Economic forecast

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U.S. Economy: These Jobs Numbers Point to Slower Growth in Q2

By , Contributing Writer, Money Morning -

Anyone hoping the U S. economy in 2013 would gain strength from job growth needs to check out Wednesday's ADP National Employment Report.

According to ADP, the U.S. economy added 158,000 private-sector jobs in March, well below projections of 200,000 - 215,000. That's the smallest gain since October when companies hired just 148,000.

March's lackluster showing was mainly due to lower job creation in construction. The industry enjoyed robust hiring in the months following late October's Hurricane Sandy. In its wake, the superstorm left behind upwards of $50 billion in damages.

A tepid recovery in the housing market in Q1 also helped the sector in January, with recent monthly gains in construction averaging 35,000.

In March, however, no new construction jobs were added.

"If that's the case, underlying job growth is not changed appreciably," Moody's Analytics chief economist Mark Zandi told Reuters. He estimates overall employment growth is running near 175,000 a month.

March's jobs report included a revised 237,000 gain for February from the previously reported 198,000. But January's numbers were revised down to 177,000 from 215,000.

So what does this mean for Friday's U.S. jobs report?

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2013 Silver Price Forecast: Silver Will Perform Like Gold on Steroids

By , Money Morning -

This past March, I asked a highly successful investment advisor what he thought about gold. Since he deals almost exclusively with very high net-worth individuals, his point of view was especially intriguing.

He confided to me that many of his clients had been asking for gold and gold-related investments over the past few years. I can't say that I was surprised.

But what he told me next simply shocked me.

"Gold's much too volatile, it's too risky", he said. "Sure it's up, but I try to discourage my clients from investing in it."

It simply floored me that he thought gold was too volatile. Gold is only up 580% since it bottomed in 2001, without a single losing year to date.

That's not something you can say about the stock market or any other type of investment.

I can hardly imagine what he must think of silver, as silver prices are up by 725% since 2001.

Today, silver is trading around $34, but our 2013 silver price forecast now has the shiny metal going much, much higher.

What will power that rise?

Since it's slaved to its richer cousin, all the fundamentals for higher gold would apply.

I wrote about them yesterday in my 2013 gold price forecast.

As history has shown, silver moves almost in sync with gold, but exaggerates its movements, both on the up and down sides. That's why I like to think of silver as "gold on steroids".

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2013 Gold Price Forecast: Expect Gold to Deliver Another Record-Setting Year

By , Money Morning -

No two bull markets are ever the same, and gold is no exception.

During the last secular gold bull market in the 1970s, gold rose from $35 in 1968 all the way to $200 by late 1974.

Then the unthinkable happened. Between late 1974 and mid-1976, gold prices were cut in half, dropping from about $200 to $100.

At the time, many gold investors sold out in disgust, never to return.

But then a funny thing occurred. Gold prices started to climb again, rising from $100 in mid-1976 all the way to $800 by January 1980.

And anyone who was fortunate enough to own gold at $35 earned better than 20 times their investment in just 12 years.

Twenty-one years later, a new bull market began. Since 2001, gold has consistently performed in what now appears to be a record-setting run.

2013 gold price forecast

In fact, since 2001 the average return on gold is now just shy of 18% annually over the last 11 years.

I know of no other major asset that has turned in this kind of performance -- ever. This rise in gold prices is simply unmatched.

This is what a stealth bull market looks like, one that I fully expect will keep powering on.

Now, let's have a look at where gold prices might be headed in 2013...

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2013 Dividend Stock Forecast: The Road to True Wealth Starts Here

By , Money Morning -

If you listen to the press, Taxmageddon is going to be a "nightmare" for dividend stocks.

There's only one problem with this scary story: It isn't true.

Of course, I'll be the first one to tell you I'm not in favor of higher taxes on dividends.

And it is true that if we fall off the "fiscal cliff" taxes on dividends will revert to the full income tax rate of each individual taxpayer.

For the top taxpayers that means the top rate on dividends will rise from 15% to 43.4% if dividends become fully taxable again.

However, that's not as bad as it sounds, which is why I believe dividend stocks will remain the place to be in 2013.

Here's why.

First institutional holders of dividend stocks are taxed at their own rate so they did not benefit from the 2003 cut in dividend taxes. That means they won't suffer from a new increase.

And even among individual investors, many have their investments in IRAs or 401(k )s or other tax- deferred accounts. These holders will continue to receive dividends that won't be immediately taxed.

As for those on more modest incomes, perhaps being retired and living mostly on their dividend income, they will pay taxes only at 15%, 25% or 28%.

These are the thresholds which have been indexed for inflation since 2001, meaning the vast majority of tax payers will never get close to the 43.4% figure that makes for great scary headlines.

But it's not just all about tax rates. There are other reasons why savvy investors should continue to invest in dividend stocks in 2013.

One of them is Barack Obama...

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2013 U.S. Economic Forecast: Even Without the Fiscal Cliff, A Recession Still Looms

By , Money Morning -

Everyone is worried about the damage the "fiscal cliff" might do to the U.S. economy in 2013, but the reality is that's only one of the potential problems in our 2013 U.S. Economic Forecast.

At present there appears to be four problems-- aside from the fiscal cliff-- that could throw the U.S. economy into recession in 2013.

These are international problems that include:

  • Brewing trouble in Japan: Japan faces an election next month. More importantly, its government debt is currently 230% of GDP, with that ratio rising by about 10% a year. The current government has increased sales tax in 2014, which may cause a recession and will likely push its debt to GDP ratio even higher.

    The problem is no country has ever survived a debt/GDP ratio above about 250% without defaulting. Britain did succeed with this in 1815 and 1945, but on the second occasion it relied on exchange controls, inflation, and dozy domestic investors, while on the first occasion it had a government under Lord Liverpool far more capable than anything we have seen in the last 185 years.

    The point is, if Japan gets a weak coalition after its election, the market may panic and cause a Japanese government default.

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"It's Like Gold On Steroids"

By , Money Morning -

Sure, gold remains the favorite of most precious metal investors, but THIS is the metal you really want to double down on right now. Three catalysts will propel the price much, much higher over the coming months and years.

Why the Jackson Hole Fed Meeting Will Look Familiar

By , Money Morning -

U.S. Federal Reserve Chairman Ben Bernanke will take the podium this Friday at the economic policy summit in Jackson Hole, WY, as traders hang on every word hoping he'll deliver a clear signal of central bank action in 2012.

They have good reason to think the Jackson Hole Fed meeting can move markets. It was at this summit two years ago in August 2010 that Bernanke announced an economic stimulus program that came to be known as Quantitative Easing 2.

QE2 consisted of the Federal Reserve inflating its balance sheet to purchase $700 billion in U.S. Treasury bonds from November 2010 to June 2011. This was necessitated as no investors, either foreign or domestic, could be found to purchase U.S. Treasury bonds at such low interest rates.

Now, two years later, the U.S. economy has economic growth falling with unemployment rising. Consumer confidence is at record low levels. Lending institutions are processing millions of properties through various stages of foreclosure. Businesses are sitting on record levels of cash, preparing for the worst, rather than investing in job-creating plants, equipment and machinery.

Oil prices are also rising, which will have a negative impact on the U.S. economy. The more money sent overseas to pay for imported oil, the less there is to buy the goods and services that raise the level of employment in the United States.

This was how things were in 2010. Actually, things seem worse now since Standard & Poor's in August 2011 downgraded the credit rating of the United States.

In an attempt to change this gloomy outlook, the Federal Reserve is letting it be known that it will act again in a major way, like in did in August 2010.

But, like that year, no new policies will officially start until after Election 2012.

The Federal Reserve cannot be seen as doing anything that might influence voting when Americans go to the polls the first Tuesday in November. That is the way it was in 2010, and that is the way it will be this year.

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