Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
The First Prophet - The Day God First Spoke to Man - Video - 30th Nov 15
America's Rendezvous With Destiny - The Fourth Turning - 30th Nov 15
Stock Market Consolidation Week - 29th Nov 15
A Black Friday for Gold Prices - 29th Nov 15
Politicians Driving The World Towards War - Fourth Turning - 29th Nov 15
Stock Market Down Monday, Gold Price Bottoming? - 29th Nov 15
Turkey Downs Russian Jet to Draw NATO and US Deeper into Syrian Quagmire - 28th Nov 15
Stock Market Quiet Week as Primary 5 Continues - 28th Nov 15
Black Friday, Weekend for Europe's Migrants - 28th Nov 15
HUI and Gold - Who's Leading Whom? - 28th Nov 15
Gold And Silver - No Ending Action, But End May Be Near - 28th Nov 15
Social and Cultural Distress Dividing The Nation - Fourth Turning - 28th Nov 15
Sheffield Houses Prices 2015, Best Estate Agents As Rated by Buyers and Sellers - 28th Nov 15
Stock Market Top Valuations, at a Critical Juncture - 27th Nov 15
The Top Shopping Opportunity on Black Friday - 27th Nov 15
Economics Is About Scarcity, Property, and Relationships - 27th Nov 15
UK Immigration Crisis Hits New Extreme of 336k Net Migration, up 32% on 2014 - 27th Nov 15
Vauxhall Zafira B Fire Danger Recall - What to Do Video - 26th Nov 15
Triggers In US Dollar Collapse - 26th Nov 15
Apple Stock is a 10-Year Short - Bear Market Environment - 26th Nov 15
U.S. Federal Reserve Rate Hike - 26th Nov 15
George Osborne's War on Buy to Let Sector Trending Towards Doomsday - 26th Nov 15
Will Turkey Drag NATO into War With Russia in Syria? - 25th Nov 15
George Osborne’s Autumn Statement and Spending Review Full Text - 25th Nov 15
Will Fresh QE From ECB Boost Gold? - 25th Nov 15
Sheffield, Yorkshire and Humberside House Prices Forecast 2016-2018 - 25th Nov 15
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

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


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,


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

© 2005-2015 - 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

Biggest Debt Bomb in History