The Doom and Gloom crowd are crowing that the economy appears to be dramatically decelerating because data point after data point over the past several months has indicated an economic slowdown is likely. This past week, unfortunately, presented some catalyst to that via some released earnings reports. Regrettably, that news isn’t to be ignored (I absolutely loathe hearing ‘I told you so’) as the market recorded the worst week of 2013. For the week the S&P 500 was down -2.11%, the Dow Jones followed with -2.14%, the NASDAQ fell -2.70% and the Russell 2000 registering a whopping fall of -3.22%.
Last week’s telltale feebleness also showed that most of the disappointing numbers came from within the Manufacturing Sectors. The Empire State Manufacturing Survey, Philly Fed Survey and the Industrial Production Report all indicated slowing growth or downright contraction. I’m not joining the ‘Recession is coming’ brigade but these facts should cause some reflection as to what the Sequestration (read as abject US government incompetence) has in store for us this quarter.
A number of reporting corporations are either reporting weaker than expected results or have already warned of developing turbulence. Justified skepticism of the U.S. economy has remained at the forefront, as the warning signs were varied last week across sectors of the economy. Europe continues to weigh on multinational companies, and growth was also sluggish in China last week as they strove to continue to reform their economy from an external to an internal model.
I remain optimistic. Even with continued U.S. economic weakness as well as lowered consumer expectations, strength remained in areas where the Fed and the government provide synthetic support. It’s not the best of news, but I’ll take it for what it’s worth. Also noteworthy in our current slowdown is the expiration of the payroll tax break from the start of the year. Decreased personal income is directly attributable to our current economic conditions. The Doom and Gloom throng enjoys proclaiming that the U.S. economy is deteriorating. I don’t buy it; one month does not substantiate a trend. I’m confident that the D&G bunch has arrived too soon for a second quarter pity party, and I’m giddy that it gets shut down before it even begins.
Have a great week!
Much success in all that you do.
Dempster R. “Bobby” Cherry