Negative numbers . . . placing the blame
Viewing this week's durable goods numbers (ex-transportation), some people's first look at GDP may make them feel as though they are getting a glimpse of what is ahead for the economy in the upcoming quarter. However, we need to take a long hard look at not only earnings from companies reporting but also revenues, same-store sales or traffic, and sales numbers in general from major corporations.
Moreover, we cannot discount the markets around the globe. They may be telling us something our economy does not want to tell us. Some people are calling the events at the beginning of this week - Monday with the Asian markets - a collapse of stocks in China and Japan. That should give us some indication of what is to come. Keep in mind that we continue to see mentions in the news about a default in the Ukraine's economy. Puerto Rico remains in serious trouble with a flood of American citizens from Puerto Rico (people of Puerto Rico are American citizens) flooding Florida in search of jobs.
Precious metals and hard commodity markets continue to suffer. Soft commodities are getting a bit better as demand will likely continue to pick up for them. More and more companies are unable to do the financial engineering they did in the previous eight quarters. We see no signs of any kind of fiscal policy coming out of Washington and are unlikely to see any until after the 2016 elections.
We continue to see negative numbers, or at least flat numbers, in . . . the economic data week in and week out . . . individual company data . . . and consumer confidence, consumer spending, and consumer income numbers (more important than anything). Although the dollar is beginning to lose some of its strength, we are in a deflationary period.
Now . . . this week we are beginning to hear some speculation about what or who is to blame. I find it amazing that we continue to hear these questions. What is to blame for the negative numbers? The 2008 financial crisis caused by failed government policy. What is to blame for the 2015 continued stagnation in the economy? The lack of government policy - good or bad. The government has not figured out that the problems in the economy cannot be fixed by more government and largegovernment. The only thing that will fix this economy is incentivizing the free markets to be free markets for capitalism and begin working as they once did.
The government and politicians believe they have answers and solutions to the economy? How about dysfunction begets dysfunction. Government and politicians need to get out of the way and let the chips fall where they will.