4 Signs that the U.S. Economy Is Set for a Strong Second Half of 2011

Moving into the latter half of 2011, you might be surprised to learn that the Dow Jones is still performing well, and many analysts anticipate continued U.S. economic growth. Fears of a double dip recession are waning, and some economists have forecasted that the last six months of 2011 will be much stronger than the first six months of the year. Here are five reasons why investors should be bullish about the second half of 2011: 1. Lower Gas Prices Every driver has felt the pain of rising gas prices when paying for fuel. Gas prices have contributed to slower economic growth because producers, manufacturers, and consumers are all directly impacted by the high price of fuel. Gas prices have also curbed the spending habits of consumers, who were spending more at the pump, with less expendable income to spend elsewhere. Now that the government has started tapping into strategic petroleum reserves, oil prices have plummeted to $90 a barrel. Saving money on gas means more dollars in the pockets of American consumers, producers, and manufacturers, contributing to a positive economic outlook. The drop in gas prices coincides with the summer season, when many people yearn for summer vacations. Reduced gas prices will hopefully equate to more people traveling this year, and more money being spent, further improving the U.S. economy. 2. Manufacturing Rebound The manufacturing sector saw an increase in demand as orders rose for lots of durable goods. Severe weather problems hampered manufacturing over the last few months, directly impacting manufacturers. May's slight increase in manufacturing numbers left many analysts optimistic, since an uptick in goods production contributes to a healthy economic outlook. In some sectors, the clean-up that follows weather-related incidents will lead to increased production, as consumers need to replace lost or ruined possessions. These same areas of the country will also spur economic growth by hiring laborers and skilled professionals to help with rebuilding. 3. Strong Retail Sales There are signs that the holiday season could be a big one, for retailers that sell popular products, niche products, and products with limited availability. GameStop GME anticipates a busy holiday season based on the current demand for the company's gaming products. Higher costs didn't hurt Nike NKE, as the footwear retailer saw its sales revenue surge over the last quarter. Apple AAPL is expected to launch a new iPhone this fall, which will undoubtedly be a big money-maker for chip makers, and for the software giant. 4. Booming IPO Market Initial public offerings were virtually nonexistent at the beginning of 2009. Investor demand for IPOs has finally returned to the market, and social media IPOs are incredibly hot. The LinkedIn LNKD IPO was well-received by the market, with shares gaining more than 80% on the first day of trading. Investors eagerly await the much-anticipated IPO filings for Facebook, and Farmville creators Zynga. A hot IPO can be a bullish indicator for the market, because many investors are interested in taking risks, and initial public offerings generate excitement. Groupon could also see robust demand from investors when they price their IPO in the second half of the year. 5. Japan Begins Rebuilding Japan has started the slow process of rebuilding after the March 11, 2011 earthquake.  The U.S. economy was directly impacted by the earthquake, in part because we're so reliant on their manufacturing outputs. Slowly but surely, Japan has begun manufacturing electronics and cars again, opening up U.S. production and sales of imported items. Final Thoughts Almost all signs point to an improved economic outlook, and the possibility that the Dow Jones can finish the year higher than its current 11,900 range. The gross domestic product of the United States may not grow at the 5% rate that many anticipate, but growth above 3% is absolutely possible. This type of growth would renew optimism and hopefully increase consumer confidence, so that the economic rebound could continue to gain steam. Do you think the U.S. economy will improve in the latter part of 2011? Why or why not? Mark Riddix is an investment management professional and contributor for Money Crashers, a personal finance resource that covers everything from investing advice to reviews of financial products and the best cash back credit cards. Mark writes a weekly column for Benzinga every week.