Thoughts From Joe - September 6, 2013September 06, 2013 Posted by: Joe Morgan, CFA
Recent BlogpostOver the last several weeks, I have outlined my view of the “Jiffy Pop” economy. You can find these posts by clicking the links below:
The Jiffy Pop Economy, Part I. A brief overview of why our favorite campsite treat provides a good analogy for today’s economy.
The Jiffy Pop Economy Part II: Foil Issues. Why is the foil covering today’s potential strength so strong?
Is the Jiffy Pop Economy Getting Burned? What the Fed has been doing to drive the economy through the foil.
Why the Jiffy Pop Economy Will Win…Eventually. Taking a long-term view we see the strengths of the U.S. economy will override today’s unique challenges.
Top Eight The jobs report disappointed for August, providing the Fed cover no matter what is decided regarding QE taper. The economy gained 169,000 jobs during the month, but erased 58,000 jobs we thought were gained in July. The unemployment rate ticked down to 7.3 percent but
the labor force participation rate is now at its lowest level since 1979. The bottom line is that we need more people working as a percent of the population, not as a percent of those only "interested in working."The service sector surged in August according to the ISM non-manufacturing survey. Though economists expected a drop, the survey rose 2.6 points to 58.6, well above the 50-mark which indicates growth is expected. This was the 44th straight month of indicated expansion and was
driven by all components measured. A decidedly strong outlook from service providers!The manufacturing sector's outlook improved in August according to the ISM. Both new orders and production measures rose into the 60's, far above the 50-mark which indicates expected growth. Because forward-looking components are so strong, we could see a significant bounce-back in this sector during the second half of 2013. In addition, respondents to the survey showed little concern about potential inflation. The bond market struggles from negative returns, greater regulation, and lack of interest. The Merrill Lynch U.S. Broad Market Index will likely see its largest nnual loss since at least 1976 as today's small coupons...Read More