A Fork in the Economic Road

Currently, the United States seems to be doing better economically and recovering from the financial real estate collapse that occurred last year. Even though, GDP is finally going up and the stock market is making a rally, signs from the economy seem to be mixed. Unemployment reached over 10% and gold is rising in price dramatically from fears of future inflation.It's price is currently at $1151.80, after finally breaking through $1000 after hitting it twice and backing away.

What this all means, I really do not know. With all the money that the Federal Reserve has just been putting into the system, inflation seems to be and should be a legitimate worry. Buying gold and other commodities, may not be a bad play. However, there doesn't seem to be any inflation right now or in the very immediate future. Banks aren't lending and that may be because of fears of another real estate crisis. This time in the commercial sector and not the retail sector. The Federal Reserve has already shown some concern and has announced new regulations to help them deal with the situation. Unless the commercial real estate crisis hits us, I think we will make a slow recovery and jobs will recover after a long time of stabilization.

Personally, I think stocks will continue on this rally for a little while with unemployment hitting 11%-12%. How likely this all is, if at all, I really have no idea. I mostly try and just keep my ear to the ground and try to get a "feeling" for how the economy is performing. I'm starting to really believe that GDP is not an accurate measurement of the economy anymore.

Currently, I have two small positions on Intrade regarding the economy.

10 Contracts going long on (DJIA.NOV09.>10500) at a price of 33.8%
10 Contracts going long on (US.UNEMPLOY.DEC09.>10.50%) at a price of 21.0%

As you can see, these are pretty speculative bets, but I like my chances. I think the prices on Intrade may reflect current expectations but don't account for a high amount of variation. I'm hoping this variation comes in my favor.