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January 2017

Is Optimism a Key Ingredient in Economic Growth?

Most of the sentiment measuring surveys posted dramatically higher results after the election on optimism over what a Trump Administration might do for the economy. But, there is a big difference between hope and reality. Beginning in mid-December, the U.S. equity markets shifted into neutral, and have slowly drifted lower, perhaps waiting for the political changeover. The Fed is now in tightening mode. In my experience, the Fed tightens and …Read More

Does 2.3 percent economic growth justify Dow 20,000?

A survey of 53 economists by Blue Chip Economic Indicators forecast 2.3 percent economic growth for 2017, up from an estimated 1.6 percent in 2016. While better, 2.3 percent is still low by post-World War II standards. Consensus found that inflation would tick up to 2.4 percent, industrial production would begin to grow again (+1.6 percent) after stagnating in 2016, business investment (+2.7 percent) would finally be positive (after several …Read More

2017 forecasts when Trump honeymoon ends

In this time of market exuberance and significant increases in almost every sentiment index, it is time to recognize that when reality returns, markets will correct. This coming year is going to begin with more uncertainty than is normally the case: The Trump fiscal agenda is huge, but so are the debt levels; and the Fed has begun a tightening cycle in earnest, with the economy still in first gear. Of …Read More