The broad US economy continues to find ways to grow despite mounting hurdles. Government reports this week of increases in GDP, exports, personal incomes, and new houses sold all defied economists’ estimates. Gains in some cases were significant, while others were increases on a declining scale.

With oil and gasoline prices raising to new highs daily it would be easy to paint a bleak picture for the future, particularly if energy was a large part of your expenses. Industries such as airlines, parcel delivery, and small businesses where transportation figures largely, are in a vise-like squeeze without signs of relief.

There remains at least one strong horse in theUSeconomy - exports. As the dollar falls in value relative to other currencies, American produced goods and services become more competitive in the global marketplace. Our trade deficits with creditor nations are shrinking dramatically. As a whole, our trade deficit is now 5% of GDP, down from a 7% peak. According to Credit Suisse it is only 3% when oil is excluded.

In our Brief two weeks ago we presented the possibility that the markets are sensing a comeback in the US economy. The Dow Jones Industrials are up 3.7% and the Nasdaq is up 4.7% from that point. Since their March lows the two indices are up 12.5% and 15.5% respectively. The bond markets and the currency markets are also moving in agreement as the dollar reached a five-week high yesterday and bond prices are trending down taking rates modestly higher.