Skip to main content

2012 Newsletters

US & World Economy –

While the US economy continues to slowly grow, all eyes are on the election and the 2013 “fiscal cliff”. Job growth has stalled and productivity per employee has little room to grow. We seem to be treading water with Europe’s recession pulling us down and a slightly faster growing Asia pulling us up.  Corporate cash holdings are at high levels as businesses continue to be cautious. The wait is almost over.

US & World Economy –

Weak second quarter job growth and earnings have dominated recent headlines. After a healthy 226,000 per month average job growth in the first quarter of 2012, a measly 80,000 jobs per month were added in the second quarter of 2012 – stalling the decline in the unemployment rate (currently 8.2%). Corporate earnings growth is also slowing. Combined with the start of a recession in Europe, this resulted in a strengthening dollar and weak commodities. The price of oil dropped, despite the continued rumbling from Iran. Add the continuing drama from Greece and Spain and you end up with heightened volatility in the financial markets and lack of confidence from investors.

US & World Economy –

What a difference a few months can make! Last year’s fears of double-dip recessions and Greek tragedies have given way to large job growths (636,000 job gains in the first quarter), improved investor confidence, and the best first quarter for the S&P 500 in 14 years (up 12.6%). The question is will this growthcontinue or peter out like it did after the spring gains in 2011 and 2010? With a large Band-Aid on Europe, a 7.5% soft landing in China and continued modest growth in the US (2 – 2.5% GDP), we expect the economy and financial markets to churn mostly sideways through the Fall, and not experience the 16-18% mid-year drops of the previous two years.

US & World Economy –

2011 was a wild year for the economy and financial markets. Optimism and continued growth early in the year gave way to fear and double-dip fears in the fall, only to end the year back where we started. (The S&P 500 Index was up 0.003% but the average US Stock fund lost about 3%). The rest of the world did not fair as well: Latin America -22.2%; Europe -15.2%; China -20.2%; India -39.1%. Remarkably, despite continued negative headlines, no country is currently in an announced recession. In fact, worldwide growth appears to have picked up in the forth quarter, especially in the US where auto and retail had their biggest gains in years. The S&P 500 will report not only record earnings, but earnings 15-20% higher than their 2007 peak.