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Posted
on 15-Dec-01 02:38 PM
FORTUNE
Monday, December 10, 2001
By Julie Schlosser
After reading all the dire economic news out there, you might be tempted to give up and hibernate for the winter. The signs point to an icy season. Employment numbers aren't pretty, tech stocks--while up notably from their September troughs--remain dicey, and consumer confidence is schizophrenic at best. Oh, right. There's also that war-on-terrorism thing. So what we're about to say might come as a shock: There are mighty powerful reasons to feel optimistic right now.
10 Big Reasons to Smile
1. Autos
Zero-percent financing may be on a collision course with the Big Three's bottom line, but it's acting as an airbag for the rest of the country. According to Comerica Bank's David Littmann, each dollar spent on a car gets recycled through the economy three times within the year.
Hit the Road
Total U.S. sales of light vehicles, in units, for GM, DaimlerChrysler, and Ford
Oct. 2000: 892,474
Oct. 2001: 1,172,971
Source: Ward's Autoinfobank
2. Inventories
After bulking up their warehouses during the boom, corporations prescribed a starvation diet over the past year. The remedy is working, says Morgan Stanley's Richard Berner: The glut should be over in several months, not years.
Source: economy.com
3. Wind chill
Baby, it's not that cold outside. This year even winter is getting less frosty. The National Weather Service has changed the way it calculates wind chill, making some of the new readings a bit warmer. Here's to a toastier 2002!
4. China
By 2004, China's membership in the World Trade Organization should increase U.S. exports to the region by $5.4 billion annually.
Source: Institute for International Economics
5. Energy
Every time the price of a gallon of gasoline drops a penny, the economy gains $1 billion, according to Salomon Smith Barney's Tobias Levkovich. Since mid-September, gas prices have dropped an average of 34 cents. (You do the math.)
6. Michael Jordan
Welcome back, Your Airness. During the last Jordan era, FORTUNE found that M.J. pumped $10 billion into the economy. Now he's returned--again--and both the Wizards and the country could use the assist.
7. Semiconductors
The industry that helped bring us out of our most recent recession crashed last year, but the chips won't be down for long. The Philadelphia semiconductor index is already up 46% since Oct. 1. Gartner Dataquest now predicts that the sector will grow at a 30% annual rate in 2003.
8. Housing
With interest rates on 30-year mortgages near a 30-year low, a record number of households are choosing to refinance. Half of them are taking out cash too--an average of $18,000, according to Economy.com's Mark Zandi--and injecting it back into the economy.
Source: Mortgage Bankers Association of America
9. Value Line
Value Line--whose top-level picks beat the S&P 500 by 1,100% from 1965 to June 2001--is recommending its most bullish asset-allocation model in more than 30 years. It is now telling investors to keep up to 90% of their portfolio in stocks and predicts a 32% increase in the S&P 500 over the next six months.
10. Power of Ten
Good things come in tens--just ask Moses. This year Greenspan cut the Fed fund rate ten times to its lowest level in 40 years. Which leads us to a commandment of our own: Thou shalt not panic.
http://www.fortune.com/indexw.jhtml?channel=artcol.jhtml&doc_id=205328
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