Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Was Second Quarter The Peak For U.S. Economic Recovery?

Stock-Markets / Financial Markets 2013 Aug 30, 2013 - 07:18 PM GMT

By: Sy_Harding

Stock-Markets

With economies in China and Japan, the world’s second and third largest economies slowing, and economies in emerging markets and the 17-nation eurozone struggling mightily, hopes have been that the U.S. economic recovery will pick up its anemic pace and provide more global support.

Markets around the world received some really good news in that regard this week. The U.S. Commerce Department revised second quarter GDP growth significantly higher, to an annualized rate of 2.5% from its original report a month ago of only 1.7%.


However, global markets paid no attention, continuing their declines in a negative week to end a quite negative month.

Why were markets not impressed by the upward revision of second quarter economic growth?

Could it be that markets, always looking ahead, are seeing the second quarter as possibly having been the peak of the U.S. economic recovery?

There are indications that could be so. The second quarter of April, May, and June may be old news given the decidedly negative reports that began in June and have continued in July and August.

That is particularly so in the employment picture and the all-important housing industry.

The Labor Department’s last jobs report showed only 162,000 new jobs were created in July, and the previous report of 195,000 in June was revised down to 188,000.

In the all-important housing industry, a major driving force in the recovery, the reports have been especially negative.

New housing starts plunged 9.9% in June, to their lowest level in ten months. Permits for future starts fell 7.5%. Existing home sales declined 1.2% in June, versus the consensus forecast for a 1.5% increase. Pending Home Sales fell 0.4% in June, and another 1.3% in July. Construction Spending fell 0.6% in June, well below the consensus forecast for an increase of 0.5%.

Then there were miscellaneous surprises like this week’s report that Durable Goods Orders fell 7.3% in July, and that consumer spending barely held on, rising just 0.1% in July versus the consensus forecast for an increase of 0.3%. Then there was the previous week’s report that the Chicago Fed’s National Business Index, a compilation by the Fed of 85 different economic indicators, remained negative at -0.15 in July, indicating economic contraction.

Against that backdrop markets may also be factoring in the reversal this year of the fiscal stimulus (elevated government spending and tax cuts) that has been so important in the economic recovery of the last five years, and the potential that the Fed may begin to taper its monetary stimulus soon.

In any event, the failure of global markets to react positively to the surprising upward revision of second quarter GDP seems odd.

I could perhaps believe the popular opinion this week that the problem with global markets has been the situation with Syria - except that the alleged use of chemical weapons took place August 21, nine days ago.

The U.S. market topped out August 2, four weeks ago, Asian markets several months ago, and European markets on August 15.

Markets are good at forecasting economic downturns, but of course have no way of predicting some individual off-the-wall event like Syria is going to take place, especially weeks and months before it does.

So it looks suspiciously like markets are expecting the second quarter was the peak for the U.S. recovery, at least for a while.

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

© 2005-2019 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

6 Critical Money Making Rules