Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

U.S. Economic Stimulus Works, Economy Recovers Under Obama

Economics / Economic Recovery Mar 30, 2010 - 01:11 AM GMT

By: Daniel_Bruno

Economics

Best Financial Markets Analysis ArticleEconomists at Deutsche Bank are calling for a big surge in employment numbers as retail sales recover in the United States. The chart below, from www.fxboss.info  shows the relationship between retail sales and non-farm payrolls.  In America’s consumer driven economy, retail sales lead the way out of business recession and consequent double-digit unemployment.   “Retail sales have turned up as recession fatigue has worn off sharply,” said Joseph LaVorgna, chief economist at Deutsche Bank in New York. “There should soon be a pretty big pickup in job growth. If history repeats, we’ll be blindsided by job gains.”


 LaVorgna anticipates payroll gains will average about 300,000 for the next three to four months. Consumer spending, constrained by the loss of 8.4 million jobs since the recession began in December 2007, has lagged behind the government stimulus targeted recovery in manufacturing and business investment. Retail sales unexpectedly climbed 0.3 % in February, the fourth gain in the past five months according to the Commerce Department.

                                                 Job Losses To Ease

 Since Obama took office, monthly job losses have fallen from 779,000 to 36,000.  Corporate profits are back; among 491 companies in the S&P 500 that reported fourth-quarter earnings, profits rose 180 % from a year ago. Durable goods orders in January were up 9.3 percent from a year earlier. Inflation is tame, and long-term interest rates remain low.  Still, for Obama the economy is a political burden inherited from the Bush years. The media and public opinion give him no credit for the impending recovery while +10% unemployment rates, not seen in a generation, capture all the headlines.

But smart money knows better; its judgment is overwhelmingly positive and as they say, money talks. One year after U.S stocks hit their post-financial-crisis low on March 9, 2009, the benchmark Standard & Poor’s 500 Index is up an astounding 68 % and it’s up 40%  since Obama took office. Credit spreads have narrowed to pre-crisis levels.  Commodity prices are back up as normalcy has returned to  the Baltic Dry Index  and the world trade it represents.   Housing prices have stopped falling.   “We’ve had a phenomenal run in asset classes across the board,” said Dan Greenhaus, chief economic strategist for Miller Tabak & Co. in New York. “If Obama were a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the president.”

G.D.P. grew at a 5.9 % annual pace in the fourth quarter of 2009 compared to a median forecast of 2.0 % by leading economists a week before Obama’s Jan. 20, 2009 inauguration.  The median forecast for GDP growth this year is 3.0 percent versus 2.1 percent for 2010 in the survey taken a year ago.  “You have to give him -- along with the Federal Reserve -- a lot of credit,” said Joseph Carson, director of economic research at Alliance Bernstein LP in New York. “A year ago, there was panic, as well as concern. And a lot of the expectations were not only that we were going to have declines in activity but they would stretch all the way to 2010, if not 2011.”

    Gallop polls report public opinion of Obama’s handling of the economy has gone from 59 % approval in February 2009 to 61 % disapproval a year later.
 
Mark Zandi, chief economist at Moody’s Economy.com, said the public’s opinion of the economy is likely to improve as the gains companies have made begin to translate into more jobs and higher wages.   “Businesses are doing very well but households have yet to benefit,” Zandi said. “Households will eventually benefit, but they’ll have to see it before they believe it.”

                                        300,000 New Jobs in One Month

According to David Greenlaw, chief fixed-income economist at Morgan Stanley, the U.S. may add as many as 300,000 jobs in March, the most in four years.

Zandi said the economic rebound is largely a result of  White House and Federal Reserve policies. He cited the bank bailout, the Fed’s low-interest-rate policy and support for credit markets, and the Obama administration’s stimulus plan, bank stress tests and backing of Fannie Mae and Freddie Mac.  “When you take it all together, the response was massive and unprecedented and ultimately successful,” Zandi said.

Georgetown University professor  Phil Swagel, who was Assistant Treasury Secretary  in George W. Bush’s administration and considers himself an Obama critic, said that  “They could have done a better job, but their economic policies, including the stimulus, have helped move the economy in the right direction.”

In addition to gains in the private sector, the decennial census has added some 250,000 temporary public sector jobs.

While small businesses still have difficulty getting loans, credit markets have thawed. Spreads on investment-grade corporate bonds have narrowed from 5.13 percentage points on the day Obama took office to 1.63 percentage points on March 8, according to Barclays Capital.  Rates on 30-year fixed mortgages have dropped from an average 5.20 percent on Inauguration Day to 5.03 percent on March 8, according to Bankrate.com.  Housing prices, which dropped since 2007 and proved a drag on the economy, have firmed. The median sales price for existing homes in January was the same as a year earlier.  “There’s definitely legs in this recovery,” said John Silvia, chief economist for Wells Fargo Securities. “There’s progress being made at the national level. But in their own situations, a lot of people are still struggling.”

                Dow Surging to New 2010 Highs as Corporate Profits Recover

By Daniel Bruno
Chartered Market Technician

www.FXboss.info

FXBOSS receives 24-hour streaming news and expert commentary. Over 70 FXBOSS forex specialists talk to trading rooms in the world’s currency capitals and track major political, economic and market events globally. They give you the instant, live, tradable information you need to judge the direction of the market, and make informed decisions about your trades.

© 2010 Copyright  Daniel Bruno - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

PJ
30 Mar 10, 12:12
Trying to sell stocks?

Wow, what happens when all the stimulus (counterfeit) money runs out? What happens when the census is over? How much “cost cutting” can companies do and still remain in business let alone profitable? The Dow is basically at the same level it was 10 years ago, the same is true for the S&P while the NASDAQ is 50-60% of its 2000 high. In the meantime the USD buys 25-30% less than it did in 2000. I hope you and Obama are holding your breath.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules