u.s. economy articles
[Editor's Note: We are constantly surveying the investment world for ideas, hidden stories and unique perspectives to share with you. One of our favorite spots to look is The Aden Forecast, which has been written by Mary Anne and Pam Aden for decades. This recent article they crafted for you is testament to why we value their insight and analysis.]
For the past six months or so, we've talked a lot about the velocity of money and its effects. Increasingly, it's become the most important factor in understanding the markets and the uncharted waters we're currently navigating.
For years we've been delicately sailing between the Scylla and Charybdis of our day, between inflation and deflation. And the sharp drop in gold was yet another slide towards deflation's shores.
Meanwhile, the world's central bankers have been at the helm, doing all they can to keep deflationary pressures at bay and steer hard toward inflation.
But despite their unprecedented global efforts, including massive money stimulus and near zero interest rates, the rocky shores of deflation loom larger and larger. Here's why...
Symptoms Don't Lie
A good doctor will not simply make a diagnosis based on measurements. The symptoms and complaints expressed by the patient are at least as important in making a determination as the data provided by diagnostic tools.
When the data says one thing and the symptoms continuously say another, it makes sense to question the reliability of the instruments.
This would be particularly true if the instruments are furnished by a party with a stake in a favorable diagnosis, say an insurance company on the hook for treatment costs.
Has Sequestration Saved the U.S. Economy?
There's a Jamaican saying, "the higher the monkey climbs up the tree, the more his butt is exposed."
The point being that the more we rise, the more vulnerable we become.
That has truly come to pass for a pair of superstars of the dismal science. And it could have a big impact on how successfully (or unsuccessfully) we can get the U.S. economy back on the rails.
The Most Dangerous Man in the World
When it comes to spending or saving, it's always a contentious debate.
But the risks are rarely as high as they are now for the U.S. and most major industrial nations. Such fundamental economic decisions will move a country forward (or backward) for decades, not months, and can't be undone quickly.
So let's choose the "winner" and "loser" of this debate carefully.
Yahoo's Daily Ticker host Henry Blodget pronounced last week that Nobel Prize winning economist Dr. Paul Krugman "won" the vicious argument fought between those who want to increase government spending as a means of rebuilding our economy, and those who want to cut spending and reduce deficits as a means of restoring confidence (and rebuilding our economy).
Myths and Realities About the U.S. Economy
When it comes to the U.S. economy, myths and misleading statistics abound.
Are taxes the highest they've ever been? Is the country's spending at record levels? Are the majority of products U.S. consumers buy produced by low-wage workers overseas?
The answer often depends on the spin.
But this Bureau of Economic Analysis presentation on myths and misperceptions about the U.S. economy gives investors a sense of what's real and what's the twisted truth.
What America's $2 Trillion Underground Economy Says About Jobs
Doing what they can to survive in a dour job market, millions of Americans exist in an underground economy that has ballooned to $2 trillion annually.
By "underground economy," we're talking about all the business activity that is not reported to the government, which includes a growing number of people getting paid for their labor in cash.
That means the shadowy figures of the underground economy - the drug dealers and Mafia godfathers, for example - now have a lot more company.
Ending the War on Pot Would Add $20 Billion to the U.S. Economy
So much for the war on drugs. For the first time ever, a majority of Americans now support legalizing marijuana.
In a recent Pew Research Center poll, 52% of Americans favored full legalization, much higher than the 12% when polling on the issue began in 1969 and up considerably from 32% less than 10 years ago.
According a new report from the Cato Institute, that could inject $20 billion a year into the U.S. economy due to the tax revenue generated and savings in law enforcement costs.
So how big is the market for market for marijuana?
Can Wall Street Continue to Rally Without the U.S. Economy?
We haven't stepped into the Twilight Zone, but it certainly seems that way when stocks are hitting historic highs yet the economy is still so weak that the Federal Reserve is printing money like a Third World nation.
It has the makings of a great prize fight between the largest market in the world and the largest economy in the world.
Can we keep this up? Is this titanic battle going to last like the decades-long Japanese recovery? Will stocks punch themselves out? Can slowing earnings keep stocks soaring?
Here's the blow by blow so far on what's causing what I call the Great Discrepancy. Let me know who you think is going to overtake the other.
Below, I tell you what I think is underway.
U.S. Economy to Get Jolt from 1.2 Million Homebuilding Jobs
An accelerating rebound in new home construction over the next two years should finally give the U.S. economy the jump-start it needs to progress toward a truly robust recovery.
New home construction continues to bounce back from the lows of 2009, after the housing bubble burst, but still has a long way to go.
With housing one of the prime drivers of the U.S. economy - historically construction accounts for 5% of the U.S. gross domestic product (GDP) and related economic activity another 13% - a spike of activity in this area could drive the growth that's long been lacking from the recovery.
"A revival in new home construction will have a huge stimulative effect on the larger economy," Brad Hunter, chief economist for housing research firm Metrostudy, told Bloomberg News. "When home construction goes up, so does demand for furniture, tile, lumber, concrete, draperies, paint and appliances of all sorts."
The Great American Rebound Has Just Begun
The U.S. manufacturing renaissance is not just a fantasy - it is actually happening. Jobs that had been outsourced to China and elsewhere really are returning to the United States.
Believe it or not, this "reshoring" already has reversed the long, steady decline of manufacturing jobs in the U.S.
In fact, since 2010 America has added roughly 500,000 manufacturing jobs, an increase of 4.3%.
The economic and investment implications of this reversal are considerable to say the least.
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