I am an avid follower of Robert Genetski of Classical Principles.com and he is finally seeing some signs of economic recovery for the U.S. His February newsletter he says the Federal Reserve increased bank reserves by 23% and for the past six months the increase was up to 35%. This is compared to a 5% annual increase in 2009 and 2010. He also mentions that when reserves move up the first indication is in the form of rising stock prices. The good news for us is that usually follows improvement in other indicators such as in the housing sector. Tracking liquidity this year should indicate future financial developments and hopefully will be an indicator of an increased spending pace this year from 4% to 6%. The increase in reserves appears to be impacting bank loans and December bank loans actually increased at an annual pace of 12%.
Contributed by
Judd Babcock 02/10/2012
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