While many observers fear commercial real-estate issues and mortgage resets, my bigger concerns relate to small businesses and government policies.

I have cited commercial real estate as being one area that could throw cold water on my relatively optimistic forecast. Some of the most pessimistic prognosticators cite commercial real estate as the lynchpin for their dire predictions. There are many different ways commercial real estate can influence the economy, and economists need to be more explicit about what worries them. Some people are worried about continuing declines in construction employment and how that would exacerbate unemployment rates. Others worry about the companies that are involved in the real-estate market, and more explicitly, the publicly traded real-estate investment trusts.   More 

With last week's bank holiday, the flow of economic indicators was at a low ebb. Initially, unemployment claims looked encouraging, as did the more obscure job openings report from the Labor Department. FedEx FDX and UPS UPS both offered favorable comments about the upcoming holiday season, providing one of the first confirmations of improving conditions in the battered transportation sector. Small business optimism managed one of its best monthly improvements during October, but remains mired at depressed levels.   More 

For the past few weeks, I have been talking about the need for improving consumer spending trends. Last week, weekly chain store sales compiled by the International Council of Shopping Centers notched its sixth straight week of sequential improvement. In addition, retail same-store sales trends are coming in above expectations (with the exception of teen retailers).

Retailers are now up against some very depressed comparables from a year ago, but it was still nice to the see a positive sign on the year-over-year data for the first time in months. Also of note, two high-end retailers, Saks SKS and Nordstrom JWN, managed to finally show positive comparisons, joining the ranks of discount retailers such as T.J. Maxx TJX, and Ross Stores ROST, which have been showing better comparisons for some time.   More 

I have never been a huge fan of the monthly job report, so I am glad to see other important employment indicators paint a more flattering picture of the employment landscape than Friday's report of 10.2% unemployment. These include the Challenger Gray and Christmas Layoffs Report, the employment component of the ISM purchasing managers report for manufacturers, and the ADP Report. Shockingly, the market seems to agree and is reacting far more favorably than expected to Friday's numbers.

News from the construction, real estate, manufacturing, and retailing sectors is better than expected. In the corporate world, merger mania continues: Black & Decker BDK and Stanley Works SWK agreed to merge, as did Berkshire Hathaway BRK.B and Burlington Northern BNI. Warren Buffett proclaimed Berkshire purchase to be "an all-in bet" on the U.S. economy. Given the wide variety of goods shipped via rail, I think Buffett's assessment is correct.   More 

In today's employment report, we were looking for October job losses in the 160,000 to 170,000 range. We got 190,000 losses, and an unemployment rate of 10.2%. This looks very disappointing on the surface. But the report also reveals that the Bureau of Labor Statistics made very positive adjustments to the August and September job-loss numbers. The losses in total nonfarm payroll employment for August was revised from 201,000 to 154,000; the change for September was revised from 263,000 losses to 219,000. These are big adjustments. That's about 100,000 more jobs than we that we had, and they're across many different sectors. If you net the past three months together, we're better off today than we thought we were yesterday.