Gold recently has been selling off. Is this just profit taking or does this demonstrate a structural change in psychology? I believe it's the latter. Stocks will perform poorly next year due to weak GDP. Here are the growth laggards for GDP:
Consumption- The housing market is hurting wealth creation and thus slowing consumption. Real income for income earners making less than $45, 000 is going down. The unemployment rate is still stubbornly higher than the natural rate of unemployment. Structural unemployment is a major issue that will increase the natural rate of employment from 5% to close to 6%. The Nordstrom consumer will prop up retail sales, but the WalMart consumer needs to fully participate to drive retail sales back to trend.
Investment-Companies are reticent to spend or hire due to the lack of transparency from the political environment. The election year will create more uncertainty and thus delay capital projects.
Furthermore, Europe will act as a drag on profits. S&P 500 (NYSEARCA:SPY) companies derive 14% of sales and 18% of profits from Europe, according to a report by Bank of America (NYSE:BAC).
According to Rick Newman from U.S. News and World Report, 40 percent of profit for firms listed in the S&P 500 stock index now come from overseas.
Gov.- Government is cutting their budget federally and locally.
Net Exports- The appreciating dollar will decrease our exports and increase our imports. Europe and the BRICs are slowing and exports to these regions will diminish.
6 comments:
I agree, the income for earners making less than $45,000 will go down due to the government cutting their budget federally and locally.
I agree that because of the vicious cycle the economy will not do as well. I don't think the economy will recover very soon and so I agree with the projections for 2012. I think once the economy becomes somewhat more stable the Walmart consumers will participate and the economy will rebound but I don't think it will happen in 2012.
I agree with this economy projections for 2012. So far, these predictions seem to be true with the market experiencing a dramatic drop. The Euro crisis is effecting the US stocks, and unemployment is still high. As seen with the upcoming elections, it is also effecting the markets to go down
So far, I have not seen any reason for the economy to improve as of yet and hope the upcoming elections will change the economy for the better
the income has decreased 45,000 and has been decreasing slowly over the last couple months , i think that the government will face set backs in time but the re growth process will not be easy for most americans
I agree with all of these projections, and it is a good statistic that earners earning lrss than $45,000 is very good. Although Unemployment is going up that other number is very good.
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