Signs of hope, however fragile, seem to be appearing on the economic horizon. That should mean higher interest rates for certificate of deposit investors, unless there is a backlash over rising public debt levels in the U.S.
For now, the good economic news is holding sway. Let’s have a look:
- Consumer spending spiked upward in February — that’s the fifth consecutive month that consumer spending has risen, according to the U.S. Commerce Department
- Private sector wages were up, as well, albeit incrementally. The Commerce Department says that wages and salaries were up by $1.9 billion in February. While that number does represent an increase, it did pale to the $16.6 billion rise in wages recorded in February. Overall though, the wage trend is upward.
- The Commerce Department reports that the gross domestic product number for the last quarter of 2009 was revised to 5.6% — the largest increase in six years.
- The Dow Jones Industrial Average rose 0.4% yesterday to 10,895.86, its highest level since September 2008.
Historically, a stronger economy is a harbinger of higher bank investment rates. The Federal Reserve is the driver here, as it usually hikes its benchmark Federal Funds rate when the economy improves, in an effort to stave off inflation. If the economy shows more vibrancy, it might force the Federal Reserve’s hand sooner than most economists expected. The consensus among Fed watchers is that the Federal Reserve would wait until late 2010, if not 2011, to raise interest rates. But that timetable could be moved forward if stronger economic data rolls in.