CEDAR VALLEY BUSINESS MONTHLY
Economy recovering — believe it or not The country is recovering! The country is recovering! Although you will not hear Paul Revere riding through the Northeast Iowa shouting this out, it is time to recognize the national economy may be coming out of the doldrums.
Stock market has improved
As the public sees its 401 (k) balances and stock market investments improving, it will give a big air of conﬁdence to the consumers, especially to the baby boomers who had stopped spending due to the rapid decrease in their 401 (k) values in 2008. As the boomers feel Money to lend more conﬁdent they again start looking Many banks that had problem loans at the extras — vacation homes, newer have formulated plans vehicles, etc. to deal with these loans. For the last 24 to 30 Iowa’s indicators are up months, banks pulled in The index used by Iowa revenue forethe reins on new lend- casters to predict the state’s economy ing. Local banks have rose for the 13th straight month in Octopositioned themselves to ber. The Iowa Department of Revenue loan money for business said six of eight components in the Iowa and personal borrowers. Leading Indicators Index contributed Robert E The business borrower to the overall increase of 0.5 percent for Manning will ﬁnd bank ﬁnancing October above a baseline of 100 points is senior vice available for building, set in 1999. president of First equipment and inventoSome of the stronger positive comSecurity State ry. Adequate cash ﬂ ow in ponents of the index were agriculture Bank in Waterloo. business will be the key futures proﬁts, diesel fuel consumpContact him at to accessing these loans, tion and average weekly unemployment 233-1181or rmanning@ but local banks are look- claims. fssbonline.com. ing in their own backAverage weekly hours in Iowa manuyards for new business facturing jobs increased to 42.3, above loan activity. the historical average of 41.7 hours for It appears personal borrowers will October. have additional cash available to them as the recent tax cut agreement propos- Reﬁnancing increases al goes beyond what economists were The public overwhelmingly choose expecting by including a 2 percent cut in ﬁxed-rate loans in the third quarter of payroll taxes that fund Social Security 2010 for personal residences, according and Medicare. As disposable income to Freddie Mac. increases, conﬁdence will improve and While 30-year ﬁxed-rate mortgages consumers should increase new car are still the most preferred product chopurchases, conduct home improvement sen for new loans among borrowers who projects or build new housing. It takes previously had that product or an ARM, time for the conﬁdence to return after borrowers who previously held shortthe stock market declines, real estate er-term ﬁxed-rate mortgages showed value declines and job losses over the a stronger preference for staying with a last 3 years. 15-year or 20-year ﬁxed-rate loan than they have in recent quarters. Overall, Tax cuts extended ﬁxed-rate loans accounted for more If the agreement as proposed is ﬁnal- than 95 percent of reﬁnance loans. ized by Congress and signed by the president, the payroll tax cut would apply to 2011 is looking better all wage earners. That would be an $800 This new year has the indications of a savings for individuals with an income strong recovery for the U.S. Conﬁdence of $40,000. Those with salaries of more is returning and as buyers spend more, than $106,800 would save a maximum companies will need to hire new people of $2,136. That would provide a nice lift and the economic circle will be spinning in disposable spending. in a positive direction. We are ready.
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