation would improve in the next six months.
We see this time and time again.
The University of Michigan comes out with its consumer sentiment survey again Friday. And they ask two questions: How do you feel today, and how do you think you’re going to feel six months from now? The results are almost always the same: “I don’t feel so good now, but I think I’m going to feel great in six months.”
These Midwest numbers from Citi just verify that.
That’s not to take anything away from families still struggling as a result of the recession. The fact is we’ve just been through the biggest economic contraction since the Depression. But the good news is that from all indications the worst is over.
The point for investors is that you need to think long-term. You’re in the stocks for the long haul. You’re in the bonds for the short haul. We’re guardedly optimistic for the next couple of years in the markets, based on our forecast of interest rates and earnings.
Bob Landaas is president of Landaas & Company.
initially posted June 8, 2010