Archive for February 2011
Oil Up, GDP Down
Our economy can’t catch a break. Last spring the European debt crisis derailed any chance of a recovery; now it’s oil. Prices have surged due to fear of violence disrupting oil supplies and the fear that political instability in the ME will persist. Every $10 rise in oil raises gas by 25 cents and that…
Read MoreIrish Elections
Yesterday Ireland held elections; Fianna Fail (FF) lost to Fine Gael & Labour (FGL). When the Irish economy tanked in ‘08 FF had the government guarantee all bad bank debt; a dreadful decision resulting in a $93 billion bailout and a painful austerity program. FGL promises to renegotiate it all. This may cause a Euro…
Read MoreChicago goes Monthly
Q4 GDP revised downward to 2.8% from 3.2% in line with the Fed Reserve Bank of Chicago’s monthly National Activity Index. It’s kind of like a montly GDP report! It’s been saying that the economy is growing, but too slowly. This is troubling given all the monetary & fiscal stim that exists and will soon…
Read MorePU Smackdown
The public union smackdown in Madison, WI has me wondering what benefits public unions bring to taxpayers. As I see it their incentives are to increase the cost of government and reduce accountability of public employees. Public union defenders may retort that higher pay attracts better applicants. But, show me a single study that says…
Read MoreReally it’s Recession
U.S. consumer confidence (Conference Board survey) jumped to 70.4 in Feb from 64.8 in Jan; the 5th increase in a row and best level since Feb ‘08. But, we are 20 months into a recovery, and 70.4 is the second lowest level of consumer confidence ever at this stage of the cycle. What is typical…
Read MoreBoomer’s battle
There was sobering article on the front page of the WSJ (weekend edition) titled Retiring Boomers Find 401(k) Plans Fall Short. The key statistic was that the median household headed by a person between the ages of 60 and 62 with a 401(k) account has put away less than one-quarter of what is needed to…
Read MoreFiscal Year begins
Given signs of inflation QE ends in June taking wind out of the S&P. The fiscal year for S&L govts starts in July and big tax hikes and spending cuts are due. State restraint is already visible in reduced employment. In Oct federal spending cuts commence as fiscal ’12 begins. In Q1 ‘12, we will…
Read MoreThe Good, The Bad, The Ugly
The Good: Fed lifted its GDP forecast for ’11 to a 3.4% to 3.9% band from 3.0%-3.4% based on minutes from Jan meeting. The Bad: Ongoing frustration with slow progress in the labor market compelled the Fed to say that accommodative monetary policy is crucial. The Ugly: mortgage apps for home purchases fell 5.9% the…
Read MoreWWII Bull Markets
The US has had two huge bull markets since the end of WWII; ’46-’66 and ’82-’00. Each time there was a positive shock to the economy. The 1st bull market resulted from baby boomers and the creation of the Interstate highway system. The 2nd resulted from a 20 year decline in interest rates and the…
Read MoreBetter Sentiments
Consumer sentiment came in better than expected in Feb at 75.1 but the expectations component which leads spending growth fell to 67.6 from 69.3 in Jan and all the gains in consumer confidence were in the high income segment; soaring to 88.2 in Feb from 80.7. Sentiment among the lowest income group fell from 72.1…
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