The stock market is wild and crazy. Frankly, I don't know a thing about investing in stocks. Nevertheless, the market is making a lot of noise and money.
It appears that investors are happy with what they see in the US. Also, it shows that all of Democrat "gloom and doom" is silly.
Michael Barone has a great article Good Economic News:
"Which you won't find on the front pages of mainstream media:
The Labor Department Friday announced that the number of jobs increased between April 2005 and March 2006 not by 5.8 million but by 6.6 million.
As an editorial in the Wall Street Journal notes, "That's a lot more than a rounding error, more than the entire number of workers in the state of New Hampshire.
What's going on here?"
The most plausible explanation, advanced by the Journal and by the Hudson Institute's Diana Furchgott-Roth in the New York Sun, is that lots more jobs are being created by small businesses and individuals going into business for themselves than government statisticians can keep track of.
Newspaper reports on the number of jobs usually focus on the Labor Department's business establishment survey.
But over the past few years, the Labor Department's household survey has consistently shown more job growth than the business establishment survey.
The likely explanation: The business establishment survey misses jobs created by new businesses.
Our government statistical agencies do an excellent job. But statistics designed to measure the economy of yesterday have a hard time reflecting the economy of tomorrow.
The federal budget deficit has been cut in half in three years, three years faster than George W. Bush called for.
Why? Tax receipts were up 5.5 percent in FY 2004, 14.5 percent in FY 2005, and 11.7 percent in FY 2006. That's up 34.9 percent in three years.
And that's after the 2003 tax cuts.
When you cut taxes, you get more economic activity, and when you get more economic activity, the government with a tax system that is still decidedly progressive gets more revenue.
The bottom line: The private-sector economy is much more robust and creative than mainstream media would have you believe."
The US economy is solid. Unemployment is low and GDP growth is the envy of the industrialized world. It does not get any better than, which is one of the reasons that the market is doing so well!
1 comment:
The stock market traditionally peaks at the edge of the business cycle - most corproate executives (and I talk to many cfos and ceos of the largest companies on a daily basis) are expecting a slowdown if not reccesion early next year and their thoughts are turning to cost cutting mechanism.
All this does not bode well for the republican nominee in 2008 when the brunt of an '07 downturn will be felt by the average voter (impact always lags occurence here). Which also brings us to why the economic statistics mean little in turning the '06 election - the economy only matters in so much as the voter feels the imapct and the growth of the last 4-5 years has just not been felt by most people. It is particularly problematic for those now who have been financing spending on debt and have seen interests rates rise (which happens during the growth part of the business cycle having a strong counter effect on how people percieve the economy).
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