Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when&
GDP = G + C + I + X – M
That’s the model we were all taught in school. What can we learn about today’s economy from this simple equation?
Our economic growth model essentially comes down to:
Government Spending + Consumer Spending + Investment
$741,198 spent for every 1 job added.
Assuming those jobs paid the average hourly wage of $25.69 and each worker worked the average 34.5 hours per week, the average annual income would by $46,088.
Not counting interest payments on the debt used to generate
2nd Quarter GDP growth again fell below expectations. While many market participants view this as good news as it may keep the Fed from raising rates in the near future, sooner or later the lack of growth should hurt stock prices.
The Fed assumes the economy will return to
One thing we learned in 1999 and 2000 was that no matter how many signs are pointing towards recession, the true pain will not start until the market participants realize all is not well. That can go on for months. It usually takes a major news event or a series
