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The Struggle Continues

January 30, 2013 – 6:22 pm

imagesGDP in the fourth quarter of 2012 shrank by .1% when expectations were for it to grow 1%. There are excuses for the miss such as Hurricane Sandy and a dramatic drop in military spending but the economy still contracted not expanded.

This weakness will certainly mean that the Fed will stay on point with very low interest rates until either the economy begins expanding at an accelerated rate or inflation becomes a problem, neither of which is even hinted at in recent economic data.

The economy may be improving but that improvement is so weak that many do not see it, feel it and some believe it is not even taking place. For many unemployed workers that certainly is true.

The stock market so far thinks the economy is improving and I would not bet against it. The market is one of the strongest leading economic indicators but again, what goes up usually comes down. In the case of stock prices that has never been more true.

Good Trading

Steve Peasley

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