Thursday, June 7, 2012

What Me Worry About the Economy, Stupid?

Alright, maybe he tells me what I want to hear, but I like James W. Paulsen's economic analysis for Wells Fargo. He's often said the thing that kills a stronger recovery is the fear of an absence in the recovery.

Lately, he's said that the economic recovery is broadening and in less danger of sliding back:

  • bank lending is rising
  • GDP is growing, and without the housing market which has fueled past recoveries.
  • employment and unemployment trends are steadily progressing in beneficial directions (and if you look closely at the numbers, the private sector is growing while the public sector's shrink is keeping the unemployment numbers up).
  • consumer confidence are at record recovery highs because of a warming housing market, low mortgage rates lower gas prices, and a strong stock market
  • from the holidays on, consumer spending has grown by six percent, including some big ticket purchase growth.
  • household debt service burden is near record lows which in past periods like this has meant that GDP will increase by four percent in the near future
He believes the Euro crisis is no longer a crisis but a chronic condition that will need to be managed for the next few years. Most European investments have probably been vetted and hedged. He also thinks there's a strong likelihood for four catalysts that will cause the stock market to have a second half rally.

Besides his caution to succumb to excessive fear, and fulfill your own prophecy, he's also a compelling speaker--rare for an analyst--with a sense of humor. So why I should I worry? Jim Paulsen isn't.

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