2010 was not bad, and if we look at the stock market, it was actually quite good with the S&P up 12.8% (not shabby). The NASDAQ, which is full of technology, was up almost 17% for the year. 2011 has started out great for Wall Street. We’ve already seen considerable gains added to what we had in 2010—so far, so good.
Everyone is asking: What is going to happen in 2011? What will the economy be like? What will the stock market be like? We sort of have this good news/bad news. We have good news on the stock market front. We do now have a tax law as of the end of the year, so we know with some certainty what things will be like for the next couple of years. We have good retail numbers out of our Christmas season. Things were up so nicely—up 5.5% with November and December (nationwide). That’s excellent news. It means consumers were back, and, of course, that helps with employment numbers. And that’s where we’ve seen a real problem. Unemployment is still quite, quite high at this point.
When consumers start spending (and remember that consumer spending represents 2/3rds of our economy), then things start rolling. And even though unemployment is still very high right now, we are starting to see some news about that dropping. We just had a jobs report that said that about 300,000 private sector jobs were just added, and some big companies are announcing hiring (GM, Chrysler)—big hiring plans for the next quarter. All of that is very good news.
Inflation is still very low. That’s good news. But we have a few areas where we’re starting to see prices tick up. In particular, gasoline prices are ticking up as well as grocery prices. So, we’re afraid that might hurt our spending patterns, because, of course, if it costs more to fill up that gas tank, then you might spend a little less at the mall. Those are some concerns we’re having.
Fluctuations in gas prices have to do with demand. It’s sort of this two-edge sword, because when gas prices go up, then that is a sign our economy is improving. It means that we’re having more demand for oil and fueling growth, but it reaches a point where it becomes a problem because transportation costs go up so high. Especially for people who live a distance from work, it becomes a difficulty. That’s the bad part of some of what we’re hearing. Some of these things could hold us back: gas prices, grocery prices.
And of course our state budget woes. All of the states are still struggling right now. So if they start cutting expenses, which means cutting jobs, then that could slow things down.
So…I’m optimistic for 2011 altogether, but we do have some possible pitfalls out there.
Concerning Mississippi, we’re hoping that we’ll see some of our sales tax revenue bump up. We’ve already seen some increases there. And that’s going to determine what they do on the budget side. If those revenues continue to climb, then they will be less likely to cut jobs; and if we can hold onto those jobs, then we’ll see additional spending. All good news.