ARBOR WEALTH: Four years of tough economic sledding

Published: Sunday, October 28, 2012 at 03:32 PM.

Like most South Walton professionals, I read industry journals, domestic and international academic papers as well as newspapers of the U.S. and abroad in order to establish a base of information through which I synthesize data.

This global macro information helps me determine where markets might be headed and how our clients might benefit. Some sources are daily, like the Athens News from Greece, which recently reported growing food lines amid widespread rejection of ECB imposed austerity as well as the disturbing rise in popularity of two extremist political parties.

Some data sources are weekly. And some, like the Hoisington Report, are quarterly, and well worth the wait. 

Firm founder Van Hoisington and renowned economist Lacy Hunt, Ph.D., provide their economic outlook, released this past Monday.  Their conclusions are disturbing.  Consider the report’s first paragraph, under a subheading of “Growth Recession.”

The Hoisington Report relates, “Entering the final quarter of the year, domestic and global economic conditions are extremely fragile. Across the globe, countries are in outright recession, and in some instances where aggregate growth is holding above the zero line, manufacturing sectors are contracting.”

The report offers the following conclusions in layman’s terms. One, the Federal Reserve’s QE1 (Quantitative Easing) and QE2, and now QE3, were necessary governmental interventions, but made very little substantial long-term impact on the economy.

And further governmental stimulation, designed to ignite spending and to a certain degree increase inflation, will suffer similar fates. What these cash injections did, essentially, was increase the price of commodities, like food and gas.

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