As the country approaches yet another version of the Fiscal Cliff in March, many Plano residents are adopting a means of survival that differs from our leaders in Washington D.C. opting for fiscal responsibility over avoidance. Christmas last year saw shoppers returning to retail stores in large numbers but choosing to buy smaller less expensive options. At a Plano jewelry retailer, sales were good but the "rush" never came and the "big pop" was very elusive. Instead, shoppers opted to buy smaller more practical items proving that Plano residents are electing to hold on to their hard earned cash and prepare for the possibility that the country will slip into recession again.
Is there evidence that the economy is improving? Yes and additional the following trends have gained momentum since the beginning of the year.
- Used cars are a hot commodity
- Homeowners and home builders have driven shares of Home Depot up 14 percent this year
- Homes being placed on the market and closing quickly
- Refinances on the rise
- Homeowners choosing to refinance from 30 years mortgages to 15 year mortgages.
These are signals that the confidence is increasing in Plano versus the previous quarter.
Moreover, corporate balance sheets are not the only ones showing improvement. Many Plano residents are reducing their debts, increasing their savings, and placing more money in their investment accounts.
Fixed income still rules the market but with downward pressure being artificially applied by the Fed, many investors are hunting for yield or accepting more credit risk. This has led to large increases in the stock market for 2013. This will be a point to watch as many of the assumptions are based on the FED keeping rates low through 2015. As recent as the January and February meeting, the members of the FOMC have expressed concerns that the policy should be changed sooner.
So how did the Fiscal Cliff affect Plano residents last time? Investors are taking advantage of the increases in the stock market and using the low inflation opportunity to improve their financial position. With their investment accounts improving, their debts being reduced and their savings increasing, the fiscal cliff has proved to be a good thing for Plano residents.
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