Sunday, January 27, 2013

Economic Recovery Ending?

SEARCH BLOG: ECONOMY.

For those of you who may have missed it, the economic recovery is now in its fourth year.

[source]

So, it's not too unexpected that various national economies might be slowing down.

Profit warnings highest since 2008

However, in the U.S., the stock market has been plowing right along to 5-year highs.

IBM's Results Lift Dow Average to a 5-Year High

Does that mean the U.S. economic outlook is really good?

Economic Forecasting Survey

The unemployment rate registered a dramatic 0.5 percentage-point drop over the past two months, but economists in the latest Wall Street Journal forecasting survey don't expect that pace of decline to continue.
"The general trend in the unemployment rate is lower, and this should continue to be true as long as the economy grows along the profile we project," said Joseph LaVorgna at Deutsche Bank. "However, the cumulative five-tenths decline over the past two months appears to be overdone."
On average, the 48 respondents, not all of whom answer every question, expect the jobless rate will still be at 7.8% in June of next year—matching the September figure released last week. The reason for the stagnation in the job market is expectations for lackluster economic growth during the rest of 2012 and into 2013. Through the first half of next year, the average forecast is for growth in gross domestic product below 2% at a seasonally adjusted annual rate.
Expansion is seen picking up as the year progresses, but isn't expected to surpass 3% through 2014. That means that even when the unemployment rate does begin to fall, the economists don't see it doing so quickly. On average, they still expect the rate to be at 7.1% in December 2014.
That's a "yes, maybe, no."
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