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Housing and Banking Sectors Bounce Back

After a terrible economic performance, it is good to hear that the housing and banking sectors are bouncing back from the economic breakdown over the past year. Ylin Q. Mui (2009) reported on Washington Post that the American stock market has shot up to as much as three percent on May 18 from home improvement chains which has announced confidence in the market for new homes. The market is reported to have risen for the second straight month. Mui (2009) also reported that the financial sector has gained to nearly five percent.

Mui (2009) reported that the home improvement chain Lowe’s decreased its profit by up to $476 million during the first quarter of the current year which is “a nearly 22 percent decline from the previous year. ” However, investors found some hope from encouraging signs in sales reported by Lowe’s from “small, outdoor project items as spring arrives” (Mui, 2009). Lowe’s chairman and CEO Robert A. Niblock reported that they “have seen consumer confidence improve, housing turnover show signs of bottom in certain markets, and home prices slow their decline” (cited in Mui, 2009).

He further announced that “these are all positive signs for the stabilization and ultimate recovery of home-improvement industry sales” (cited in Mui, 2009). Mui (2009) also reported that the National Association of Home Builders found that for the second month the “builders’ confidence in the market for new, single-family homes” has reached its highest level since September last year. Despite these, Lowe’s explained that many of the variables in the analysis of the market remain at or are near historic lows.

As a fail-safe for the full recovery of the industry as well as the whole economy, following Lowe’s example to “continue to plan conservatively and manage expenses appropriately” seems to be a good idea (cited in Mui, 2009).

Reference

Mui, Y. Q. (2009). Housing, banking sectors lead market rally. The Washington Post. Retrieved May 19, 2009, from http://www. washingtonpost. com/wp-dyn/content/story/2009/05/19/ST2009051900009. html? sid=ST2009051900009

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