Economic outlook

Looking Ahead

As the Fed’s asset purchase program ends, the price of oil plunges, global growth stalls, and the stock market recovers from its fall jitters, this seems like a good time to take a long view of where we are in the post-apocalypse recovery. The best guide to any such assessment remains Reinhart and Rogoff’s brilliant survey of financial crises, This Time Is Different, published in 2009. In their preface, they write: “If there is one common theme to the vast range of crises we consider in this book, it is that excessive debt accumulation, whether it be by governments, banks, […]

The US Equity Bull Market: Where are we today?

As the bull market in US equities charges into its sixth year, I’ve been chewing on what drives stock prices higher. “Duh,” you say, “more buyers than sellers.” Sure, but what kinds of tailwinds encourage buyers to load up?  And how hard are those winds blowing today? Going into a recession, the stock market tanks in anticipation of a decline in corporate earnings.  Then in time the recession ends, earnings rise, and the stock market recovers.  So recovery from a bear market is driver #1.  Today?  Well, following the smash in 2008, US companies did enjoy strong earnings recovery from […]

Let’s Toast the Disappearing Deficit!

The most important number you won’t see waved around at year end by politicians of either party is $680 billion. That’s the US budget deficit in fiscal year 2013 (which ended September 30). This is a 38% decline from fiscal year 2012 and amounts to a respectable (and responsible) 4.1% of US GDP. From the perspective of the nation’s fiscal health, it’s excellent news.  The deficit is now 51% of 2009‘s record $1.4 trillion and headed lower. So why aren’t our elected leaders trumpeting these glad tidings from the rooftops? Die-hard Republicans don’t want to advertise this dramatic reduction for […]