U.S. Economy and Stock Markets, November 2017

US real GDP growth from Q1 2009 to Q3 2017. The green line is a linear fit to the GDP over the three years from Q1 2014 to Q1 2017.

US real GDP growth from Q1 2009 to Q3 2017. The green line is a linear fit to the GDP over the three years from Q1 2014 to Q1 2017.
St. Louis Federal Reserve District Bank / FRED

I have have just updated  the leading and coincident economic indicators I am following, the first update I have done since last May. That means it is time to take a more analytic view of just what is happening to our economy, and why.

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U.S. Economy and Stock Markets, May 2017

Alas! Real GDP growth is still trending downwards.

Alas! Real GDP growth is still trending downwards.
Data and Image credit: St. Louis Federal Reserve District Bank / FRED

It is now time  to take our periodic look at how the U.S. economy fairs. My last survey was last February, with my tardiness in making a new one due to a hope that the new Trump regime would cause something new to happen in the economy. Although there are indeed new signs for hope, nevertheless the new administration’s biggest economic ambitions still await fruition. Given the true enormity of the political and economic problems, I suppose it could be no other way.

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U.S. Economy and Stock Markets, February 2017

Real U.S. Percapita GDP in chained 2009 dollars

Real U.S. Per capita GDP in chained 2009 dollars (blue curve) and its percent change year over year (maroon curve). The thick green line is a linear fit of the maroon curve over the recovery years from the Great Recession.
St. Louis Federal Reserve District Bank / FRED

I have not made a general survey of the U.S. economy for some time,  the last one having been in October of last year. What caused me to take longer in producing a new one was the (for me) unexpected surge in GDP in the third quarter of 2016. From the Atlanta Fed’s forecast called GDPnow, plus

The time evolution of the Atlanta Fed's GDPNow statistic for Q3 2016

The time evolution of the Atlanta Fed’s GDPNow statistic for Q3 2016
Image Credit: Atlanta Federal Reserve District Bank / Center for Quantitative Economic Research

the other bearish indicators I was watching, I firmly expected third quarter GDP to come in at or below two percent. Instead, it showed at a very respectable 3.5 percent! What was going on? I decided to wait and watch before pontificating, searching for understanding before I wrote.

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How a Bursting Stock Market Bubble Will Hurt Everyone

OOPs! A Bear!

OOPS! A Bear!
(c) Can Stock Photo

Approximately eight years ago,  progressives were screaming that capitalists had with their avaricious, dishonest and selfish behavior thrown us into another Great Depression. The reaction of a Democratically controlled Congress was the Dodd-Frank Act, which has bedeviled the U.S. economy ever since. Yet noting this just barely scratches the surface of all the misdeeds of the executive and legislative federal government branches that are progressively weighing down our economy. One of the major effects of government discouragement of economic activity has been the inflation of a stock market bubble. Continue Reading…

The Threat of the U.S. Stock Market Bubble

The New York Stock Exchange
Wikimedia Commons

The last time we were hit with a devastating recession,  the Great Recession of 2007-2009, it was caused by the bursting of a real estate bubble created by federal government policies. Now we are facing the possibility of another gut-busting disaster from the inflation of another financial bubble, but this time it is a stock market bubble.  Continue Reading…

U.S. Economy and Stock Markets, October 2016

The time evolution of the Atlanta Fed's GDPNow statistic for Q3 2016

The time-evolution of the GDPNow statistic  from the Center for Quantitative Economic Research of the Federal Reserve Bank of Atlanta.
Image Credit: Federal Reserve District Bank of Atlanta/Center for Quantitative Economic Research

The graph above  of the GDPNow statistic produced by the Atlanta Federal Reserve confirms what the bulk of economic statistics are saying to me. By now it should be obvious to even the most dense that something is very, very wrong with our economy.  Continue Reading…

U.S. Economy and Stock Markets, August 2016

US real GDP growth from Q1 2009 to Q2 2016

Real quarterly, annualized GDP growth rate in percent from Q1 of 2009 to Q2 of 2016
Image Credit: St. Louis Federal Reserve District Bank/FRED

It is time for me to take one of my periodic looks at the condition of the U.S. economy and stock markets. As has been my practice, every time I do one of my general surveys on the economy, I update my Leading Economic Indicators and Coincident Economic Indicators, so be sure to take a look at them.

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If Hillary Clinton Were President …

Hillary Clinton speaking at the Brown & Black Presidential Forum in Des Moines, Iowa on January 11, 2016

Hillary Clinton speaking at the Brown & Black Presidential Forum in Des Moines, Iowa on January 11, 2016
Wikimedia Commons/Arthur Skidmore

Given how the bombastic Donald is increasingly sabotaging his own cause by opening his mouth, “crooked Hillary” in the photo above may very well end up as our President (heaven forfend!). It would then be a very useful exercise to imagine what a Clinton administration would mean in terms of the policies she favors.      Continue Reading…

Economic Freedom in the United States

World Map Of WSj/Heritage Foundation Index of Economic Freedom for 2016

World Map of the WSJ/Heritage Foundation Index of Economic Freedom
Image Credit: Heritage Foundation

It would distress many Americans to learn the United States does not have the greatest economic freedom in the world. Indeed, in the latest 2016 rankings by the Wall Street Journal/Heritage Foundation Index of Economic Freedom, the U.S. ranks eleventh behind tenth rank United Kingdom. In fact, the U.S. is currently declining in economic freedom, having fallen 0.8 points from the previous year’s ranking.

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The U.S. Economy and Stock Markets, June 2016

Real GDP growth Rate

Real quarterly, annualized GDP growth rate in percent from Q1 of 2008 to Q1 of 2016
Image Credit: St. Louis Federal Reserve District Bank/FRED

Having just updated my Leading Economic Indicators and Coincident Economic Indicators pages, now is an appropriate time to do one of my periodic reviews of the health of the U.S. economy. In addition, I shall puzzle some more on the historically anomalous behavior of the stock markets.      Continue Reading…

Stock Investors’ BIGGEST Enemy: Central Banks

The Shiller CAPE: The most trustworthy index on stock valuations
Image Credit: gurufocus.com

The question for the day is whether or not we should invest in the stock market. This should be an overwhelmingly important question for all of us! Investing in the stock market, either through 401K accounts or Individual Retirement Accounts (IRAs), has evolved into the primary (and for most people the only) way to save for retirement.      Continue Reading…

U.S. Stock Markets and the Economy, April 2016

Dow 30 and S&P 500 indices as of 3/31/2016

Candle charts of Dow 30 index on top, S&P 500 on bottom. Blue overlay curves are 50 day moving averages, Red curves are 100 day moving averages.
Images courtesy of StockCharts.com

Confirmation that “Bad is Good” Meme Is Back!

From the charts for the Dow 30 and the S&P 500 shown above, you can see confirmation the “Bad is Good” stock market meme has been restarted. Despite the fact corporate earnings have been in recession for almost an entire year, the major stock market indices have recovered most of their losses since the beginning of the year. The betting now is that average S&P 500 earnings per share (EPS) in the first quarter of 2016 will have fallen about 4% year-over-year from the EPS in the first quarter of 2015. If that turns out to be true – and we should find out in April – then corporate earnings will have been in recession for an entire year.     Continue Reading…

A Corporate Earnings Recession Continues

Earnings per share growth in recent quarters

S&P 500 average earnings per share growth, year over year in %
Image Credit: Bloomberg.com

[Note on 3/26/2016: On Friday March 25, the U.S. Commerce Department announced  corporate profits for the fourth quarter of 2015. Corporate profits after tax, without inventory valuation and capital consumption adjustments, fell at a -8.1% pace last quarter from the third. This was the largest quarterly fall since the first quarter of 2011. Profits fell -3.3% in the third quarter from the second, so the profit decline is accelerating. On a year-over-year basis, corporate profits declined -3.6% in the fourth quarter, as opposed to the -5.5% estimate quoted in the article below.]

Corporate earnings have fallen during the last three quarters of 2015, and current indications are they continued to fall in the first quarter of 2016. Continue Reading…

U.S. Stock Markets and the Economy, February 2016.

A thrilling ride!

Investors in the stock market getting their thrills!          
Wikimedia Commons/Boris23

The last few weeks with the stock markets have certainly been an exciting roller coaster ride! As you can see in the chart below, market moves of more than 100 points in the Dow 30 index and 10 points in the S&P 500 – both up and down – have been the rule. Just as important as the size of the moves has been the volatility where a decline one day is followed many times by an increase the next. Continue Reading…

The Fed is Losing Credibility (Duh!)

S & P 500 Index as of 11/18/15.                    Image courtesy of StockCharts.com

Two posts ago in The Wall Street Casino Is Open Courtesy of the Fed, I put forward the idea, growing increasingly popular, that the U.S. stock markets are totally divorced from economic reality. Instead, they and the Federal Reserve have been trapped in a positive feedback loop. Attempting to generate a “wealth effect” from a growing stock market, the Fed would keep both short and long-term real interest rates as close to zero as it could. Continue Reading…

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