News/Blog
Good News Trifecta
· The money supply as measured by currency plus bank deposits plus households’ money market funds – called M2 – is growing. At about $8.6 trillion, the 13-week moving average, which smoothes out weekly fluctuations, is up by 4.1 percent at a seasonally adjusted annual rate compared with the 13-week period ending May 17th. This means that more money is available for spending and lending.
· Also from the Federal Reserve, the Senior Loan Officer Opinion Survey on Bank Lending Practices released this week noted that banks loosened standards and reduced spreads for commercial and industrial loans (general business lending) for both large and small firms in the most recent quarter. Not only is there more money in the economy, but banks are more willing to lend it.
· Developing countries are expanding rapidly, which will put a floor under demand for U.S. exports. The International Monetary Fund forecasts growth in world output of 4.6 percent in 2010 led by growth in emerging and developing economies of 6.8 percent. The often-cited BRIC countries (Brazil, Russia, India and China) are expected to grow by 7.1 percent, 4.3 percent, 9.4 percent and 10.5 percent, respectively, this year.
Lastly, if you didn’t read “The Case for Economic Optimism” in Wednesday’s Wall Street Journal, you can click here read the editorial by Ross DeVol of the Milken Institute and view a segment on CNBC’s “The Kudlow Report.” Mr. DeVol says there is “… cause for measured optimism: A return to modest but sustainable growth is close at hand.”
-Bob Bach, Grubb & Ellis Senior Vice President, Chief Economist
