Optimism has seized stock markets in the past month on the back of better economic data in the United States and a late-summer lull in the euro crisis. Market volatility is at its lowest level in years. [That being said, however,] BofA’s top economist Ethan Harris…thinks the U.S. economy is “in the eye of the storm” right now. Below is what Harris sees on the horizon. Words: 363
So says Matthew Boesler (www.businessinsider.com) in edited excerpts from his original article* entitled BofA: The US Economy Is ‘In The Eye Of The Storm’.
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Boesler goes on to say, in part:
Here’s what Harris sees on the horizon:
“We remain very concerned about the outlook. In our view, the markets have been lulled to sleep by a temporary remission in negative macro news….
Europe:
We believe the Euro zone crisis is far from over. At this stage the policy pattern for Europe is well established:
A funding problem in one of the peripheral countries arises;
policy makers engage in brinkmanship with the core demanding austerity and the periphery demanding bailout;
the markets start to melt down;
policy makers do just enough to satisfy the markets, but not cure the underlying problem.
There is nothing merry about this go around. Over time it undercuts the foundations of the Euro zone. The economy steadily slides into recession, populist parties grow in strength and the markets become increasingly fragile. For the US and the rest of the world this means ongoing collateral damage, primarily through confidence and capital markets.
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USA:
The worst of the U.S. fiscal crisis also lies ahead. Note that in the uncertainty shock literature, the impact of the shock grows exponentially as the day of reckoning approaches. The cliff is slowly working its way into corporate thinking. The real test will come in the fourth quarter when the cliff will be just months away and the incentive to delay spending and investment decisions will peak.
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The timing is tough, but we would expect some…very soft numbers in the October to January period. We are keeping a close eye on corporate commentary, confidence surveys, indicators of hiring and capital goods orders.”
*Source of original article: http://www.businessinsider.com/bofa-us-economy-eye-of-the-storm-2012-8#ixzz24i77UKQm
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
We all know that high debt is a growth killer and, at the moment, the U.S. has a budget deficit of about $1 trillion. That’s a very big number…The question is, at what point do countries have to deal with high debt levels? How high do debt levels have to be before one has to deal with the problem by lowering budget deficits? Also, what are the consequences of such debt and budget reductions? Words: 500
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economic data in the United States and a late-summer lull in the euro crisis. Market volatility is at its lowest level in years. [That being said, however,] BofA’s top economist Ethan Harris…thinks the U.S. economy is “in the eye of the storm” right now. Below is what Harris sees on the horizon. Words: 363
