Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
Gold Price Falls, Stocks Record Highs as Japan Goes ‘Weimar’ - 31st Oct 14
EUR/USD - Double Bottom Or New Lows? - 31st Oct 14
More Downside Ahead for Gold and Silver - 31st Oct 14
QE Is Dead, Now You Tell Me What You Know - 31st Oct 14
Welcome to the World of Volatility - 31st Oct 14
Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start - 31st Oct 14
US Mortgages, Risky Bisiness "Easy Money" - 30th Oct 14
Gold, Silver and Currency Wars - 30th Oct 14
How to Recognize a Stock Market “Bear Raid” on Wall Street - 30th Oct 14
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

How Long Can U.S. Economy’s Sweet Spot Last This Time?

Economics / US Economy Feb 23, 2013 - 07:50 PM GMT

By: Sy_Harding

Economics Until recently, the recovery from the 2008 financial crisis and meltdown has been in stealth mode all the way, much of the country either unaware of the progress - or in denial that it was happening.

That’s even been true of investors, whose success depends so much on being able to separate the facts and reality from the static and noise. 


Statistics measuring money flow in and out of mutual funds show that many investors followed their historical pattern of holding on through the 2007-2009 bear market, suffering big losses, only beginning to pull money out in 2009, after the bear market had ended. Money was then pulled out of the market in each of the last four years, even reaching a record pace in the first six months of last year.

It’s been understandable.

It was thought in early 2009 that the ‘Great Recession’ was probably worsening into another Great Depression, and that the stock market, even though down 50%, had much further to go on the downside.

And although the recession ended in June, 2009, the recovery since has been a stutter step advance of several paces ahead followed by a stumble in the summer months each year, keeping nervousness alive.

The positive steps in the recovery were continuously reported in the headlines but repudiated.

Monthly job losses reversed to jobs gains – but not near enough to replace all those that had been lost. Real estate sales reversed from steady multi-year declines, and growing inventories of unsold homes, to impressive gains in sales and a declining inventory of unsold homes. But that supposedly couldn’t last because of the enormous overhang of foreclosed homes that would still be hitting the market. The epic government spending on bailouts of banks and the auto-industry that couldn’t possibly work, not only worked but were pretty much repaid with interest. But there was still denial of progress since the resulting government debt would surely bring the economy tumbling back into recession. The fear that unprecedented easy money policies would create spiraling inflation did not materialize – but that was due to the government manipulating the numbers. And on and on. Progress but denial that it was taking place.

Yet through it all the economy has been recovering, and the stock market, usually moving in advance of the economy, followed a similar stutter-step recovery of rallies and pullbacks, but has recovered all the way back to its pre-crisis 2007 level.

There have even been reports lately of progress regarding the remaining big problem of tackling the record government debt.

The bi-partisan Congressional Budget Office reported earlier this month that although the budget is still running at a deficit, and so the national debt continues to rise, the improving economy and other changes have cut the annual deficit in half over the last four years.

And some of that deficit-cutting has been the result of progress toward the smaller government and federal austerity that conservatives are insisting on.

As Tom Raun of the Associated Press wrote on Friday, “Without much fanfare or acknowledgement of the progress, spending by federal, state and local governments on payrolls, equipment, buildings, teachers, emergency workers, and core government functions has been shrinking steadily since the deep 2007-2009 recession.”

It also shows up in the monthly jobs reports of the private sector adding jobs while governments continue to cut jobs.

It’s too bad that so many investors have been unaware of, or in denial of the realties, and so have not participated in the stock market’s recovery, still pulling money out of stocks and mutual funds up until just a couple of months ago.

Because this sweet spot in the recovery is not likely to last much longer before running into its next rough patch.

In fact it’s becoming eerie how once again the economy, market, and even economic reports, are tracking so closely with the patterns of the last three years as the summer months approach. The market is experiencing an impressive winter rally, but recent economic reports are showing signs of the economy tiring again.

For instance, it was reported this week that U.S. housing starts unexpectedly fell 8.5% in January; the U.S. PMI manufacturing index fell from 55.8 in January to 55.2 in February; the Philadelphia Fed Index, often a precursor for the national index, unexpectedly fell to negative 12.5 in January, much worse than forecasts of an improvement to positive 1.6.

I and my subscribers remain on a buy signal for the market from last fall, but we are now watching those indicators closely given the similarity of conditions to those as March and April approached in each of the last three years.

We’re nearing the time it will be important that investors not become overly complacent or fall asleep at the switch.  

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2013 Copyright Sy Harding- 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.

Sy Harding Archive

© 2005-2014 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

Free Report - Financial Markets 2014