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To add to my previous post, I would note that rising yields on Treasury bonds are also a sign of rising confidence. Yields are still very low, and as such reflect lingering fears of recession and deflation. As confidence improves and the economy recovers, T-bond yields should continue to ratchet higher.
6 comments:
Scott,
Are you concerned that the 4 week moving average for unemployment claims went up this week? I've seen some analysts suggest that this will dampen consumer spending if folks are worried that the unemployment rate is going to go up. Of course those of us old enough remember that the unemployment rate stayed above 9% through 1983 when the economy was recovering.
I'd love to see claims continue to fall, but I don't see the uptick as a sign that the trend has changed. I would expect to see claims follow an irregular and slow downtrend, with the occasional setback on the way.
Scott,
What are your thoughts on the latest comments by Roubini regarding a double-dip recession? He seems to echo your thoughts for a good recovery as inventory levels return to normal, but warns of anemic growth after that.
http://news.yahoo.com/s/nm/20090823/bs_nm/us_roubini_doubledip_recession_2
I don't see anything of substance in what Roubini is saying. It boils down to something like "if things don't go well, then there will be trouble ahead." Wow. And what "massive fiscal stimulus" is he referring to? As far as I can tell, all the fiscal "stimulus" has been more like a headwind to recovery. Taking from Peter to give to Paul is not stimulus. Spending money on make-work projects is not stimulus. Ramping up the size of the government only raises the threat of a massive increase in tax burdens, and that damps animal spirits.
As I've said before, the economy appears to be recovering despite all the fiscal "stimulus" that has been dumped on it.
To get another recession we need a heavy dose of bad fiscal policy and bad monetary policy. I don't see that right now. Fiscal policy is actually getting less bad on the margin.
Scott,
Thank you for the reply. Have a great vacation; we are also on vacation and I'll tell you what everyone tells me (but I never hear...): get off the computer and enjoy the beach! :)
Amen!
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