Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17
Stock Market Higher Highs Still Likely - 18th Jun 17
The US Government Clamps Down on Ability of Americans To Purchase Bitcoin - 18th Jun 17
NDX/NAZ Continue downward pressure on the US Stock Market - 18th Jun 17
Return of the Gold Bear? - 18th Jun 17
Are Sheffield's High Rise Tower Blocks Safe? Grenfell Cladding Fire Disaster! - 18th Jun 17
Globalist Takeover Of The Internet Moves Into Overdrive - 17th Jun 17
Crazy Charging Stocks Bull Market Random Thoughts - 17th Jun 17
Reflation, Deflation and Gold - 17th Jun 17
Here’s The Case For An Upside Risk In The Global Economy - 17th Jun 17
Gold Bullish on Fed Interest Rate Hike - 16th Jun 17
Drones Upending Business Models and Reshaping Industry Landscapes - 16th Jun 17
Grenfell Tower Cladding Fire Disaster, 4,000 Ticking Time Bombs, Sheffield Council Flats Panic! - 16th Jun 17
Heating Oil Bottom Is In.(probably) - 16th Jun 17
Here’s the Investing Reason Active Funds Can’t Beat Passive Funds—and It Worries Me a Lot - 16th Jun 17
Is There Gold “Hype” and is Gold an Emotional Trade? - 16th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

As the Stimulus Fades U.S. Economy and Stock Market Loses Steam

Economics / US Economy Jun 16, 2010 - 09:10 AM GMT

By: Claus_Vogt

Economics

Best Financial Markets Analysis ArticleOver the past two years, we’ve seen the largest stimulus policies the world has ever produced.

As a result, sovereign debt and central banks’ balance sheet holdings have gone through the roof!


A glance at the monetary base chart below shows how extraordinary these policy measures have been in the U.S.

Board of Governers Chart

When a government and its central bank throw hundreds of billions in taxpayers’ dollars at the financial markets and the economy you’ll definitely see …

Desired and Undesired Consequences …

The official desired short-term consequences include the huge stock market rally off the March 2009 lows and the economic rebound since mid-2009.

On the other hand, the undesired, longer-term consequences will often be swept under the rug by short-sighted politicians and central banks.

So today I want to focus on two of those undesired consequences, ones Washington wants you to ignore:

Undesired Consequence #1— The Unstable Economy

The stock market rally since March 2009 has indeed been impressive. But according to many measures the economic rebound has been extremely weak …

The easiest way to understand how weak this recovery has been is to look at the work of the National Bureau of Economic Research (NBER).

Founded in 1920, the NBER is the nation’s leading nonprofit, economic research organization dedicated to promoting a greater understanding of how the economy works. And it is the official arbiter of recessions in the U.S. — giving notice when their researchers determine a recession has begun and when it has finally ended.

The number of jobs in the U.S. hasn't increased in 10 years.
The number of jobs in the U.S. hasn’t increased in 10 years.

And as recently as yesterday, the NBER has NOT declared an end to the recession that started in December 2007.

Especially troubling is the labor market …

According to the Federal Reserve, the number of working Americans isn’t any higher today than it was 10 years ago! Since Census figures show the U.S. population is growing by 2 to 3 million every year, this stagnation in job growth is a giant roadblock for an economy struggling to dig out of a recession.

Undesired Consequence #2— Weakening Financial Indicators

At the same time some important leading economic indicators have begun to roll over again. The most obvious is the stock market, which has declined more than what is considered a normal 10 percent correction since its April high.

This has to be rated as an ominous sign.

Then the Conference Board’s Index of Leading Economic Indicators (LEI) started to turn down in April. The year-over-year percentage change declined to 10.2 percent from 11.5 percent.

This reading is still far from a recession warning. But it may very well be the turning point for this cycle. And history shows the LEI can decline very quickly after the turnaround is in.

Finally, there is the Economic Cycle Research Institute’s (ECRI) Weekly Leading Index, another major leading indicator. It has just fallen to minus 3.5 percent — the lowest level in the last 10 months.

I’ve marked this level with a red horizontal line in the following chart. If it keeps falling, even by a little bit in the coming weeks, its message will be loud and clear: Double dip recession ahead!

Index GPOChart

As the Stimulus Fades the Economy Loses Steam

I’ve just given you some of the early, but usually reliable, signs of a deteriorating economy. But you shouldn’t be surprised about this sad development. The fact is, no matter how much money is thrown at the problem, the economy isn’t getting any traction. Nor has it entered a self-sustaining recovery.

The economic rebound we’ve seen in the past months is just the short-term reaction to the unprecedented stimulus programs. And as the stimulus money fades away, so does the economic recovery — and so does the stock market rally.

Best wishes,

Claus

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

Catching a Falling Financial Knife