The close of the first quarter of 2010 brought some promising economic news and earnings reports. Yet, even as stocks and growth indicators are up, people’s perception of the overall economy remains quite low according to a Bloomberg National Poll. Mixed economic signals and conflicting news reports have many people wondering: are we in a recovery or not?

Investment advisors Jim Mailliard, CFP® (left) and Patrick Eng (right) offer their analysis. (photos)

One of the most reliable leading economic indicators is the stock market. The stock market has put in a strong showing for the first part of 2010, with the Standard & Poor’s 500 Index up about 6 percent as of early April.  Small company stocks have taken the lead – a good sign – rising about 11percent. International stocks have lagged a bit, up about 3.5 percent for the year. In addition, in the past 12 months, the S&P has risen more than 49 percent; while the index is still down nearly 25 percent from its peak, the size and speed of this rebound is encouraging.

The broadest measure of US economic activity, gross domestic product (GDP) rose 5.6 percent in the fourth quarter of 2009 after rising 2.2 percent in the third quarter, according to the U.S. Department of Commerce. Durable goods orders also rose. At the same time, growth in the US manufacturing sector has provided one of the clearest signs of economic recovery. In March, the Institute for Supply Management’s gauge of industrial activity rose for the eighth straight month, showing the strongest pace of expansion since July 2004.

Yet, many Americans remain pessimistic.

A majority (six out of 10) believe the economy has worsened rather than improved during the past year, according to a Bloomberg National Poll conducted March 19-22. Among investors polled, only three in 10 say the value of their portfolio has risen since a year ago.

Why the disparity between traditional economic indicators and many people’s perception of the current economy?  It could be that there still are several significant economic factors that continue to show disappointing numbers. Persistently high unemployment, chronically high budget deficits and higher taxes are issues that roughly 90 percent of Americans polled cite as a medium or high threat to the U.S. economy. Add in the stalled housing market recovery, and it’s understandable that many folks remain worried.

Still, we prefer to look ahead with cautious optimism, with a focus on positive economic indicators, steadily rising markets, and a proven investment philosophy. By maintaining a sound, consistent investment strategy, our clients have reaped the benefits of the markets’ steady upturn of the past 12 months. Going forward, our focus will continue to be on keeping client portfolios in balance and on track with their individual financial goals.