Several Bright Spots in the Otherwise Troubled Economy Offer Hope

Despite unfavorable economic news seemingly coming in daily as of late, there are a few bright spots in the US economy. Not that these bright spots assure us of a rapid turnaround for the struggling economy, but they do remind us that a recovery, as sluggish as it has been so far, is indeed a recovery.

US agriculture has remained relatively unaffected by the turmoil that has dragged down almost every other industry in the country. Prices continue to soar on everything from meats to grains, mostly caused by increasing demand from international markets.

American farmers will have exported more than $107 billion worth of agricultural products by the time the fiscal year ends September 30th. That's the second highest total of American agricultural exports ever, behind 2008's record of $115 billion. A larger portion of US exports go to Asia, especially China, who is expected to pass Mexico next year as the second largest foreign buyer of American farm products, behind Canada.

Agriculture, however, can only take the overall economy so far, as it makes up a very small portion of the overall economy. But it is definitely a bright spot, and should continue to be, as demand for farm products continues to soar in China and other overseas markets.

Another positive sign for the economy comes in the form of increased corporate buying in recent months. Last month was the busiest August ever for worldwide mergers and acquisitions, with $286 billion worth of deals completed in the month. It was also the highest one-month total since July 2008. With the end of the fiscal year just three weeks away, the total value of global hostile bids to date is at $134 billion, an increase of 26.5 percent over last year.

The total number of mergers and acquisitions in the US during the fiscal year is up a staggering 42 percent over the previous year. Mergers and acquisitions activity is generally seen as a sign of strength in the economy, but with so many other sectors struggling, analysts caution that it's just too early to declare this a comeback.

Another, albeit unlikely bright spot, is Detroit, Michigan and the auto industry. Many economists are suggesting the city and the industry are poised for a significant comeback after changing the way they do business in the wake of enormous government bailouts for General Motors and Chrysler. The Big Three (Ford, GM, and Chrysler) have made huge strides in the past year. Ford, for example turned more profit in 2010's first six months than in the previous five years combined. GM recently filed for one of the biggest stock offerings in the nation's history, a little over a year after declaring bankruptcy and receiving a $50 billion taxpayer bailout. And Chrysler has been steadily adding new workers over the last few months.

Finally, there is the American manufacturing agency, which has been in decline for decades now. Many analysts had forecast a severe slowdown in the sector last month, but reports came in proving the opposite to be true. The Institute for Supply Management's factory index rose last month to a three month high of 56.3. Most economists had predicted the index would fall from 55.5 in July down to below 53. A reading of 50 or above is considered to show growth in the industry.

In addition, the surge in manufacturing activity has led to the creation of jobs, albeit mostly temporary jobs. The Labor Department's jobs report, issued Friday, showed that manufacturing jobs fell more than expected in August, but 17,000 temporary jobs were added. And Caterpillar, the construction and mining equipment manufacturer, has vowed to create 9,000 new jobs this year. Manufacturing, which accounts for about 11 percent of the total US economy, helped to spark the current recovery, and will be vital to that recovery moving forward. -Jon Fraley

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