It wasn't exactly the data that the stock market was looking for, but the size of the US economy did increase by +3.2% in the 4^th quarter of 2010 (i.e., quarter-over-quarter change expressed as an annualized number).  That result was better than the +3% growth rate traditionally thought of as the minimum needed to create enough jobs to keep pace with our nation's increasing population.  For all of 2010, the economy grew at a rate of +2.9%, its best calendar year result since 2005 and an enormous improvement over the 2.6% contraction we experienced in 2009 (source: Commerce Department).

After decades of deficit spending (the US has spent more than it has taken in during 45 of the last 50 fiscal years), the time may have finally come for our country to begin to live within our means.  The good news for deficit hawks is that before President Barack Obama delivered his annual State of the Union address last Tuesday (1/25/11), he called for a 5-year freeze on a portion of government spending.  The bad news for deficit hawks is that the president's plan excluded Social Security, Medicare and Medicaid from the proposed cutbacks (source: White House). 

In its first unanimous vote in 13 months, the Federal Reserve decided last Wednesday (1/26/11) to keep short-term interest rates at their current low level.  The group also reaffirmed its intention to continue to buy up to $600 billion of Treasury notes and bonds to drive longer-term rates lower.  The so-called "QE2" bond buying plan is now in its 3^rd month of purchases (source: Federal Reserve).