While the U.S. stock market continues its record-setting pace, the economy seems to have decelerated somewhat, with GDP growing at a somewhat disappointing 2.5% pace in the first quarter following the meager 0.4% growth rate of the fourth quarter of 2012. How does one reconcile the seeming disconnect between the rising stock market and sluggish economy?
In this piece, Dr. David Kelly and Brandon Odenath review the importance of labor force participation in understanding the recent decline in the unemployment rate, dispel popular myths about why LFP has fallen and provide a 5-yr. outlook for LFP. Their examination of LFP includes implications for the economy, labor markets, Fed policy and capital markets.
Perspectives on the current economic, investment and political landscape from a variety of thought leaders across Deutsche Bank Group.
5/1/13, OTR Global - If there's been one theme the past weeks of earning news, it's that companies have been generating earnings but missing on revenue. Analysts have remarked again and again about anemic revenue, indicative of U.S. and global economies that are barely registered growth (the recently released first-quarter GDP report of 2.5% expansion notwithstanding). With nearly half of the S&P 500 companies having reported as of April 25, more than half missed on revenue even as nearly three-quarters beat on earnings, according to data compiled by Bloomberg.
On March 5, the most-watched Dow Jones Industrial Average Index closed at all-time high of 14,253.77, topping the previous record of 14,164.53 reached on October 9, 2007 and more than double (+118%) its bottom of 6,547.05, hit on March 9, 2009. With the stock markets hitting new-record highs and accumulating sharp gains, many investors wonder whether the stocks have entered a new bull market—or entered the bubble zone.
Seemingly oblivious to the political wrangling over the budget and the country’s long‐term fiscal state, economic activity continued to steadily improve in the first quarter as many segments of the economy posted slight gains over the previous quarter. Domestically, housing was once again a bright spot, with several measures of the sector modestly advancing. Manufacturing rebounded strongly after a period of stagnation. Consumer confidence also improved during the quarter...