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Monthly Archives: August 2008

Market Update Letter

Well, we got through a lot of data on the economy and a slew of company earnings over the last two weeks.  And the stock market also stabilized with the S&P 500 Index unchanged!  Looking at the data, the “glass is half empty” crowd note the rise to a 5.7% unemployment rate in July, the seventh month in a row of declines, albeit small declines, in payroll employment, revisions that now show a 0.2% decline in fourth quarter 2007 GDP, and a “weaker than expected” rise of 1.9% in second quarter GDP.  Looking at the same data, the “glass is half full” crowd note that the unemployment rate is still, historically speaking, fairly low, that the modest declines in payroll employment are consistent with continued measured adjustment by business to slower growth, that the tiny dip in Q4 GDP was nowhere near recession territory, and that the GDP increases in the quarters since—up 0.9% and up 1.9%—indicate an economy regaining its footing.  Same story on inflation—the inflation worrywarts continue to say a big surge is in the offing, but the broadest measure of inflation, the GDP price index, rose at an annual rate of only 1.1% in Q2 and is up only 2% over the last four quarters.


Weekly Economic Commentary

For the second consecutive week, financial market participants actually paid attention to the economic data released last week, and for the most part, the data had something for everyone.

Those arguing that the U.S. is in recession could point to:

  • the 7th consecutive monthly decline in payroll emplyment
  • the spike in jobless claims
  • the downward revision to GDP growth over the past year, and
  • the weakest monthly reading on domestic vehicle sales in 21 years ……

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