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2013 Newsletters

US & World Economy –

The rapid rise in the 10-year Treasury interest rate from 1.6% to 3% has rippled through the financial and real estate worlds. Bond portfolios got crushed, stocks dropped then rebounded and residential and commercial real estate appreciation has stalled. In response, the Fed has delayed the action that caused the rise (reducing its monthly bond repurchases) as they are concerned with not harming the improving economy. The financial markets are digesting all of this as well, and the 10-year Treasury yield has backed down to 2.65% for now.

US & World Economy –

US consumers have kept the American economy slowly moving forward despite the weakness in our exports and the “sequester and tax” policies. Job growth has finally resumed, giving hope for a stronger second-half of the year economy. China’s slow down in growth (particularly in infrastructure and real estate) has contributed to a drop in commodities. Europe is emerging from its “double dip” recession after choosing austerity vs. US-style stimulus and remains vulnerable to set-backs as their unemployment remains at record levels.

US & World Economy –

Animal spirits are back! With Europe in a mild but stable recession, China on an upswing, US housing starts and prices rising (Case Shiller Index up 8.1% over the last 12 months ending in January – best since 2006), and the Dow Jones and S&P 500 both making new all-time highs, consumers and businesses alike are feeling better. Consider these new economic levels:  the stock market at new highs from 2007, S&P 500 quarterly earnings at new highs, US household net-worth at a new high ($69 trillion vs. $67 trillion), and household debt service to income ratios at a 30 year low (J.P. Morgan).

US & World Economy –

The world breathed a sigh of relief after the recent Fiscal Cliff vote and all of us are happy to remove that phrase from our vocabulary. The US economy is in good shape to absorb the changes to the taxes and likely debt ceiling outcome (more on that below) and according to most economists, should grow at 1.5 – 2.2% in 2013. In other words, more of the same slow growth we have experienced for the past couple of years. Regardless, a serious cloud has been lifted and businesses can now plan with greater confidence. In addition, China’s economy and US housing starts are building strength and will help the economy this year. While there is always something to worry about, the scope of our problems have become smaller over the last few years.