WEEKLY UPDATE FOR 10-28-2011

The growth of the U.S. economy is measured via the Gross Domestic Product (GDP).  This is a measure of all the goods and services produced by our economy.  The first estimate of GDP growth for the first quarter of 2011 (3Q11) has been reported as +2.46%

This is a great improvement considering some of the negative news of late.  In addition, it is significantly better then 1Q11 at +.36% and 2Q11 at +1.34%!

My complaint on the GDP growth number is the inflation rate used by the government to attain this "real", or after inflation, growth number.  The inflation rate used does not include food or energy cost increases, which are both up significantly.  However, it does include housing costs which are down significantly.  These few items artificially push the GDP growth number up.

I continue to suggest inflation is closer to 6%.  If this more realistic inflation rate were used in the GDP growth rate the 3Q11 GDP would be closer to -1.02% versus the reported +2.46%.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.

WEEKLY UPDATE FOR 10-21-2011

As this is written on 10-21-2011 the equity values of Corporate America, as measured by the S&P 500, are almost exactly where they were one year ago.  It has been one of the most volatile trends I have seen in my thirty years as a wealth manager.     

On October 4th, 2011 the S&P 500 opened at 1,097.42.  As I write this the S&P 500 stands at 1,233.93, a 14 day gain of +12.44%.  Yet, none of the problems we all read about have gone away.

I think we are witnessing a "short covering" rally before options hedging expires today.  I will drill into the detail in this months issue of The Seven Signs of a Changing Economy.  In the meantime, this is a significant bounce up in value, but as of now it is not a trend.  If and when the trend develops, up or down, we will start to invest our cash position.   

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.

WEEKLY UPDATE FOR 10-14-2012

WEEKLY UPDATE FOR 10-7-2011

     I have written extensively that our economy must add 200,000 jobs per month.  We need 100,000 jobs per month to replace the 8,000,000 jobs lost in the Great Recession plus an additional 100,000 jobs per month to absorb new entrants to the workforce each month.
     Jobs growth is a by-product of growing the goods and services we create in our economy, i.e. our Gross Domestic Product (GDP).  Our GDP must grow at 3% per year to create the by-product of 100,000 jobs per month and 5% per year to push the current unemployment rate down by just 1%.  Our current annualized GDP growth rate is 2.1%. 
     Do the math and the conclusion is crystal clear:  Until the economy grows at 5% or more per year, the unemployment rate is not going to trend down! 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and may not be invested into directly.