Positive 4th Quarter Economic Data Does Not Necessarily Signal A Turnaround

Positive economic data released recently on jobless benefits claims, new home construction, and small business confidence are sparking optimism among investors, economists and policy makers. But, The New York Times warns, that optimism should be laced with a dose of caution. The positive economic signs may be caused by “temporary factors,” and some economic forecasters say the uptick does not signal “a strong, sustainable recovery.” Why the pessimism? Positive trends in the fourth quarter may not continue into next year, and the U.S. economy is still facing some major unsettling forces: Europe’s persistent sovereign debt crisis, domestic cutbacks beyond the control of President Obama, and the fact that the unemployment rate is likely to hover around 8.6 percent through next year’s presidential election.