This morning's flurry of M&A activity - Unilever NV (UN) purchased Alberto-Culver (ACV), Southwest Airlines (LUV) bought AirTran (AAI) and Wal-Mart (WMT) acquired a South African consumer goods company - indicates that an economic recovery may come sooner rather than later. After all, the aforementioned companies are excellent barometers for the overall economy because Unilever and Wal-Mart both sell consumer goods and Southwest is in a very cyclical industry. In fact, the biggest news may be that Southwest - one of the leaders in the airline industry - was willing to put up $1.4 billion to buy AirTran, even as other rivals are cutting routes and in some cases, filing for bankruptcy.
To see these companies putting up billions to acquire other firms is a sign that they are comfortable with getting rid of some of the cash on their balance sheets that they had hunkered down with to help combat the recession. Any large outlay of a cash by a firm for an acquisition at this point of the economic cycle is a sure sign that they are confident enough in their ability to generate cash from operations going forward to help fund it.
With that said, this news also has plenty of importance for Gen Y because the potential for an economic recovery means that the job market may recover sooner rather than later. Granted, the recent employment reports have indicated prolonged sluggishness remains, but the confidence on the part of large companies in expending billions of dollars to buy other firms suggests that the next logical step will be the creation of new jobs both at those companies and across the broader economy.
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