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The Recovery

August 6, 2010 – 4:52 pm

Everyone was waiting for July’s jobs report released this morning. It was weaker than expected. We lost 130,000 jobs, all of it government temporary census workers. There were 70,000 private sector jobs created. That was more than last month when it was about 30,000 but that was not good enough. Too many people were expecting too much from this economy at this point. We are working ourselves out of an economic soft patch and until that is behind us, if it fades behind us, the numbers are going to be weak.

I believe we will see the soft economic numbers start to firm up but I also expect the economy to be slower in the second half of the year. Most economists are expecting that same scenario. The problem we are having in this economic recovery that is different from other recoveries from deep recessions is that construction is not part of the equation and probably won’t be. In other recoveries from deep recessions builders started to build again and that provides a tremendous boost. That sector’s activity represents about 2 to 2.5% of the GDP when looking at historic norms.

Expect slow growth to continue in the U.S. It is not going to be easy but we are growing. The world economy is growing faster and recently China has signaled that they may be ending their effort to slow their economy. Too bad we don’t have that problem in the U.S.

Good Trading
Steve Peasley

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