Saturday, August 30, 2008

The economy keeps on growing...


"a recession is two consecutive quarters of negative GDP growth. When the first quarter results showed a gain, not negative growth, the refrain from the bears was that the economy's current problems, credit liquidity and housing, were too recent to be reflected in Q1 numbers. "We're in a recession, all right, but the government numbers will take time to catch up," they said.
So when preliminary Q2 numbers came out at a POSITIVE 1.9%, the bears were somewhat befuddled. And they really didn't like it when the forecasted numbers for yesterday's GDP was raised from 1.9% to an expected annualized growth rate of 2.7%. You can only imagine the bears' dismay, then, when the Commerce Department raised the Q2 estimate even further than expected — to 3.3%. And the stock market erupted on the news, with the Dow Industrials gaining 1.6% yesterday."

Interesting alright...VERY interesting.....

" The economy, despite all odds, continues to grow, at an expanding rate.And the stock market has reflected almost none of this, as it remains distracted by housing and credit market concerns. Those concerns remain a market issue, not because of the depth of those problems, but because of investor concern that we haven't heard the complete story yet. The market can handle just about anything except uncertainty. Once the magnitude of the housing problem and the credit problem are on the table, you can expect the market to rally."

I for one am of the opinion that the economy is growing (but slowing) and it is whipsawing around like no tomorrow. The U.S. gov't is attempting to inject liquidity into the markets like NO tomorrow while constantly walking the tightrope with preserving the U.S. dollar by keeping interest rates flat (not cutting them.) I think the next president will be the one inheriting a recession and the biggest budget deficit in the history of the U.S.

Dan Ross

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