US Economy –

The strength of the American economy picked up steam in the 3rd quarter of 2013 with a final GDP estimate of 4.1%, about double the average of the last few years. It is further estimated that the 4th quarter GDP (despite the short government shutdown) also exceeded 3%. Unemployment has dropped to 7.0% and consumer sentiment is back up to 82.5 (Reuters/University of M), up from a November dip of 75.1. This in turn has led the Fed to finally announce the start of tapering to their long-term interest rate support/bond buying program. This positive economic news was welcomed by Wall Street and pushed the S&P 500 further, up 32% for the year, while the yield on the 10-year Treasury bond crept back up to its high for the year, near 3%.   Continue reading →

US & World Economy –

The rapid rise in the 10-year Treasury interest rate from 1.6% to 3% has rippled through the financial and real estate worlds. Bond portfolios got crushed, stocks dropped then rebounded and residential and commercial real estate appreciation has stalled. In response, the Fed has delayed the action that caused the rise (reducing its monthly bond repurchases) as they are concerned with not harming the improving economy. The financial markets are digesting all of this as well, and the 10-year Treasury yield has backed down to 2.65% for now. Continue reading →

US & World Economy –

US consumers have kept the American economy slowly moving forward despite the weakness in our exports and the “sequester and tax” policies. Job growth has finally resumed, giving hope for a stronger second-half of the year economy. China’s slow down in growth (particularly in infrastructure and real estate) has contributed to a drop in commodities. Europe is emerging from its “double dip” recession after choosing austerity vs. US-style stimulus and remains vulnerable to set-backs as their unemployment remains at record levels. Continue reading →

US & World Economy –

Animal spirits are back! With Europe in a mild but stable recession, China on an upswing, US housing starts and prices rising (Case Shiller Index up 8.1% over the last 12 months ending in January – best since 2006), and the Dow Jones and S&P 500 both making new all-time highs, consumers and businesses alike are feeling better. Consider these new economic levels:  the stock market at new highs from 2007, S&P 500 quarterly earnings at new highs, US household net-worth at a new high ($69 trillion vs. $67 trillion), and household debt service to income ratios at a 30 year low (J.P. Morgan). Continue reading →

US & World Economy –

The world breathed a sigh of relief after the recent Fiscal Cliff vote and all of us are happy to remove that phrase from our vocabulary. The US economy is in good shape to absorb the changes to the taxes and likely debt ceiling outcome (more on
that below) and according to most economists, should grow at 1.5 – 2.2% in 2013. In other words, more of the same slow growth we have experienced for the past couple of years. Regardless, a serious cloud has been lifted and businesses can now plan with greater confidence. In addition, China’s economy and US housing starts are building strength and will help the economy this year. While there is always something to worry about, the scope of our problems have become smaller over the last few years. Continue reading →

US & World Economy –

While the US economy continues to slowly grow, all eyes are on the election and the 2013 “fiscal cliff”. Job growth has stalled and productivity per employee has little room to grow. We seem to be treading water with Europe’s recession pulling us down and a slightly faster growing Asia pulling us up.  Corporate cash holdings are at high levels as businesses continue to be cautious. The wait is almost over. Continue reading →

US & World Economy –

Weak second quarter job growth and earnings have dominated recent headlines. After a healthy 226,000 per month average job growth in the first quarter of 2012, a measly 80,000 jobs per month were added in the second quarter of 2012 – stalling the decline in the unemployment rate (currently 8.2%). Corporate earnings growth is also slowing. Combined with the start of a recession in Europe, this resulted in a strengthening dollar and weak commodities. The price of oil dropped, despite the continued rumbling from Iran. Add the continuing drama from Greece and Spain and you end up with heightened volatility in the financial markets and lack of confidence from investors. Continue reading →

US & World Economy –

2011 was a wild year for the economy and financial markets. Optimism and continued growth early in the year gave way to fear and double-dip fears in the fall, only to end the year back where we started. (The S&P 500 Index was up 0.003% but the average US Stock fund lost about 3%). The rest of the world did not fair as well: Latin America -22.2%; Europe -15.2%; China -20.2%; India -39.1%. Remarkably, despite continued negative headlines, no country is currently in an announced recession. In fact, worldwide growth appears to have picked up in the forth quarter, especially in the US where auto and retail had their biggest gains in years. The S&P 500 will report not only record earnings, but earnings 15-20% higher than their 2007 peak.

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US & World Economy –

The US economic growth stalled over the summer as consumer confidence dropped to a 30 year low amidst the disappointment of watching a nearly nonfunctioning Congress and the first time ever downgrading of our government debt. This has led economic forecasters to increase the likelihood of a recession to 50/50, produced sharply lower worldwide stock prices and reduced earnings estimates. Inflation fears have also receded and interest rates were driven to multi-year lows. All of which has left US consumers a bit shell shocked as they continue to deleverage to shore up home finances and trim spending, while the stock, corporate bond and commodity markets had their worst quarter in almost three years. Continue reading →