Contact Us Disclosures Blog
Make an Appointment Contact Us Podcast Blog
Market Commentary Audio Archives Book Shelf InvestAbility Center

Good and Not So Good

March 2, 2012 – 6:17 pm

The evidence builds demonstrating slow growth in the U.S. economy. The durable goods report was dismal as reported earlier in the week at a reduction of 4% for January. The expectation was for it to be down 1.3%. This morning jobless claims stayed low at 351,000, down a few thousand from last week and that is the lowest it’s been in a number of years. Being a leading economic indicator this is good news.

Also out this morning was inflation news, which remains benign and two disappointing reports. New Construction spending was down .1% when expectations were for it to be up .7% and the manufacturing ISM report for February came in at 52.4% from 54.1% last month. However, the expectation was for it to rise to 55%. Still any number above 50% is growth in the economy and below is shrinkage.

The recent numbers are still pointing to an improving economy but not anywhere near at a robust rate. This lackluster performance is going to continue for the foreseeable future. The reasons that we cannot move at a faster pace are due to a couple factors. One major issue is housing. Usually, it is adding to GDP shortly after a recession but this time housing is still weak two years past the recession despite very low mortgage rates. Banks have tightened their standards to such a degree that it retards lending. Banks are dealing with the excesses of the past and very stringent and unknown new rules still coming out of Washington. They are getting pushed and pulled in two directions at the same time. The government wants them to lend money but then they also want them to be financially healthy. Lending money is risky and yet the government wants them to take less risk.

I am glad I am not a banker.

Good Trading
Steve Peasley

Post a Comment