In a recent analysis, Brett Arends from SmartMoney critically examines the conventional stock/bond balanced fund strategy. He argues that in today’s investment landscape, characterized by a diverse range of asset classes available through low-cost ETFs, sticking to a basic equity and fixed income portfolio might be misguided.
The latest update on jobless claims brings a sense of calm amidst ongoing concerns about the labor market’s potential slowdown. According to the Department of Labor, claims remained unchanged last week, holding steady at a revised figure of 370,000 on a seasonally adjusted basis. While this may not inspire immediate confidence, the broader perspective of the data suggests continued job growth may still be viable.
Stanford economics professor John Taylor raises an important question: is policy uncertainty hindering economic recovery? He cites research conducted by Ellen McGrattan and Ed Prescott, which highlights the adverse effects of increased regulation. Additionally, the U.S. Chamber of Commerce’s recent small business survey indicates that 42% of small businesses view over-regulation as a significant concern, further underscoring the impact of policy uncertainty on economic confidence.
Contrary to fears of rising recession risks, the latest update on industrial production shows a robust recovery. Reports indicate a significant 1.1% surge in April, marking the strongest monthly increase since December 2010. Despite potential future challenges, the current figures suggest that industrial production is defying the odds.
The Census Bureau reports a modest increase in retail sales of just 0.1% last month, marking the smallest gain since December. Given the stronger pace observed in the previous months of the first quarter, this slowdown is not overly surprising. However, amidst rising concerns regarding Greece’s potential exit from the euro and the possibility of increased recession risks in the U.S., this news may not bolster consumer confidence.
European officials and financial markets are on high alert as Greece’s exit from the eurozone appears increasingly likely. With efforts to form a government in Athens failing, discussions surrounding Greece’s departure have become more prevalent. This uncertainty has resulted in significant sell-offs in shares, oil, and the euro, as concerns grow over anti-austerity sentiments gaining traction in a potential second election.
The Economic Cycle Research Institute recently reiterated its forecast for an impending recession in the U.S., a prediction they have remained consistent with since last September. Compelling indicators, such as the declining growth rate of personal income, suggest that potential challenges lie ahead for the economy.
● Better, Stronger, Faster: The Myth of American Decline… and the Rise of a New Economy
By Daniel Gross
Q&A with the author via Kai Ryssdal (Marketplace)
Ryssdal: In your book, you mention the key ingredients are already in place for future growth. What are they?
Gross: Exports are a major component. With the global economy growing faster than that of the U.S., there is ample opportunity for American products to thrive. For example, exports began to rise in April 2009, well before the economy rebounded, demonstrating a trend that continues to benefit U.S. industries.
Oil: A Temporary Selloff?
BCA Research | May 10
Despite short-term downward pressures on oil prices, particularly due to euro volatility, our outlook remains cautiously optimistic. Many factors contributing to the current market conditions are expected to be temporary. Increased liquidity from the Federal Reserve serves to stabilize equities, while lower oil prices can support consumer confidence. We conclude that absent significant external shocks, we anticipate oil prices to recover by year-end.
In the latest report on jobless claims, there are mixed signals. New filings for unemployment benefits decreased slightly by 1,000, arriving at a seasonally adjusted total of 368,000. While a downward trend is encouraging, a more substantial decline is necessary to restore confidence. Currently, we remain in a state of uncertainty regarding the implications of weakened growth in private payrolls over the past two months on the broader economic landscape.
