Best of the Week
Most Popular
1.Putin’s World: Why Russia’s Showdown with the West Will Worsen - John_Mauldin
2. Stocks Bull Market Grinds Bears into Dust, Is Santa Rally Sustainable? - Nadeem_Walayat
3. Gold and Silver 2015 Trend Forecasts, Prices to Go BOOM - Austin_Galt
4.Gold Price Golden Bottom? - Toby_Connor
5.Gold Price and Miners Soar on Huge Volume - P_Radomski_CFA
6.Stock Market and the Jaws of Life or Death? - Rambus_Chartology
7.Gold Price 2015 - EWI
8.Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - Nadeem_Walayat
9.Gold, Silver, Crude and S&P Ending Wedge Patterns - DeviantInvestor
10.Is the Gold And Silver Golden Rule Broken? - Michael_Noonan
Last 5 days
The Price Of Oil Exposes The True State Of The Economy - 27th Nov 14
Brazilian Bovespa Stock Market Technical Analysis - 27th Nov 14
Gold Price Would Soar on Possible Swiss Yes Vote - 27th Nov 14
Crude Oil Asset Bubble Trouble - 27th Nov 14
Thanksgiving and Puritan Geopolitics in the Americas - 27th Nov 14
The Dow Jones Stocks Index - Beautiful Tree in the Desert - 27th Nov 14
The Digital World, The Opiate of The People - 27th Nov 14
Harry Dent's Simple Strategy for Surviving Withdrawals from Markets on Crack - 27th Nov 14
Socialist France Just Cannot Compete Against Google Freedom - 27th Nov 14
A Short Tale About the Grand Manipulation of Crude Oil Prices - 26th Nov 14
China Secret Gold Buying ... How Could It Happen? - 26th Nov 14
Gold Price Spikes to $1,467.50/oz on Computer Glitch? - 26th Nov 14
Gold - So Bad It's Good: Surviving 2014 - 26th Nov 14
TrueShopping.co.uk Real Customer Experience Review - Online Shopping Lessons - 26th Nov 14
Is There A New Global Consensus About Cheating Investors To Reboot Employment? - 26th Nov 14
EUR/USD – Currency Bulls Don’t Give Up - 26th Nov 14
Swiss Gold Referendum A Golden Opportunity for Switzerland - 25th Nov 14
Silver: What COT Analysis Tells Us - 25th Nov 14
Stock Market Big, Bold and Ugly - 25th Nov 14
U.S. Dollar Near Top? Gold and Silver Trading, Platinum Breakout Invalidation - 25th Nov 14
Buy Fear - Easily Pick Up Profits on Stock Market Dips - 25th Nov 14
The Islamic State Reshapes the Middle East - 25th Nov 14
Gold Price Forecast 2015 - 25th Nov 14
The Swiss Referendum On Gold: What’s Missing From The Debate - 25th Nov 14
Clash of Generations - Why Millennials Still Live at Home; Not Jobs, Student Debt, or Housing - 25th Nov 14
Stock Market Reminiscent of Pompeii - 25th Nov 14
Once Upon A Time There Were Philosopher Kings - 24th Nov 14
The 2014 Crude Oil Price Crash Explained - 24th Nov 14
China Stock Investing - Follow the Money! - 24th Nov 14
122 Tonnes of Gold Secretly Repatriated to Netherlands - 24th Nov 14
What Causes the U.S. Dollar to Move? - 24th Nov 14
Stock Market Indexes New Highs - Will Uptrend Extend Even Further? - 24th Nov 14
All Hail the King U.S. Dollar - Trend Forecast - 24th Nov 14
Where Is China Economy On The Map Exactly? - 24th Nov 14
Most of The World Economies Panic - Is The US Next? - 24th Nov 14
Stock Market Exhaustion Gap? - 24th Nov 14
Gold Golden Gains Come After The Pain - 24th Nov 14
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

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