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“Normal,” It’s Not What You Think!

Most readers remember the pre-recession days of 4% GDP growth, interest rates at levels where savers had return choices worth pursuing (e.g., the 10 year T-Note at 4%), and workers could count on annual real wage growth.  Today, many refer to this as “normal,” and there is a desire, if not a movement, to return the economy back to such a state. You can see this in the political arena.  …Read More

Dealing with the ‘New Normal’

In ’09 and ’10, when Mohammed El-Erian and Bill Gross both worked at PIMCO, they put forth a concept they called “the New Normal.” It postulated that the economy would grow at a much slower rate than it had in the past, and therefore market returns – both equity and fixed income – would be much lower than what we had experienced in the post-WWII era. Nice theory, many thought; …Read More

An approaching financial crisis — reality or myth?

The data seen so far in Q2 are somewhat better than Q1, and Q1’s real GDP growth has been upgraded from a miserable 0.5 percent to a miserly 0.8 percent. The U.S. economy remains in first gear, mainly due to the oil patch and continued sluggish manufacturing activity. With such poor results from a record-breaking level of deficit spending for the last decade, it isn’t any wonder that the purveyors …Read More

Part II: The Long-Term Outlook – Even a Strong Economy Doesn’t Change the Ultimate Outcome

If you’ve read Part I of this year end outlook, you know that it is our view that the underlying private sector is healthy and, except for the fact that the real rate of inflation is much faster than the ‘official’ rate, we could well have a short period of prosperity. Unfortunately, our long-term outlook is not as sanguine as our short-term view.  The eventual recognition of the inflation issue, …Read More