Best of the Week
Most Popular
1.UK House Prices BrExit Crash NOT Likely Despite London Property Market Weakness - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit Implications for UK Stock Market, Sterling GBP, House Prices and UK Politics... - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - Nadeem_Walayat
7.UK Interest Rate Cut to 0.25% Imminent and More QE Money Printing - Nadeem_Walayat
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.The Stock Market is Reading it Wrong! - Chris_Vermeulen
10.Breakouts Galore in Gold and Silver - Jordan_Roy_Byrne
Free Silver
Last 7 days
Soybean Commodity Price to Soar Again - 23rd July 16
SPX Stock Market Uptrend Continues - 23rd July 16
Gold And Silver – Debt Addiction Will Carry Precious Metals Higher, Guaranteed - 23rd July 16
Pokemon Go - How to Play, First Use, Balls, Stops, Catching Pokemon's... Great Excercise! - 23rd July 16
7 Signs That the Gold Market Remains Resilient - 23rd July 16
Basic Income in The Time of Crisis - 23rd July 16
Silver Bull Faces Correction - 22nd July 16
The Serious Warning No One’s Talking About - 22nd July 16
Stock Market Insight from Greed, Volatility, and Put/Call Ratio - 22nd July 16
What Will Happen To the Stock Market When Interest Rates Rise? - 22nd July 16
How to Escape the World’s Biggest Ponzi Scheme - 22nd July 16
Addicted to Debt - We Can’t Borrow from the Future Anymore - 21st July 16
Not Everything Is Bullish for Gold - 21st July 16
Don’t Get Sucked Back Into the Stock Market - The Big Picture Hasn’t Changed - 21st July 16
Silver – Caught Inside - 21st July 16
Forex: "The Markets Are Getting Exciting!" - 20th July 16
China Economic Troubles - Is Kyle Bass Finally Getting His Revenge? - 20th July 16
Why Lithium Will See Another Price Spike This Fall - 20th July 16
The Peak Oil Paradox Revisited - 19th July 16
SPX Challenges the Upper Trendline - 19th July 16
Missing ’28 Pages’ of the 9/11 Report Released into Blitzkrieg of World Events - 19th July 16
Likelihood of Organized Disruption at GOP Convention - 19th July 16
More on the ‘Breadth Thrust’ and Stock Market Internals - 19th July 16
FX Traders: Get a Free Week of Forecasts (Details inside) - 19th July 16
Ups and Downs in Gold and Crude Oil Price - 19th July 16
Keep an Eye on ‘Bitcoin’ as the Next ‘Financial Crisis’ Starts! - 18th July 16
Erdogan Might Have Known about the Coup but Didn’t Prevent It on Purpose - 18th July 16
More Deflation Ahead: Silver, Gold And Their Mining Stocks A Must-Have - 18th July 16
Stock Market Minor Top? - 18th July 16
5 Best Gold and Silver Junior Mining Stocks in 2016 - 17th July 16
Gold And Silver – NWO-Created Tragedies Will Never End, Seek Truth - 16th July 16
How Long Can Buybacks Continue To Support A Market Which Is Standing On A Fundamentally Flawed Premise? - 16th July 16
Will They Come For Your IRA? - 15th July 16
Gold’s Record Selling Overhang - 15th July 16
Capitalism Has Entered a New Era—and Historic Stock Market Investing Returns Are Gone Forever - 15th July 16
Gold Price Could Hit $5,000 or Even $10,000 in a Few Years - 15th July 16
Junior Gold and Silver Mining Funds or Individual Gold and Silver Mining Stocks - 15th July 16
The Soaring Risk of Flying in Bernanke's Helicopter - 15th July 16
The Broad Stock Market, Helicopters and Gold - 15th July 16
The Curious Case of Vanishing Lady Liberty; Only Gold and Silver Remember Her - 15th July 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Forex Forecasts

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

© 2005-2016 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