Thursday, May 31, 2012
Tough Luck On Optimists
It can now be said that the economy has experienced a third straight year of “spring swoon.” In 2010 this was provoked by a premature recovery that made the first quarter look stronger than it really was, and the 2011 culprits seemed to be the supply chain disruption from the earthquake in Japan, as well as the Arab Spring’s impact on oil prices. What seems to be the problem in 2012? One explanation holds that the European crisis has become this year’s “black swan” as it has affected everything from banks to exports. A second opinion contends there is nothing really wrong with the economic recovery, but that industry is just taking a breather. A third holds that the consumer is hibernating again as they react to everything from high jobless numbers to inflation.
The latest Credit Managers’ Index lends some support to all three scenarios, but mostly the data underpins the sense that consumers are in retreat.
It's snark attack week on the price discovery channel.
I think the November elections bear on the outcome--a big Republican win biases policy toward deflation. A Democrat win (even if just the Presidency) biases policy toward hyperinflation. At least that's my take on it, and oil at least has tracked Obama's Intrade chart pretty well over the last year. Except that its recent decline has not been matched at Intrade, interestingly enough.
Glad to have you back, M_O_M.